Msingi wa KAPESA Program Launches Successfully
In September, with the help of our Kenyan staff, we developed the loan service to our Msingi wa KAPESA (basic group savings) program. We have learned a lot of lessons over the past three years and have now been able to design a stalwart program. However, because of what we have learned, the rules and regulations regarding the loan program are a lot stricter than they have been in the past. At first, we feared that the first round of loan clients would be few and that our Field Officers might struggle to explain the reasoning behind our new rules. We knew the Msingi wa KAPESA program had attracted more participation than our other programs had in the past, but we assumed between the new rules and newness of the program itself, we should only expect at 10% increase in participation over our historical numbers. Instead, we were blown out of the water.
The response for first-time participation was double what we had projected. But if the sheer magnitude wasn’t enough to shock us, the way the community responded was more than enough. We focus a lot of time during our trainings on savings; and when we finally introduce loans, it is always in the context of how much one needs, how much one can afford to take, and how one must take it for the right reason. In the past, whenever we have offered loans, the majority of clients have always asked for the largest amount available. We knew what we were teaching and we would consistently explain why to the community, but when loans are offered, it has been a mad dash to what some still perceive as free cash. This time was different. In October, we had loan applicants who had enough in their savings account to double the size of the loan they were requesting, but they requested less. When asked the reason for taking the amount requested, they said it was because they didn’t need more money than that at the moment. We had numerous loan applicants apply for exactly 25% of what they had. (One of our new regulations is that you have to have 25% of the requested loan amount in your savings account and that you have to have three guarantors who collectively have the remaining 75% in their savings accounts.) We had great response from the guarantors and demonstrated understanding of what it means to guarantee multiple people (having enough to cover their portion of both loans). And out of 268 applicants, we were able to approve 224 loans for people whose first-time loan applications and financial training came through Nuru.
The loan disbursement was a breeze. Our Kenyan team worked with precision and set up various stations where the clients could sign the contract with guarantors, receive the money, and pay their processing fee. Receipts were written and back at the office, and our office clerk was hard at work receiving the contracts and putting them into Mifos so we can track the payments and the loan history as these clients progress. All in all, the unexpected response showed us the impact of the Msingi wa KAPESA program and the potential it has to be a game changer in the fight to end extreme poverty.