Village Banking: Ensuring sustainable Source of Community Financial Capital. | WWF
Village Banking: Ensuring sustainable Source of Community Financial Capital.

Posted on 12 May 2016

Zuhura Bakari Mwatete, known simply as Mamake Aisha is a 40 year old mother of 5 children, from Kinondo Village in Kwale County. 10 years ago Mama Aisha could hardly make ends meet with her USD 35 monthly income, but a decade later courtesy of the Kinondo Financial Services Association (Village Bank), in her own words, her fortunes are looking up.
 “When I joined the bank, I was running away from another micro finance institution which was exploitative and abusive” says Zuhura.

“First I was reluctant, I could not believe that community can actually manage a financial institution, I therefore approached the bank very cautiously” narrates Zuhura.

She took her first loan of USD 65 in the same year she joined the bank for the purpose of expanding her grocery business.  She re-paid the loan and took another loan of USD 200; she used the money to open a shop and to diversify her stock from grocery to other commodities. She repaid the loan in 8 months.

Zuhura took another loan of USD 750 to further expand the business to start buying and selling coconut and Makuti, she also established one acre of woodlot in her farm. Currently, she is servicing a loan of USD 1500, which she has used partly to put up a permanent house.

Zuhura’s life has changed completely; “I am now able to educate my first born in secondary school, has dug a water well where I get water for domestic use and farming, I have changed my house roof from makuti (Thatched house) to iron sheets and I have transformed my shop from temporary structure for groceries to a one of the biggest permanent shops in the village”.

Her monthly earning has increased from below USD 35 per month to now more than USD 280 per month. She has also employed four people from the village. Zuhura is very happy and grateful to the village bank as it has enabled her fulfill her dreams and lead a comfortable life. 

Zuhura’s life is just one among many that WWF Kenya through its initiative of the Kinondo Community Financial Services Association (KFSA), a community owned and managed association that strives to provide range of financial services to the poor local community, has been able to impact socio-economically.

The association was formed with support from WWF-Kwale landscape project with the objective of providing access to affordable and appropriate range of high quality financial services including credit, saving, fund transfer and cheque clearance to the local community. The Association is located in an area with one of the highest poverty levels in the country. Its ultimate goal is to reduce  poverty amongst the local community by providing financial services that create jobs, earn extra income and improve their living standards.

Kaya Kinondo FSA is located within Kwale Landscape and offer services mainly to communities living in 25 villages adjacent to three forest blocks namely Kaya Kinondo sacred forest, Kaya Muhaka sacred forest and Gogoni Forest reserve. The association was initiated in 2003 as part of Kaya Kinondo community ecotourism project. A rapid appraisal supported and conducted by WWF-Kwale landscape project before the association was established, showed that large populations of the community lacked access to financial services. This prompted the need to form a community-managed financial institution. 

As at December 2015, KFSA membership stood at 1,788 (women 869, 779 men and 140 groups).  The first loans of USD 65 were given in February 2006 to five (5) women.

Since 2006, the association has shown tremendous growth in terms of credit disbursements, savings and membership. The graph below shows the growth in loans advanced and savings in the last four years. 
Clean Energy Village Initiative (CEVI)

The Bank entered into a Memorandum of Understanding with WWF and is now implementing the Clean Energy Village Initiative in Fihoni and Miyani Villages of Kwale County. The project aims at providing renewable energy solutions to the community. In addition, the project is being run through a revolving fund known as Mazingira Fund which enables the project beneficiaries acquire solar lanterns through loans. So far the project has attracted more than 300 households in both villages.

Most of the credit advanced to the members goes into the establishment of micro enterprises at village level such as food kiosk, buying and selling of coconut, motor cycle for taxi services, tree growing and improved farming practices. Education loans are also available.    
Figure showing savings, amount of loans given to members and net profit each year from 2013-2015 in USD
  Loans   Savings   Net savings  
2012 12,966,000 129,660 21,839,634 218,396 764,362 7643.62
2013 13,229,000 132,290 18,130,904 181,309 817,517 8175.17
2014 15,125,000 151,250 21,913,755 219,138 822,709 8227.09
 Figure showing savings, amount of loans given to members and net profit each year from 2013-2015 in USD
Exchange rate used USD 100
Mama Zuhura’s parting shot to women in Kinondo, “women should join the bank and initiate small scale businesses to support their families, instead of waiting for their husbands to provide everything.  The FSA is tailor-made to suit people with limited income, and helps them to improve their wellbeing: discipline and dedication is all that one requires.” 
Kaya Kinondo Village Bank
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