Financial Planning for the Microfinance Loan
This week the story of one of our community members, Francis Mwita, was released. When his story was filmed almost a year ago, Francis was an outstanding Nuru farmer. He followed the intensive agricultural training and group work to triple his maize yield. Today, he continues to be a standout member and a great example of the link between Agriculture and CED programs.
I didn’t know Francis very well last year, because I interacted mostly with the Nuru members participating in KAPESA group savings program. Because KAPESA requires members to save weekly, it excludes the many Nuru farmers who rely on seasonal agricultural income only. These members, like Francis, access the CED program’s loans through the Jamii Development Fund, Nuru Kenya’s rural micro finance program.
It works like this – Nuru farmers can continue taking loans for agricultural inputs season after season. But to qualify for a JDF loan, a member must have saved enough money to purchase their maize inputs rather than taking an agriculture program loan. This keeps members from taking loans on top of agriculture loans and becoming over indebted. It also requires farmers to plan ahead enough to save money from 2 or more harvests to buy inputs for the subsequent season, demanding financial planning and discipline – the foundation of the CED program.
Francis has not only made that successful transition; he has taken it one step further. Toward the end of the open application period last month for our second round of JDF loans, Francis arrived with his completed application for a school fees loan. The application looked reasonable so I asked the field managers to speed up the loan processing time because most schools were reaching their deadlines for payment of school fees. Francis told us there was no hurry. He actually doesn’t need the loan until next January. However, knowing that JDF loan processing for the next season would run into the deadlines for payment of school fees, he decided to plan ahead and meet loan requirements almost half a year early. Great example of financial planning – kazi nzuri, Francis!