Our parents always said the rules were there to protect us, to help us and because they loved us. As we grew up, and some of us even became parents ourselves, we saw the truth behind what our parents always said. We saw the reason for the rules, even if the benefits were long term and we had been looking for short term gratification. The Community Economic Development program at Nuru is a training program. We do not exist to offer credit to those in extreme poverty, however we do offer credit services. Our goal is to equip those struggling in extreme poverty with money management skills that will help them use their limited cash flow more wisely. When a windfall comes, be it harvest or credit, our goal is to provide them with the choice and knowledge to know how to manage the additional cash to their greatest benefit. But when survival and the next meal has been the focus for so long, it can be hard to think about school fees six months from now or even try to predict when the money might run out. Because we focus on behavior change and choice more than the financial services we offer, we have some pretty strict rules for those services. We don’t want our impact to create an increase in entrepreneurs or to be tied to the number of loans we give out. We want to see the people in the communities we work apply the money management skills we offer trainings on. We want to see that people value and benefit from saving before we shift the focus to loans. We want to ensure savings is a foundation, not just a step to receive credit. And that means we need to follow the rules.Our model is new. It is new on the micro-finance development scene, and it is new to us and the communities here in Kenya. It is only human nature when something new comes on the scene to try and test boundaries. The “maybe just this time” or “but this client is different” line of argument has been echoing in our ears since we started. And we have indeed regretted the times we have given in, bent the rules and been swayed to make an exception. But we have learned from those mistakes as a team. I have never been more proud of the Nuru Kenya CED Team than during this last round of loan review and disbursement for our MwaK program.
Over the past three months since our last disbursal, we finalized our preliminary financial sustainability model for the nine year cycle of the model. We have since been having long conversations about how to ensure we are making our desired impact and reaching our financial sustainability goals. We have also been taking a serious look at the programs history and dealing with some of our more difficult loan clients, a lot of whom we had bent the rules for. We realized that sticking to the rules was a major factor in making the change we wanted to see stick. When we received 242 applications this round, we already knew our discussions with our clients about the importance of savings and what it required to qualify for a loan had hit home with some clients. We have more clients but had fewer applicants than we did back in October, I believe because we have been clear in our messaging- ‘if your savings isn’t enough to cover 25% of the loan you’re applying for, you won’t qualify’. We encouraged these clients not to apply, but instead to focus on savings until the next round and seek out additional help from their Field Officer(s).
Next came the big test. I had been having these discussions mostly with my Program Leader, Andrew Chacha, and my Field Managers. We had had a few trainings with our Field Officers and really trying to mentor them on the “whys” behind what we were doing as a program. It was up to the Field Officers to determine who would qualify and if we didn’t follow the rules we hadn’t budgeted any financial room to back it up, it was a sink or swim opportunity for the program. And boy did they swim!
No client was given a loan unless their savings matched the requirement and no one was even allowed to guarantee if their shares didn’t match the guarantor requirement. They conducted thorough home visits. They worked for three long days to work trying to figure out who could qualify for what amount and who showed the best savings history, not just balance. And when the community became a bit rowdy because of the strict rules, the Field Officers arranged extra community meetings with the Field Managers in order to address some the issues and explain in depth the reason CED works the way we do. When some clients refused to take a reduced loan amount, trying to pressure the Field Officers, they re-explained the rules, why the reduced amount had been offered and told the clients that they could apply again next round when they had increased their savings. We disbursed 172 loans this round, but we are proud as a team of each qualification decision we made.
And best of all is the ownership the Kenyan team now displays over the program. They understand the value in why we have the rules and the benefit to our program and the community of the rules. Not only that, but they have taken the opportunity to learn it so well that they are able to explain it to their communities, their neighbors. Team morale is high and confidence in the model runs deep. With such a fantastic team and an impact goal they all believe in, a model based on savings instead of credit, based on trainings above services, actually has a chance to flourish.