Rural Women Building Financial Assets

How do we build financial resilience for people crippled by chronic economic immobility? WEM Integrated Health Services (WEMIHS), a Kenyan community-based organization, is taking a community-led approach to explore how best rural communities can best navigate financial mechanisms.

For decades, WEMIHS has worked in Thika and Kitui districts of Kenya, servicing very rural communities that are largely marginalized and overlooked by government resources. Within this context, there are varying levels of poverty, and WEMIHS uses a three-tier system of evaluating household income: “ultra-poor,” “poor,” and “coping.” WEMIHS focuses its work on households classified as “ultra-poor” that make less than 6000-5000 KSH a month. Over 80% of the households that WEMIHS works with are headed by women.

Theorganization recognizes that building the financial resilience and capacity of those living in poverty takes more than just direct services. Real confidence must be built on behalf of the participants in question. It started informal savings groups that gave individuals who qualified as “ultra-poor” community structures to save and lend in the early 2000s. But ongoing assessment underlined that participants they weren't saving enough to get them to the next level of financial security. “They were saving well, but too little-- they needed an insertion of capital to increase the slope of their own capital building.” said executive director Wairimu Muigai.

In 2012, WEMIHS piloted The Village Development Fund (VDF) with support from Africans in the Diaspora organization (AiD). Community members wanted to establish, own, and manage their own financial credit and savings structure. The VDF aimed to create access to capital to grow small businesses, generate enough savings to cover health and schooling expenses, and create a pathway to participation in formal financial institutions if desired.

Identifying the low-income households in its targetdistricts, VDF formed 77 savings groups, each with two community-appointed leaders. WEMIHS introduced intensive training and curricula that its staff implemented alongside community leaders; and each group received a bank account with a rural-friendly bank (transfers occur through mobile banking). In order to receive a loan of 500,000 KSH (approximately $550), the group had to make a deposit into their account; after this, group members could then apply for micro-loans.

AiD provided WEMIHS with a small grant of $10,000 USD: $6,000 for starting loan capital, and the rest for training and curriculum costs. Over the course of the year, VDF groups invested $4,000 into the fund. 520 people from 23 savings groups applied and were approved for loans to bolster their small businesses.

The results were overwhelmingly positive. After months, $2,000 was repaid-- meaning members generated enough income to surpass their basic needs, save, and repay their loans. That capital was reinvested into the Fund, and then redistributed to other borrowers. WEMIHS reported a 100% loan repayment rate. By the end of the grant cycle, $12,100 worth of loans were distributed: a combination of AiD’s starting capital, which continues to revolve, the community shares from prerequisite deposits, and repaid loans. Now, two years later, 70 percent of the participants continue to contribute their savings through the VDF while 80 percent of the women have reported increase in their assets.The VDF network also created a communal welfare fund for emergencies and healthneeds. Eighty percent of the participants have received some form of support from this welfare fund.

An integral strength of the program is ongoing mentorship and household visits to help members decide how to use the funds effectively. Traditional micro-finance models tend to assume a certain entrepreneurial savvy, and a grasp of local markets. While WEMHIS knows know its members are motivated, capable, and aware of local market activities, they acknowledge the limits in their comfort with managing money.  

It’s too soon to gauge what the long-term impact of the VDF will be, but we are reminded that those living in low-income households are resourceful and capable of managing and engaging in financial markets. Meeting them at their level-- both capacity and comfort-- allows them to learn about money management at a practical pace.

WEMIHS is not a financial institution and does not aim to be one. Yet, its model is critical in
Helping us understand the foundation of facilitating self-determination for the
economically marginalized. At the base of this model is a solid relationship between the
loan-taker, a trusted resource and guide (WEHMIS) and a community of support in which
everyone else is a learner. With this grounding community members can be agents in defining what a successful business means for them.