Economic empowerment for rural Kenyans.

Village Savings and Loan (VSL) groups provide basic banking services to the rural poor. Once a group is organized and trained the VSL group is totally governed and operated by its members making the model truly sustainable.

Fadhili has been involved in VSL groups for nine years; and in that time we have reached over 40,000 members in 1,500 plus groups. Women make up 91% of VSL members. As the benefits extend to these women’s families, we estimate that over 120,000 individuals have been impacted by this project.

An impact assessment in 2015 found that 89% of groups formed in 2010-2013 were still operating with many going on to form new groups in their villages. To date the groups have transacted over 220 million KES. These were people that previously thought they had nothing to save!

A typical VSL has 15 to 25 members (mostly or all women) who meet weekly over a period of 12 months. Members buy one to five “shares” at each meeting where each share might be 50 shillings. From the monies collected, members can apply for small loans which are guaranteed by the group. The loans are repaid with interest, then at the end of the cycle the members cash out taking home a tidy profit and the cycle begins again. On cash out, members can receive two times or more the amount invested.

Record keeping is designed to be very simple and all business is also conducted verbally so even the illiterate can participate.

Although amounts may seem small, to the rural poor having even modest savings can make a huge difference in their lives. Many start by buying a few chickens to sell meat and eggs then diversify to other livestock, crops or businesses. Loans are also used for school fees, household nutritional needs, home improvements like sheet metal roofing and purchasing stock for small businesses.

Most groups maintain a social fund which acts as a form of group insurance. The fund assists with medical and funeral expenses among others.

Here are a few stories of the 40,000 plus members experiencing the benefits of our more than 1,500 VSL groups.

Jen Kyele is a young mother. Before she joined the Village Savings and Loan (VSL) group she didn’t know how to save money for school fees for her children. She had to knock on doors of her neighbours and family members in order for her children to attend school. Jen felt shame and embarrassment when she had to do this.
Jen’s VSL group has been running for almost three years. Since becoming part of the group she has learned about saving and now finds it easy to pay for her children’s school fees. She has saved enough money to build her house, buy some goats, build a chicken coop and buy chickens. She also runs a small business selling kerosene and gives 10% of what she earns to the church as an offering.
In the future, she wants to continue building up her farm. She plans to purchase more equipment and seeds to expand on what she has already done. Jen is grateful for Fadhili Trust and the Village Agent who taught her how to save and earn money. It has transformed her life. In short, Jen’s shame and embarrassment has changed to hope and optimism.
Josephine Kasipa is the chairperson of the Kiuani Village Savings and Loan (VSL) group. Kiuani means Fruit of the Tree because there is a large tree bearing lots of fruit on the property where the group meets. The tree could be a metaphor for the productivity of the group. While only in its second year, the group’s members are able to do so much more than they could before.
Despite her young looks, Josephine and her husband Masila have five children, eight grandchildren and three great grandchildren. For a very long time Josephine relied on her husband to take care of the family financially. Masila was a casual laborer, so his income was inconsistent. Masila is now older and retired. So when it came time to pay for their youngest son’s college education Josephine needed to take out a loan. She went to a micro-finance group which charges 20% interest on loans. After she had finished paying off the loan she heard about VSL groups and was excited because the interest rates were so much better at 10% and profits are returned to the members. She decided to join a group.
When she gets money she brings it home and shows it to her husband and together they decide what they should spend it on. Since starting, she used her first loan to cement her home, the second to buy mango seedlings for her business and the next to expand her business so she could sell produce on a larger scale. She hopes to keep building her business and make improvements on her home.
Her children all live away from home but when visiting they are amazed at all the improvements. They ask “How are you doing this since you don’t have a job? Where are you getting the money?” She tells them about her VSL group.
Josephine wants to ell others that being in a VSL group is good! In her words, “Fadhili Trust trained us and now we are capable of pooling our savings together. We loan to each other and support each other. Tell people they should join groups too!”
In the rural areas of Kenya, men do not have a good reputation as many move to cities to find work, spend most of their pay and send little or nothing back to their families. Others go so far as to marry other women and have a second family in the city.
With experience, Fadhili has found the savings groups work well if, of the five officers (chairperson, box keeper, secretary and two counters), only one can be male. In a group of women, males tend to dominate so this restriction keeps the balance.
It takes a lot of courage for a man to join a women’s savings group. Men who associate in public with females are considered “sissies” and ridiculed. Fortunately a few brave men are changing this.
Kiio Kitiko is one of those brave men. What follows is a transcript of an interview some Fadhili supporters conducted with him.
Tell us about your family? – I am married, a father of two, a girl and a boy. My girl is in Form 1 and my boy is in class 8.
Tell us about your life before you joined the VSL group. – Before joining the group, I had two tanks. I would fetch water and sell it but I used the money in ways that were not beneficial to the family.
Since I have joined the group, now the money I am getting I am saving in the group. When I first started saving, I saved 2000 shillings, got a loan (from the group) and bought 5 chickens. I can also get a loan for 500 shillings to buy food for the chickens.
What do you do with the chickens? – I sell meat and eggs. I sold 8 chickens this Christmas and now I am raising chicks of my own.
How does your wife feel about you being in the group? – (He laughs) My wife is happy because she is a green grocer (has her own grocery business) and we share the loans.
Why did you join the group? – I saw it was a good group to help me with savings and my money is secure.
How did you feel about joining a group of women? – (He laughs) I was afraid to join but it has been a good place for me.
What are your goals for the future? – I want to expand my poultry business to 100 chickens by the end of this year.
What do you want to tell our people about your story? – When you go back home, you tell your people we are grateful for the work you (through Tearfund and Fadhili Trust) have done for us. Tell them the people are “able”, because they have started some businesses and their families are stable.