Feeds:
Posts
Comments

Posts Tagged ‘group lending’

At the café someone whispers something in Julius Mutanga Muteti’s ear. It’s the car, again! It has been stopped by the police. The car is Julius’ taxi, and his driver needs money for the cop, who stopped him. The driver has done nothing wrong, but it doesn’t affect Julius, it’s business as usual. He leaves the café. You have to bribe the police officers to make things run smoothly. A few minutes later Julius is back and we continue our chat over tea.

Julius Mutanga Muteti in front of his kiosk in Eastleigh, Nairobi

Julius Mutanga Muteti in front of his kiosk in Eastleigh, Nairobi

We meet in his neighborhood, Eastleigh, which is predominantly inhabited by Somali immigrants, by some called Little Mogadishu as well as a country within the country with its own economy. According to Wikipedia this is on account of its robust business sector. And robust it certainly is, not only the economy, everything is robust here. It’s a part of Nairobi you’ll not find described in the tourist literature, in fact not many from outside Eastleigh come here, and to be honest at first sight I wouldn’t go there either unless I had business and was accompanied (that changed after I’d been there a few hours). But I have business and I am in the pleasant company of partnership relations officer Kevin Njuguna from MYC4’s office in Nairobi and branch manager Joshua Kithome Muinde from SISDO. We are going to meet three borrowers who are in the same group.

The Somali neighborhood Eastleigh in Nairobi

The Somali neighborhood Eastleigh in Nairobi

And that’s how I meet Julius and two of his friends. Over and over again Julius says: “We have the brains and the ability – but we lack the funding to be boosted higher”.  He’s afraid that I’ll judge them as not being smart enough, but I soon learn that they are men who’ll grasp any opportunity they can get their hands on to improve their situation. They are eager to move up. “Yes”, says one of the others, “we need to get boosted”.

Nothing wrong with the name though, Eastleigh Enterprices is the impressive name of Julius’s business which consists of the cab and a little road side shed or kiosk where his nephew sells fruit and vegetables. At home his wife manages the house with rooms for rent. He would like to buy a truck and go as far as Congo, he says. No doubt that Julius is the entrepreneurial kind. It was on his initiative that the group was set up, he’s the chairman, and now he’s on his third loan for 150,000 Kenyan Shillings (1340 EURO) through SISDO.

Julius gets up every morning at 4.30; he goes to market to buy vegetables for his little kiosk, and rarely does his day end earlier than 7 o’clock at night. – We family men share the same problems, we have too many expenses for schools etc., he says. Another problem is terror. A couple of years ago Eastleigh was targeted by terrorists, handgranates were thrown, probably by Al-Shabaab, business went down, and people are still scared, says Julius. But generally there are no problems with the Somalis. – We’re all interacting, so we are not complaining about that, but the loans we get are too small!

His friend Peter Kiumba wants to show me his business, so we walk along the dusty, noisy and very busy streets of Eastleigh, we cross a yard, go through narrow corridors and end up in a cramped outdoor space with junk all over it. – This is my business, says Peter. –Where? I ask.  – All this! Peter points to the heaps of plastic bottles and scrap metal. Peter is in recycling and collects what other people throw out. The bottles are sold to the Chinese who have recycling factories outside Nairobi. Peter is also in the chicken feed business, like Julius he doesn’t want to be vulnerable by focusing on one business only.

Joshua from SISDO tells me afterwards that one of the problems is that Africans don’t borrow enough. – They ask for too little, when they apply for a loan they should always ask for more than they actually need, so they can put a little aside, he tells me as we stroll back to the car. – There’s a lot of pirate money in this neighborhood, look at all the businesses. It’s a sad background, but I like the Somalis and the Muslims, they are very good at taking care of each other, they can count on each other, and we should learn from that.

Next time you are in Nairobi and after you have visited the nice shopping malls make a trip to Eastleigh, there’s a lot of nice things at low prices. And maybe you’ll even meet the Boostie Boys, Julius and Peter.

Read Full Post »

174

Meet Jane Wangari, a 47-year-old business woman and borrower with SISDO one of MYC4’s providers. Jane and her husband have been farmers all their lives but turned it in to a serious business when her husband retired in 2000. They have a five acre land where they do their farming and this is also where their family house is. Farming is what they know how to do best and they have seen it take them to greater heights. The farm is located in Kimende in Limuru, Kenya. Wangari is also the chair lady in her lending group, called Kirimaini, which consists of 13 members. MYC4, together with SISDO’s Limuru branch manager and a loan officer, went to visit Wangari at her farm. When she sees us with her loan officer, Mr. Lazarus, who she refers to as Mwalimu (teacher in Kiswahili), she is very happy. Wangari is a jovial woman, you can see it in the way she welcomes us to her compound.

Where is the cow?
We discover that she has a broken leg, and she explains that she broke the leg as she slipped while working. This however, she says, does not stop her from doing her work; it just slows her a bit. She has taken a polythene paper and a cloth to cover her leg as she walks around and does her work. She also has a chair nearby just in case she gets tired. Her determination has enabled her perform her normal duties and attend her group meetings regardless of the broken leg.

The two cows

The two cows

Wangari has borrowed €1,468 to buy a high breed cow so as to increase milk production and hence boost her business. The demand for milk has grown and many of her customers are demanding for more litres of milk. She also wanted to employ extra help as the work in the farm and with the cows has increased because she has purchased another land elsewhere for cabbage and carrot farming. Looking around the cow shed, we only see two cows but cannot see the high breed cow, so we ask her where the cow is. She explains that, with her broken leg, she has been unable to bring the cow home, so she talked with the seller of the cow to keep it for her until her leg gets better.

Her business entails selling of milk; she takes 20 litres of milk to a nearby factory every day and they pay her 30 shs per litre (€0.25). On a good day they pay 35 shs per litre, (€0.30). She also supplies in the local shops and sells to customers who come to buy for their own consumption. She farms potatoes, spinach, carrots and cabbages for sale. The harvest has been good this season and Jane is estimating 50,000 shs (€431) for the sale of the cabbages she has planted in a quarter acre plot. She has also harvested potatoes and beans which she has spread on a canvas sheet on the ground to dry. Her husband was not home during the visit. He had gone to look for market for the potatoes and the cabbages and was going to come back in the evening. Wangari has three children, two daughters and a son. She has educated her children and they now have good jobs. Her business has enabled her to take care of her family as well as educate her children.

“The girls are all married and in their husbands’ homes raising their family. The boy is also working and you can see, he is putting up his house. We are so proud of our children and most grateful to SISDO, they have enabled us to improve our farming business. We eat, clothe and educate because of SISDO.”

Wangare's son's house under construction

Wangari’s son’s house under construction

Future plans?

After finishing paying for the current loan, Wangari plans of taking another loan to start a poultry farm and business. She has seen her friend do well in the business, and the friend has promised to help her start the business and advice her on how to take care of the special breed called Kenbro. This, she says, will enable her to grow her farm business even more. Wangari gets up to prepare some tea for us, but we cannot wait for the tea to be ready as we have another borrower waiting for us at our next visit in Ngecha, a few kilometres from Wangari’s farm – and it is not good to keep business men waiting.

Read Full Post »

2012 has been a year in which we have recorded significant quality growth on the MYC4 platform. We started off the year with 1,154 active loans and currently we have over 3,700 repaying loans. Farming has been the biggest growth industry and women now hold the majority of all loans with 60 % of the active entrepreneurs on the platform being female.

In the process, the Outstanding Loan Balance (OLB) has doubled from €1.1 million in January to €2.2 million in December 2012. Over €4 million worth of loans have been uploaded for funding this year compared to €2.5 million in 2011. This is a remarkable growth in loan production for the platform from existing and new providers that came on board in 2012. The overall Portfolio at Risk above 30 days (PAR 30+) remained within the 5% range for most of the year.

The number one challenge in 2012 was obtaining a balance between loan production and the available liquidity on the platform. That notwithstanding, we achieved an overall funding success rate of over 90%. Any ideas or leads on how we can improve liquidity on the platform are always welcome.

We will be back in the first weeks of the new year with our Portfolio Performance Update for Q4 2012 as well as our outlook at 2013 in terms of the key challenges and opportunities ahead. Remember that the platform is always open for business – right now we have more than 200 open loans for African entrepreneurs looking for funding to grow their micro- and small businesses.

As we look at 2013 with optimism, kindly receive the best New Year wishes from the MYC4 Team.

One of the new additions in 2012: a KEEF women’s group

Read Full Post »

When I was hitch hiking the US as a young man in the seventies I sometimes had to spend the night in bus depots or open-round-the-clock restaurants. One of them was a restaurant called “Jack in the Box”, a chain of burger joints with lousy coffee and big ambitions. One night I was staring at their motto over my umpteenth cup of stale  brew. The motto said: “ Watch out McDonalds – we’re coming!” Meaning, of course, that the little Jack would eat the great Ronald McDonald for breakfast sooner than he could count all his billions.  We all know that didn’t happen, but I came to think about that motto, when I visited a small shop in the Nairobian neighbourhood, Kawangware.

Behind the counter was Josephine Wlangui and husband Patrick Kanja Ragae.  Jack in the Box was open 24/7 – Josephine and Patrick not quite so many hours, but from 7 in the morning till 7 in the evening they are open for business, 12 hours every day, only closed during church time on Sundays. To the customers the shop is just a hole in the wall, where you place your order. We’re not talking supermarket or self-service here.

- You have to be there for the customers, otherwise they will go elsewhere, says Patrick as he’s paying attention to a customer, who’s buying a couple of cigarettes. The purchase is quite typical: People buy little at a time, a few biscuits, a bag of rice, a bottle of cooking oil, but this has not stopped Patrick’s ambitions.

- We’re doing well, but we would like to take it further. A real supermarket is my plan, and since you ask why not supermarkets all over, even in other countries, Patrick dreams on. And this is where I think: Nakumatt, go home!

Their shop is eight years old, and they have two employees who bike around the neighborhood with goods. They have three children and live with some family but would like to have a house of their own. They are on their second loan through Micro Africa (100.000 Kshs), the first (30.000 Kshs) was paid back on time. They have no problems paying and would like a third loan. With me this morning is branch manager from Micro Africa Jobes Omondi, and Patrick enthusiastically asks him what the limit is. – It can go as high as 1 million Kshs,  Jobes tells him.

Loan officers from Micro Africa come around every so often and can see for themselves that everything is running smoothly. Jobes Omondi:  – The good thing about it is that they are a couple. Family stability is a big issue for us in the micro finance world. They are both aware of what it takes, and they have a good customer base. The wife is really good, and they are good with money.

Most likely Josephine and Patrick will not push Nakumatt aside any day soon, but less can do it, and there’s no doubt in my mind that the ambitions are there in the small shop in Kawangware as well as a will to work hard for it.

Read Full Post »

Merry-go-rounds; a never-ending cycle of money contribution by members of a group that happens in turn whereby everyone has a chance to get the contribution – or chamas as they are popularly called in Kenya – are very common in Africa. Mostly attended by women, chamas are a major informal way of harnessing capital. Mainly, there are three kinds of chamas:

  • One is where a certain fixed amount (mostly the entire contribution for the day) is given to one designated member. Members meet every month or twice a month, depending on the number of members and preferences, to contribute a set amount (each member has a number randomly picked to show who gets money after whom). This goes on until the last member receives their money and then the chama starts again with the person who began. At this point more members may be added or dormant ones eliminated. The cash is then used by members to buy household goods, improve their businesses etc.
  • The second one is where members contribute amounts which form shares and are allowed to borrow money from the account (mostly one member keeps the contribution account books). The amount of money borrowed depends on the shares one has in the account. Members still meet at set times e.g. every month. The member then is able to pay the loan at a very minimal interest or sometimes no interest at all. These funds help them start businesses, expand their businesses, etc., and hence improve their livelihood.
  • The third one is where the chamas become investment clubs. The members contribute with an aim of investing in jointly owned property, or businesses. This has become a popular mode of self development for both men and women. The banks have seen the potential in these and have developed products to fast track the realisation of the chamas’ vision.

Chamas may have become popular in recent times, but the model is quite ancient. My grandmother once narrated to me that long long time ago, she and her friends in the village had their chama. This chama was however different from the ones we have today because it never entailed money but labour. They would meet every tilling, planting and harvesting season and help each other till and harvest. They would meet like in a normal merry-go-round, pick numbers randomly to decide whose farm they would work on that particular day. As they worked on each others’ farms, singing and sharing stories and advice on their daily lives, it made it easy for them to do their farm work (their farms were very large), and hence finished the work in time every season. This was transformed gradually to the financial chamas that are there today where people support each other. These chamas help the members grow their businesses, educate their children, and cater for their basic needs as well as in their social lives e.g. contributing in times of funerals and weddings.

Many small businesses entrepreneurs in Africa are women as the women have risen up to the challenges faced in Africa e.g. unemployment, poverty, diseases, illiteracy etc. hence the increase of chamas in Kenya. Such-like groups are formed in the countryside as well as in the city and the members empower each other to rise from poverty. The story is the same in almost all parts of Africa. The advantage of these chamas is that they not only support the financial aspects of its members but their social aspects as well. The group members share their struggles and successes and offer each other advice and support, hence lift their morale in life and business. For those that form a kitty for on-lending, the interest rates are also very affordable.

Bayollah, one of MYC4’s employees in Nairobi, is a member of 3 different chamas and had this to say about her experience:

Chamas are very important to my life. Since I started the chama, I have really improved because when it’s my turn to get the money, I can organise myself. Then I can buy household goods without relying fully on my salary.

Many households in Africa have members who belong to such chamas and it is often these chamas that later access financial help from microfinance. Some of these Microfinance Institutions partner with MYC4, e.g. KEEF and Yehu Microfinance Trust. When investing, especially in group loans, it is these wonderful men and women you empower, and a brighter Africa you are developing because these funds help them be progressive in their business and daily lives.

Read Full Post »

Jobes Omondi is branch manager for Micro Africa’s largest branch, the one in Kawangware in Nairobi

Being branch manager for Micro Africa Jobes Omondi is a busy man. It’ Micro Africa’s biggest branch in a large area called Kawangware, a buzzing part of Nairobi. It’s nine in the morning, and he’s just out of a meeting with the credit committee which deals with loan applications every day. The applications also come in every morning. I want to know what it’s like to be a loan officer, what the challenges are, and Mr. Omondi, who used to be one, should know.

- The biggest challenge is when a loan defaults, when clients don’t pay or simply disappear. That’s the biggest problem: We can’t trace them. And that’s why we work hard on getting to know them real well. We take borrowers through referrals; the current groups refer new clients to us, which enables us to have a call back plan. The group members sign for each other, and we make sure they really know the conditions, says Jobes Omondi, who also knows about the challenges of being a branch manager.

- You have to understand the staff and meet their expectations. The loan officers, of which we have eight, have different temperaments, and I have to mentor them and lead them into a new culture.

Micro Africa mainly deals with group loans and some SME. Kawangware is a highly populated area, it’s a mixed market with slums and nicer areas. The middle class is slowly emerging here as elsewhere in Kenya.

Jobes Omondi and Ezekiel Kamanu at a group meeting in Kawangware

Ezekiel Kamanu is a loan officer who tells me about the difference between the active poor and the poor.

- The active poor has done something about his or her situation, maybe saved up some money. He can get a loan whereas the poor can only get charity and try to move up to be active poor, says Ezekiel Kamanu, who – when we talk about the fact that the borrowers are mainly women introduces me to an African saying: “It’s better to get a foolish husband than a foolish wife”, meaning that the wife can cover for a not so good husband, not the other way around (these are Ezekiel’s words, not mine!).

Ezekiel Kamanu, loan officer, Micro Africa

Both Ezekiel and Jobes have a background in banking. – As loan officer you have to break the ground and our muscle is much smaller, a loan officer makes a good banker. If you can make it in microfinance, you can make it everywhere, as teacher or as administrator. I can tell in five minutes, if a potential client will be a good customer or spend the money on something else. On any day you can either be very disappointed, when you have visited a group, or you can be very happy. With the first you just have to leave it behind you like dirty clothes and get on. You must be thorough and smart and stand strong in the wind, says Jobes.

Ezekiel: – I like my job, the best thing is to see the changes in peoples’ lives, to empower people. A full group cannot disappear. The idea of group loans is brilliant, we can manage the group. But sometimes people disappear: This is credit! It happens!

Read Full Post »

Group meeting, ajusting the pass book

Driving around the countryside outside Limuru reminds me of Tuscany in northern Italy: the hilly landscape, the softness that meets the eye, the green views and the open landscape. It’s beautiful, and in the far distance: Florenze…no,  Nairobi in the haze. But the similarity stops here, because no rich Florentine families, no descendants from the Medicis have built marble mansions in this part of the world, and vineyards are not to be seen. This is a poor rural part of Kenya, and the smell is the smell of my childhood’s vacations on my grandmother’s farm in Denmark.

I’m with loan officer Patricia Kalu and trainee Stephen Mwangi Mburu near a small town, Chunga Mali. They are from KEEF Kenya , Kenyan Entrepreneurship Empowerment Foundation – and we’re lost! We cannot find our way to the group meeting, this down to the fact that the borrowers take turns in hosting the meetings. So where is it this time?

We finally find the little homestead and wait for the 15 women to arrive at ten o’clock. One is in the hospital with her child, so we give them another hour, but eventually only seven show up. Fines of 50 Shilling (app. half a dollar) will be handed out later for the no-show. Not even a glass of water is offered and the meeting finally begins with a prayer.

All the women have brought a little blue booklet called the pass book with recordings of their repayments, everybody have paid back on their loan the day before by mobile phone, typically a few hundred Shillings. No notes are changing hands, and every pass book is carefully checked and filled out by the loan officers.  The women in the group vouch for each other. A while back one of them couldn’t afford to pay, but with the help of the group she’s now back on track. That’s the beauty of group loans. And the beauty of mobile technology:  At the beginning of the meeting the woman who is hosting the meeting asked for an advance of 2,000 Shilling, and half an hour later she’s got it through Mpesa!

They are all interested in learning more about MYC4, the interest and the reduced rate, which some of them do not understand. One is so agitated that she stands up and raises her voice, but Patricia Kalu patiently explains the principles to her. The women also want to know more about school fee loans.

Loan officer Patricia Kalu from KEEF, borrower Grace Wangui Wambiru and trainee Stephen Mwangi Mburu, KEEF

A prayer finalizes the meeting after about an hour, and I ask one of the borrowers, Grace Wangui Wambiru if she wants to show me her place. We walk for a while along narrow paths lined with vegetables and get to her homestead. She has a loan with MYC4, 46,000 Shillings (her first loan was with KEEF, 10,000 Shilling). For the money she has bought a lot of very young chickens, which all look alike to me, but they are different races, and she wants to experiment to find the right one for her. She also has a cow, a Friesian she tells me, the same race my grandmother had, black and white. To top it off she has seven rabbits in a cage.

- Three times a week I get up at two in the morning to go to the whole sale market in Nairobi to sell my vegetables, Grace tells me. The first few kilometers are on the back of a donkey the rest of the 40 kilometer ride is by matatu, a minibus.  – I sell everything I have, I come back with nothing, so that’s’ good. Every week I make about 3,000 Shillings this way, so I’m not complaining, it may sound tough, but where there’s a will there’s a way.

Grace is married and has four children, one of them is in a national school which requires good marks, and Grace has high hopes about university. Which is the subject every time you talk to borrowers - and I have met a few – they want education for their children.

I leave Grace and the rest of the women confident that they’ll make it. Patricia Kalu talks about the benefits of being a loan officer:

- I love my work, it can be very satisfying, we can take people somewhere, they can educate their children, it’s girl power.

Indeed it is.

Read Full Post »

Tujijenge Uganda has been a MYC4 Provider for two months now. The statistics on the Tujijenge Uganda Provider Profile show that so far 20,179 euro has been disbursed in 28 loans to 22 businesses. So how come some businesses have received more than one loan?

Tujijenge Uganda is the first MYC4 Provider to offer group loans on the platform. In the group loan model, borrowers come together in small groups to guarantee each other in case of repayment difficulties. Sometimes the whole group borrows money at the same time, but often the members have different needs. To accommodate this and to tailor the loans to fit each individual borrower, Tujijenge Uganda divides their groups into sub-groups. As a MYC4 investor, you will therefore see that one group can have several loans open at the same time.

One example is Women’s Group Senior Quarters B. According to the group description, it “consists of 16 members who deal in livestock, produce and fishing. Their vision is to work hard and become self reliant farmers. They started as a small village group of 5 people but the group later grew bigger and organized. They are hard working and meet three times in a week. They want to purchase drugs for spraying their Animals and more fishing nets”.

The Senior Quarters B has been divided into three sub-groups:

  • 9 of the members who mostly deal in fishing have received a loan of 1,189 euro, with each member getting between 89 and 149 euro. The loan has a payback period of 12 months.
  • 4 of the members who mainly deal in livestock have applied for 594 euro to be repaid in six months.
  • 3 of the group members who deal in livestock have together applied for a loan of 385 euro to be repaid in 8 months.

One of the group members' cattle farm

Other Tujijenge Uganda groups include the farmers groups AkodakinosHarambe Toroma and Omorio; the women groups AsianutAmuria, and Alakara; and the youth group Dokolo Youth Farmers Initiative.   

Read Full Post »

Follow

Get every new post delivered to your Inbox.

Join 91 other followers

%d bloggers like this: