By Joel Carlman, KF8 – Kisumu Medical & Education Trust – Kisumu, Kenya
Over the years, there have been many entries on this site (and on many others) about the popular topic of group lending. The fact that borrowers gather once a week, or once a month to deal with any issues they might have or to keep each other accountable is incredible. That group lending has tended to lead to higher repayment rates is a fun little factoid that practitioners of microfinance love to point out. But, that only represents the utility of group lending. Yes, it works, but it’s also beautiful in practice.
Recently, I had the chance to travel a few hours south of Kisumu to two borrower groups. One is located in the rural community of Bware, and the other in the more urban-feeling town of Rongo. Both groups taught me a lot about what group lending is all about, and why, besides serving a utilitarian function, it can also be beautiful.'
Our first stop was a relatively brief one in Bware, a small community in the rural area outside of Migori, the bustling border town you cross just before entering Tanzania. When we pulled up in our vehicle, I could hear singing and clapping. The women (this group is all women) scooted close together on their make-shift bench to allow me a spot while several of their peers led the group in a traditional song of celebration. They were happy to see each other, and to be a part of something that was good for them and for their community.
After the payments were collected, and the members allowed time to bring up any issues they might have on their mind, we were on our way to Rongo. The members of the Rongo group—once again all women—were waiting patiently as we arrived at the field in front of the town hall. I was quickly introduced to the leadership board of the group: chairperson, treasurer, and secretary; and then I was told the name of the group: ROCOSHP (like “roh-coh-shop”) which stands for Rongo Community Orphan Support and Healthcare Programme—there isn’t even anything in the name that mentions loans or microfinance!
These women were organized not around getting money, but around the shared vision of supporting the disadvantaged children and families in their community. For me, it was just another example of how innovative K-MET has been in using microfinance to come alongside initiatives that are working and give them a big boost. The group was passionate about their mission—evidenced when they asked a small man named Jack to stand (I hadn’t seen him when we first arrived). As soon as he stood, I realized that the sport coat he was wearing hung close to his torso—he was missing both of his arms. The chairwoman told me that the group was holding a fundraiser the following week in order to raise money to buy Jack at least one prosthetic arm (but they were shooting for two).
The group seemed incredibly close knit, though there were close to a hundred women in attendance. They were laughing with each other and smiles could be seen all around—and yet they took their businesses very seriously, and have an intense system for self-monitoring. The women screen all new loan applicants themselves. When a small group of new borrowers is formed, they are paraded in front of the larger group of 50 or 60 people. The loan amounts they have applied for are announced to the entire group, and all of the other members are allowed to chime in and say any reasons why this person might not be able to repay their loan. It reminded me of the part in weddings where the minister says, “Speak now or forever hold your peace,” only here, women actually speak their piece. Many times, K-MET approves a person for a 30,000 Kshs loan, and yet the group decides that they should start with a smaller amount, or sometimes, not get a loan at all. In fact, some members in attendance had been denied a loan the month before—and they were still attending the meetings! The group dynamic is a very powerful one, and K-MET tries to empower them as much as possible by allowing them to making these decisions on their own.
Once a month, at a gathering like this, the existing borrowers make their payments. If even a single payment is missing from the entire group, the new borrowers don’t get their money that month. Usually, in a missing repayment situation, the people who did not pay have their names read aloud, and questions are asked regarding their whereabouts. If they can’t be located, other members from the group will make the payments for them, and deal with collecting the missing funds themselves during the month.
After leaving the Rongo group, I had a lot of thoughts about this model of microfinance. From everything I have seen, it works. But it turns out that the encounter I had that day was less about microfinance and more about community. I thought of the African idea of Ubuntu— I am because we are. In the context of rural Kenya, the group meeting, the sharing of burdens, the accountability of each member, and the dedication to impacting one’s community just works. It might not work in India or Indonesia or Mexico or even neighboring Tanzania—or maybe it works in a different form. All I can say is that I met these women, and it works for them. I began to wonder if something like this would ever work in the U.S.—to an extent, American individualism has allowed people to achieve success without being tied down by other people. But, in this context, one of the reasons for these women’s success is that their businesses, their families, and their futures are tied together.