The “art” of community savings: a look at the Kenyan federation savings tool

By Alice Sverdlik and Shadrack Mbaka, Nairobi

Kiandutu Slum is located one and half kilometer from Thika town; the centre of administration of the expansive Kiambu County, 50 km northeast of the capital, Nairobi. Kiandutu occupies approximately 100ha of land and is home to around 18,000 people, This is according to an Enumerations report produced by Muungano wa Wanavijiji. Beranrd Kabue, the chairman of the Kiandutu advocacy pressure group tells us that the slum came into being in the late ‘80s through to the early ‘90s. It was curved out of the Thika municipal council’s land (Now under the County government of Kiambu) which had been taken from its original owners with the promise of compensation. Most of the housing units in the slum, mostly made from timber and mud, are owned by a few affluent structure owners who rent them to the local residents.

“Too often, it’s easy to get stuck in a rut, doing the same thing over and over again, every single day. But if we the urban poor living in the informal settlements are going to live at our full potential, we ought to constantly grow and sharpen our skills and improve on our union. Slum dwellers have no option but to strive to learn and grow every single day because when we stop learning, we stop growing. When we stop growing, we stop existing.”-Florence Wairumu, Federation member, Kiambu

Rashid Mutua, takes a group photo with residents of Moroto, outside their Resource centre

Savings is a core ritual of Muungano and all SDI groups, and like all rituals it needs to be strengthened and renewed regularly. By saving on a daily basis, low-income residents demonstrate their powerful stake in their settlements and cities more generally. Setting aside a few shillings a day helps establish the foundation of everything from livelihood loans; advocacy with government for land, housing, or services; and greater autonomy and empowerment especially for women, tenants, or other previously-marginalized residents.

Additionally, savings play multiple vital roles within Muungano as a movement, and members have recently taken steps to revitalise the importance of savings. In Thika, Nairobi, and several other Kenyan cities, members are conducting’ savings inventories’ at the household and settlement levels. Joseph Muendo, a resident of Mukuru, Nairobi, is one of several Muungano members creating a snapshot of savers today, total amount of savings, and groups’ histories. “It will raise the number of members, the savings, the loans,” so that Muungano groups can continue growing and deepening their roots across their settlements.

Furthermore, Mwendo and other Muungano members have conducted local trainings about the importance of savings and accurate record-keeping.Trainingshave highlighted the importance of “leadership, transparency and accountability, and record books,” since “if we have this, the members can be moving well and trust their leaders and also the leaders can understand the members.”

Grace Kang’ethe a member of the Kiandutu North Savings scheme located in Thika, Kiambu County gives a clear perspective of how savings has had impact to her and the federation members in Kiandutu,

“Savings has a direct linkage to community projects; personally I believe that through our group shares members are able to access loans for project development at settlement or group level. For instance, the youth came up with a concept of developing a community car wash, with this business plan the youth were able to access loan from the CBO shares account to set up the project, which will be repaid back with interest. In our group structure we have a CBO bank account which holds the share worth of all members; one share is equivalent of Ksh 100.

At the group level we have a separate account where we deposit our weekly savings. For groups to access loans from the CBO share account, groups make a formal loan application whereby the requested amount is sub-loaned to individual group members with a subsidised interest of 1 per cent a month. Savings has instilled personal discipline among community members, who are practicing the art of savings, initially I would find myself buying fries or lolly pops, but today I have learnt that I did not even need the “sweet things of Life” if I do not think of my future, this discipline of saving has enabled me access what really is of great importance to me and my family.

Am not ashamed to say that through my little savings I am a beneficiary of the SELAVIP house improvement project, courtesy of Muungano wa Wanavijiji and the SELAVIP foundation, which am currently repaying at Ksh 500 weekly. To benefit from the project, savings was a priority; members with huge savings were given first priority in the house improvement project. My family and I used to be rained on, and through this project I am perfectly sheltered from the extreme weather patterns.

Biashara Bio centre under construction in Kiandutu

Currently as a community we have embarked on a twin sanitation project in Kiandutu; an Ablution block in Molo village and a bio centre in Biashara Village, this is as a result of the synergy build through the savings groups at the grassroots.

We have received adequate training on the savings systems that has challenged community members practicing home banks; these systems within the groups have created transparency and accountability in the management of member financial resources. These systems have strengthened the capacities of savings schemes to properly handle the finances of the members.”

Savings often position group members to access financing to deliver on the intended individual or community projects. Participation of members in savings gives a clear credit worthiness of a member; group records can enable members’ access loans from formal banking institutions. The more the savings the greater the opportunities for the members to benefit directly from projects or receive donor subsidies from donor agencies or government to match up what communities has pooled together. The federation’s strategy is to promote purposeful savings by being project conscious by innovating projects or initiatives that would boost membership and increased savings.

One of the most common challenges face by savings schemes is the misappropriation or even theft of membership savings. This has led to distrust among members and fatigue, which has led to dwindling in savings. Those involved in stealing of members savings be replaced and work in developing a 2nd tier leadership which will oversee the introduction of new systems that ensure transparency and accountability. Other challenges are; members would like to access huge loans that do not consummate with their level of savings. Kiandutu North group often gives one two times their savings as a loan. We save with family bank and have built good relations with the bank.

Jane Wairutu from MuST also emphasised the key links between trust, financial transparency, and strengthened Muungano groups. “When there’s transparency around money, it gives members confidence to save,” according to Wairutu.The purpose of the savings inventory is “to verify, just like in enumerations,” which are similarly checked for accuracy and posted in public places for all residents to endorse or correct. MuST and Muungano are also working to create monthly and quarterly savings reports, so that changes and growth are captured over time.

Savings are thus a key tool to amplify Muungano members’ voice and organization, providing the building blocks of a process that simultaneously binds residents together internally and expands their external reach. In this continuously unfolding process, Muungano’s savings inventories, trainings, and other efforts to renew daily savings rituals are playing their own highly significant role.