A CREDIT SCHEME WITH A DIFFERENCE : THE JAMII BORA TRUST

Kenya has more than 1000 NGOs as well as various other societies whose avowed purpose is to improve the lives of the less fortunate. One of these organisations, the Jamii Bora Trust has had unusual success in making a difference in the lives of some of the most marginalised members of society. We decided to find out more about the reasons for this success. Ingrid Munro, the founder of Jamii Bora, was interviewed for Wajibu by Mokeira Masita.

M.M.: Mrs. Munro, could you tell us a bit about the founding of Jamii Bora?
I.M.: Jamii Bora was founded in 1999 as a result of requests from former street beggars and slum dwellers with whom we had worked since the early 1990s. Thus Jamii Bora was born out of friendship and trust between poor people and a group of people with whom I had been in a work relationship, but especially as a result of trust between poor people themselves.

When they came to me, I told them to start saving and that for every shilling they would save, I would find someone to donate two more. Now, one and a half years later we have some 8,000 members and they have to date managed to save a total of Kshs 35 million. So far we have advanced loans for a total of Kshs. 94 million which the members are repaying very well. Jamii Bora is a fast growing micro-finance institution.

At Jamii Bora we encourage self-management and new staff is recruited from the membership. They are often people whose mothers are beneficiaries of the Trust. We do not insist that they should have a university education: the character and life experience of the person is more important.

Eighty percent of the membership is from Nairobi; however, due to demand, Jamii Bora is now expanding to rural areas. We have recently opened branches in Kitui, Mwingi, Migori and Kajiado. Altogether we have a total of 12 branches operating in 24 areas in Kenya.

There are quite a number of credit schemes in Kenya. How is the Jamii Bora scheme similar and/or different?
The similarities are that, like all other credit schemes, Jamii Bora gives small loans, requires the members to save in order to borrow, members must repay at a good rate, and the target of the scheme is the poor.

There are some differences, though. A member can borrow twice as much as she has saved. The maximum amount for a micro business loan is Kshs. 60,000. An average loan would be between Kshs. 7,000 to 8,000, whereas the smallest loan we have ever advanced was Kshs. 300. Apart from these basic micro-business loans we have what we call the Daraja Business Loan, which is advanced to those members who are very talented. We find that the business of such people is growing at a very fast rate and therefore the small loans are not sufficient. These loans range from Kshs. 60,000 to Kshs. ½ million. Members wishing to take out such a loan must have a very good repayment record. So far about two percent of our borrowers have reached this level. Jamii Bora can also borrow for housing, plots, water schemes, and school fees. These loans are very popular.

Another difference between Jamii Bora and other credit schemes is that we offer insurance services to members, both life insurance and health insurance. For the purpose of life insurance, we deduct one percent of a member's loan. The idea to have this kind of insurance was born out of the problems we saw some of the members experiencing. For example, if a member takes out a loan and then dies before finishing the repayments, this is burdening his or her family whereas if one has insurance, it covers the remaining debt. The next of kin will benefit from twice the amount of the member's savings.

The health insurance was also started to assist the members. We realised that those who default in repayment of their loans often do so because of health problems. The health insurance premium is Kshs 1,000 per year per family, up to a maximum of five persons. It covers all in-patient costs, surgery and follow-up; it also includes conditions related to HIV/AIDS. Insurance companies will normally have a clause in their policy which excludes cover for HIV and its related illnesses. At Jamii Bora we realise that a great number of poor people are affected with HIV/AIDS and so our insurance includes this condition. For this purpose we are linked to St. Mary's Mission Hospital; we have an account there and replenish it regularly.

There are a great number of street beggars who are very, very poor. They have no hopes or dreams, and are thus left out. Our Tumaini Department assists the beggars to get into the mainstream of Jamii Bora activities. They try and change their outlook on life by building up their self-confidence. It is a transition period before bringing them into the micro-credit of Jamii Bora where they can effectively save money of their own, start a business and better their lives. Twenty percent of our membership are street beggars or ex-street beggars. There are 14 social workers in the Tumaini Department all of whom have been on the streets, some for as long as 20 years, but they have benefited from our work for ten years. They were actually the founder members of Jamii Bora two years ago.

Some of the women who have become successful traders with the help of this credit scheme used to live on the streets. How did they get to know about the scheme?
I got to know many of them already in 1988 when my husband and I adopted a 7-year-old street child; he had many friends on the street. For the last ten years my staff and I have worked with the street families and by now more than 1000 families have been able to leave street life permanently.

There are many women on the streets and most often their children are street kids. So the problem is rarely solved when we get the kids off the streets because they are actually the breadwinners for their families. It is better when you get a mother off the streets and into business, because by so doing you get her many children off the streets as well. The mother can now generate some income to send them to school. The Tumaini Department continues building on the friendship between Jamii Bora and the beggars on the street. Most beggars in Nairobi now know about our organization and many are members.

Can you give us some examples of how the scheme has changed the lives of the people involved?
Many members start off on a loan of Kshs. 1000. Take the case of a vegetable vendor. By taking the loan, she will be able to double her stock and therefore double her income because once she has sold off her stock, she will be able to put more savings into her account, double her stock again and so on. So, members have gone from borrowing Kshs. 1,000 to Kshs. 50,000 in one year with Kshs. 25,000 in their savings account at the end of the year. At Jamii Bora, members are encouraged to borrow at their own rate; some have more initiative than others. We have seen people move from sitting on the pavements with their little pyramids of vegetables to operating wholesale businesses, paying school fees for their children and getting a loan to build a house. Some of them have even become landlords.

The change is dramatic in some cases but in most instances we see a more gradual rise to better circumstances. It is a joy to see a mother being able to see her children through school. Now we are talking about the second generation. Those have an even greater vision for themselves and for their children, now the third generation. These are attending school, taking computer classes, etc. Some of the people at Jamii Bora have turned out to be so composed, self-confident and articulate that one would never dream they came from such humble beginnings. In life, it is important to stress the strength in everyone. There is potential in poor people in that they so much want to create a better life for their children. That is why I believe that Kenya is not a poor country: we are rich in human resources, which is a great asset we can use to develop this nation.

How do you assure that the scheme remains viable?
We have a strong anchor in our members. The most important thing in micro-finance, however, is to focus strongly on savings and not to be too dependent on donor funding, which may end up being too little or even too much. If someone gave Jamii Bora Kshs.500 million today, the members asking for loans would not increase, therefore the financial base must grow with the demands of the members.

We are also very strict on loan repayment; however, where a member has a genuine problem, we do not punish them but try and find a way of helping them. Our selection of members is also done carefully: anyone wanting to become a member must be recommended by a trusted member.

We also have a rigorous administrative system in place: application of modern technology, and simple day-to-day rules of running the scheme. As staff members, we remind ourselves every day that we are here for the members, the members are not here for us.

The Jamii Bora Trust has also had some donor support, from local business people in Kenya as well as from Norway. However this constitutes a small percentage of its financial base as compared to members' savings.

Lastly, the Trust has forged long-term personal relations with its members; there exists a strong bond among the staff members. We all work as a team, so there is never a worry that the scheme will cease to exist if any of us would leave: the rest will carry on.

There have been some complaints of late about certain people in this micro enterprise sector. They are forming groups of small traders, and then they collect training fees from donors but do not do any training. How does your organization guard against financial abuse?
First, we do not rely on that kind of money; the type of training program we have is different. We call it the Jamii Bora Business Academy. We started initially to develop the curricula together with our members. We now offer the following courses: Business Studies, Home Economics, Management and Leadership; all these courses are on three levels. Level 1, 2, and 3 take 8, 16, and 26 weeks respectively, with four hours of lessons per week. We charge a course fee of Kshs. 250, Kshs. 750, and Kshs. 1,500 for the respective levels.

It is up to the members to enroll in the course, if they so wish. This is working out quite well because no one will pay for something they do not receive. We will, however, have to double the fees very soon since we are taking level one out to the branches. The members complained about the costs of bus fares for coming to the main centre. They would rather pay more for the course and have it closer to home than spend the money on bus fares.

The reason we charge for the training is to make it as fair and sustainable as possible. If we had donor funding it would be difficult to decide whom to select for the training and whom to leave out. Once the members complete the course, they receive a certificate. This is done formally at a graduation ceremony.

Mrs. Munro, as a former staff member of Habitat, we know that the living conditions of the poor are of great concern to you. The scheme you have started helps the persons involved to at least have their daily bread. But what about other concerns, like a decent place to live?
Getting out of poverty is a long climb on a very steep ladder and once in a while a step may crack and you may fall. However, you may not fall all the way down: you can grab the ladder, get a strong grip and continue your climb up. Our experience is that the ultimate dream for most members is a little permanent house of their own. That is why we also offer housing loans to members who perform well.

Donors normally carry out impact assessment on credit schemes to see whether they bring people out of poverty or whether they just manage to get people into a debt circle. Speaking from experience, it takes three generations to come out of poverty completely. Typically, a mother benefiting from a scheme will invest everything in her children, the second generation. There will not be much improvement for herself: no new clothes, no fancy hairdos or better housing. But if you look at her children, they will go to school, get proper food and clothes, etc. And for the third generation the changes will be even greater. The impact assessment should thus be carried out on the family and all the generations and not just on one individual. It should be long term, looking at the whole process. If only the individual is targeted and this person happens to be in a bad spot at that moment, this will appear negative, whereas she may actually be seeing permanent and long-term improvements

Finally, I would like to say that each and every one in our society has a responsibility to be there for those who are less fortunate; poverty can be and must be combated. We can all decide to make a difference, each one in his, or her own small way.

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