Loans to women= smart economics

Early in his address at the Global Entrepreneurship Summit on Saturday in Nairobi, US President Barack Obama turned the focus to women’s role in creating prosperity.

“Women are powerhouse entrepreneurs. Research shows that when women entrepreneurs succeed, they drive economic growth and invest more back into their families and communities,” he said.

“But if half of your team is not playing, you have a problem. In too many countries, half of the team is women and youth.”

In rural Kenya, a simple financial concept, table banking, is promising to change the game and is making a difference for thousands of women and their families.

Table banking is a simple idea where members gather monthly and literally put their money on the table, which then becomes immediately available to members as loans.

The practice eliminates bank fees, waiting periods for loan approvals and many other obstacles faced by women in Africa who need loans but lack collateral. The loans are used to start revenue-generating projects.

Joyful Women Organisation (JoyWo) is one of the most successful table banking groups in Kenya, with membership of more than 11,500 women groups, each with 15 to 35 members on average.

Started by Rachel Ruto, Deputy President William Ruto’s wife, in 2009, JoyWo started with only 80 members, mainly from Ms Ruto’s Uasin Gishu County. The group started with a revolving fund of about Sh80,000.

In six years, the group has expanded to 44 out of the 47 counties in the country, and its revolving fund has grown to Sh1.6 billion from contributions, loan repayments, grants and donations from fundraising.

Successful beneficiaries

In the past five years, the average annual income of more than 740 such women’s organisations worldwide has been a mere Sh2 million, according to the Association for Women’s Rights in Development. JoyWo has set its sights much higher.

“We are committed to helping women to rise up because I know a woman is a full circle. Within her is the power to create, nurture and transform,” Ms Ruto said.

Irene Chepkoech Tuwei, an unemployed single mother of two, disabled from an early bout of polio and with a past drinking problem, is one of the beneficiaries of JoyWo. According to the organisation, she became a member in 2010 with an initial contribution of just Sh200.

She took a loan of Sh15,000, bought two pigs and opened a grocery kiosk. In 2011, she took a Sh70,000 loan to improve her small business and bought chicken and a dairy cow.

Last year, she took a Sh300,000 loan and bought a tractor that she leases out to farmers at Sh15,000 per acre cultivated.

In a good month, she makes about Sh450,000.

She is today one of JoyWo’s top savers. She has also bought a car and a motorbike to use in running her businesses, and is now in the process of opening a petrol station.

“Table banking has transformed my life ... it has given me a plate from which I will be eating. I want to be one of the shining examples of successful persons living with disability in the country,” said Ms Tuwei.

JoyWo’s influence has been such that this year’s Committee on the Status of Women conference, convened annually by the United Nations, invited Ms Ruto to New York in March to speak about the organisation’s innovative approach in empowering women.

She shared the groups’ successes and challenges, and what other countries could learn from them.

To make running JoyWo in rural counties easier, members form smaller groups of about 15 to 35 members at the village level. Each group has a minimum and maximum amount each member can contribute to ensure that all the women are on the same economic level. Each member is given a passbook to record transactions.

From the money placed on the table, a member can borrow up to twice her contribution for short-term loans, which are repaid within three months. A long-term loan, which can be up to three times a member’s shares, has a repayment period of 6 to 36 months.

To the smaller groups, JoyWo gives interest-free loans, and collateral is mostly in the form of guarantors. The small groups re-lend the money, charging members 10 per cent interest for short-term loans and 12 per cent for long-term ones.

The interest forms part of the revolving fund and is paid back to members as dividends. In 2014, for instance, Sh152 million was paid out to the women as dividends.

Business training

The organisation plans to use its contributions to reach a million women in 47 counties by 2017, before expanding to the rest of East Africa. It also plans to increase its long-term loan portfolio from the current Sh121.6 million to Sh1.2 billion by 2016.

As a result of its popularity and impact, big organisations have formed partnerships with JoyWo through donations or training, and include UN Women, the Ford Foundation, KCB and Intel.

To promote table banking countrywide, Ms Ruto realised that training should go hand-in-hand with borrowing. Entrepreneurial skills, for example, could help increase profits, so she introduced different types of business training.

The courses include ‘agripreneurship’ to help turn peasant and small-scale farmers into entrepreneurs. JoyWo has also created market access programmes to help members sell their produce collectively. It also has a housing project that allows members to build and own affordable homes.

Like any other organisation of this size, JoyWo faces some challenges, such as loan defaults, which currently stands at two per cent.

“This is why we always insist that members should know and be able to vouch for one another,” said Ms Ruto.

JoyWo is an example of how women are mobilising at the community level against years of discrimination and the structural systems that disadvantage them, particularly in terms of access to financial services.

— Africa Renewal

Additional reporting by Dominic Omondi