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Women Stay United To Reap From Micro-Loans

By Bedah Mengo NAIROBI (Xinhua) -- Women in Kenya are reaping huge from micro-lending institutions because of their ability to form groups and stay united.

The women, majority who are in groups commonly known as chamas, are the biggest beneficiaries of micro-loans in the East African nation.

The loans from microfinance institutions that range from as low as 58 U.S. dollars to 2,325 dollars have made them stay ahead of men in running small businesses.

In both Kenya’s urban and rural areas, women lead in operating small businesses that include vegetable stores, food kiosks and second-hand clothes and shoes stalls, thanks to micro-loans.

Microfinance institutions work with groups, not individual members. Members of the groups, together with their contributions, act as guarantors to loans their colleagues take, thus eliminating the burden of them offering collateral as demanded by commercial banks.

“Women are good at making groups, staying united and running their activities in an organized manner,” noted Sammy Kitula, a business development services coordinator at Global Village Energy Partnerships (GVEP) in a recent interview.

According to the business mentor, women are patient and have communal sense, which binds them in groups.

“To a woman, being in a group means a lot. It gives her a sense of belonging and feeling that she is part of a whole. She will adhere to the tenets of the group as long as she knows that it is for her good,” explained Kitula.

Unlike men, Kitula added that there are many things in the society that bring women together.

“The fact that women face various challenges in society means that they need people to share their thoughts with. That is why it is easier for them to come together and form groups.”

Some of the challenges that unite women include funerals, being widowed, lack of finances and marital problems.

“Women will form groups to help each other. They only need a reason to have a group and they will form one. It, therefore, becomes easier for them when it comes to forming groups to access finances,” said Kitula.

Kisumu-based Nyamasaria Widows and Orphans is one such a group. After losing their husbands, the women formed the group to help them socially and economically.

The outfit has turned to be one of the biggest cook stove makers in the country, producing over 5,500 units a month.

According to secretary Herme Okonjo, the women through the group have benefitted from micro-loans in the past and have gone ahead to form their own savings scheme, where members can borrow loans.

“We do not have men in our group but this is not because we have locked them out, none has come to ask to join. We will accommodate them if they come,” she said.

Valarie Mwikali, a leader of a group belonging to Kenya Women Holding in the capital Nairobi, acknowledged that women are the biggest beneficiaries of micro-loans.

“Women are reaping from microfinance institutions because of their innate power to form and work in groups. As a member of a group, one must make contributions and attend meetings every week, a thing most men find hard to do,” said Mwikali.

George Otieno, a credit officer who works with a micro-finance in Western Kenya, blames culture on exclusion of men from micro- loans.

“Most men believe in standing alone to show their masculinity. Some will form groups and fail to attend meeting thus killing them. With microfinance institutions, you cannot take a loan without being in groups,” said Otieno, who added most men consider micro- finance institutions as a “women’s affair”.

According to the Central Bank of Kenya (CBK), microfinance institutions play a crucial role in enhancing financial inclusion, particularly at the grassroots.

Kenya has over 52 microfinance organizations, with a good number of them taking deposits from members. The institutions have grown from less than five in early 2000.

The increase in number of institutions has helped improve access to financial services in the sector, from 2 percent in 2006 to over 10 percent currently, according to Microfinance Information Exchange, a U.S. organization.

CBK notes that microfinance institutions in the East African nation as at 2012 had mobilized over 1 million deposit accounts valued at more than 100 million dollars.

A majority of microfinance institutions in Kenya charge interest rates of between 1.8 percent and 2.5 percent a month.

Others, on the other hand, charge 0.5 percent a week. Kitula further noted that another thing that has made women stand out in getting micro-loans, besides being in groups, is their will to repay.

“Most women will not take loans that they believe they cannot repay. A woman will take a loan of 116 dollars, repay and take another as she builds her business. She will not go for a loan of, let’s say, 1,162, which she knows may burden her,” he said.

“GVEP guarantees loans for groups that it works with, many of them belonging to women and they do not default in repaying money borrowed,” he added.

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