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Village Savings and Loan groups impact women to startup businesses in Lamu

Women groups in Lamu Island are reaping big from Village Savings and Loans associations aimed at enabling them access lines of credit that they can utilise to grow small businesses.

Village Savings and Loan Associations are self-managed groups who meet to save their money and access small loans as well as receive financial literacy training on how to manage their funds through the table banking model.

The model is based on table banking in which members save and loan out to fellow members at a minimum interest rate which is then shared out at the end of each saving and loaning cycle as gains.

Speaking to KNA during a tour of the seven groups that have been established in Amu Island since 2018, Kandahar Village Savings Association Chairperson Ms. Hawa Mohammed narrated how the VSLA has enabled most of the members to establish not only businesses but also build their homes from scratch.

“Some of our members are single mothers who have had very little help by way of being able to access bank loans, but since the establishment of the VSLA in our village our members have been able to grow their financial revenue streams by way of starting small grocery businesses, Mpesa agent shops as well as Henna saloons,” she said.

Mohammed further intimated that since starting the VSLA group in 2018, their 13 members have benefited from getting loans that have also aided them in solving emergency issues such as school fees and medical bills.

She further revealed that the VSLA group has been able to buy a 50 by 100 plot that they now use to grow crops such as mchicha, spinach, kales, onions and tomatoes that they sell once they mature through their group grocery.

“The monies we get from selling groceries from the plot enables us take care of our group members who have family medical emergencies or even school fees arrears,” Mohammed stated.

“Most of the women that joined our Kandahar VSLA came together because they could not access loans from banks since they are not formally employed,” she added.

Mohammed, a mother of two further revealed that the VSLA has been key to her especially in building her two-storey home which she has done over four years.

Agnes Ndungu also known as Amina, a member of the Kandahar VSLA group narrated how the VSLA has aided her in growing two businesses as well as put her two boys in school.

“I have been able to grow my grocery and juice businesses, primarily on the back on the loans that I get from the group,” Ndungu said.

She further revealed that the group has also brought a sense of camaraderie among members who help one another in times of crisis such as when during medical emergencies.

Barke Ali another member of the Kandahar group also revealed that the VSLA has enabled her save funds that she used to buy land on which she plans to build a home later.

“The VSLA came just in time during the downturn of the fishing industry that was affected in 2016 with the commencement of the Lamu Port Project which compromised the rich fishing grounds in Kililana,” Ali stated.

She further added that her husband’s daily catch diminished with the port project leading her family to barely get by since he was the breadwinner.

Kandahar Village and Savings Group tending to vegetable for sale from their 50 by 100 plot in Kandahar village which they acquired from their savings and interest earned from the group. Photos by Amenya Ochieng

However, things took a turn for the better in 2018 when she joined the group and was able to access loans that enabled her to start a fish selling business as well as training on financial literacy.

The Kashmir VSLA group also has members who revealed that they have been able to start a local Community Based Organisation (CBO) as well as a Mpesa agent shop to manage their collected savings.

“So far we’ve been able to run the group through five cycles which has seen us progress up to the point where we have progressively shared out our savings and interest at the end of every year,” Tima Bakari, the group’s Patron stated.

She further revealed that the 13-member group has recently shared out Sh 1.2 million among the members.

One of the members Mohammed Abdalla also illustrated how since joining the group, he has been able to acquire better fishing gear as well as start up a fish processing business in Amu Island.

“We urge the World Wildlife Fund (WWF) to increase their financial literacy trainings  and issuance of grants that will enable the VSLA model grow to other parts of Lamu besides Lamu Island,” said Feisal Ali Aboudi a building contractor who joined the Kashmir VSLA after seeing how the group had initially benefited its members through savings and loans.

“The VSLA model is built on trust and the closeness that the members have with one another and thus the issuance of loans and the success of each saving and loaning cycle is based on the groups interdependence,” Sofia Kabibi, WWF Project Officer stated, adding that her organization realized the potential that table banking has especially within the informal and unbanked in Lamu.

She added that WWF’s role has so far been to provide trainings as well as monitoring for the groups to excel and graduate its members to acquire land and businesses that they can get diverse income streams from.

“There is a need to increase revenue streams in homes within Lamu homes since most are either dependent on fishing or mangrove harvesting which can lead to overfishing and sometimes degradation of the environment with some parts of the Lamu mangrove forest being heavily cut down due to demand for mangrove poles,” she added.

These sentiments were echoed by WWF communications officer Nzani Kassim who stated that the VSLA initiative still has room to grow especially in enabling young families acquire financial sustenance which can enable them to thrive.

“Most of the households in Lamu are solely dependent on one breadwinner, which is increasingly becoming difficult and thus the need especially for women to get involved in providing for their families through small businesses, as has been the case for many VSLA members who started their own businesses,” Kassim said.

Lamu West Sub-County Social Development Officer Hassan Mwashimba on his part acknowledged that the VSLAs have been a big boost for small businesses in Lamu but noted that the groups still face the challenge of timely repayment of loans.

“Most VSLA members are not employed and a good number do not own sustainable businesses thus you find that repayment of loans hinges on when the breadwinner gets money that is then used to repay the loan,” he said.

He however added that the national government was keen to support such groups when grants arise and are available and advised these groups to apply for funding since most of them qualify for funding.

By Amenya Ochieng

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