Mengo NAIROBI (Xinhua) --
For the last five years,
Caroline Akoth had been a member of a table banking
group that comprises of 12 small-scale business
The group members were meeting twice
a month and contributed 500 (5 U.S. dollars) each
They would then take loans based on their
Akoth, a resident of Kitengela south of Nairobi,
had borrowed from the group several times to expand
However, three months ago, Akoth, 47, withdrew
from the group and asked to be given her 700 dollars
"I felt I did not need to continue being a member
of the group because I was borrowing more regularly
from the digital apps than from the group," she said
Six other members of the once vibrant table
banking group have also quit, with the outfit
staring at dissolution thanks to digital loans.
The saving groups, which have been very popular
in Kenya for years and are credited for uplifting
people financially, are facing disruption from
With many people readily accessing loans from the
close to 100 digital apps in Kenya, being a member
of a saving groups is no longer appealing to
"I was in the group so that I can access loans
since I could not get from banks or micro-finance
but now the loans are on my phone. Why should I
continue to contribute every month for me to access
money?" posed Grace Mutuku, who runs a vegetable
store in Nairobi.
Mutuku noted that from an app by a bank, she
borrows up to 300 dollars at a click of a button,
money that it would take members of their group to
meet for her to get.
While the disruption caused by the apps in the
Kenya’s banking sector has been documented with the
financial institutions joining the fray to protect
their turfs, the effects of the apps to informal
saving groups is slowly unraveling.
"We disbanded our group and everyone was given
back their shares.
"It had reached a point when members were not
attending meetings or contributing and they would
talk of easy access of loans through the apps in
"It was not feasible to continue," said Simon
Bwire, a motorbike rider in Busia, western Kenya.
Bwire said he will miss the group because it is
through it that he acquired his second motorbike.
In table banking groups, members normally
contribute an agreed sum of money every week,
fortnight or monthly with the purpose of lending it
out at a small interest rate averaging 5 percent to
The practice is called table banking because the
transactions are done at or around a table.
The women congregate, collect and lend out money
at the table.
Besides the table banking, another saving group
popular in Kenya is called merry-go-round, where
members meet weekly or monthly, contribute money and
give to one person until the last one gets before
the cycle starts again.
According to the Kenya Association of Investment
Groups, the saving groups that include table banking
schemes and merry-go-round, controlled up to 200
million shillings in assets in the east African
Bernard Mwaso of Edell IT Solution noted that
digital loans have disrupted the entire financial
sector but unlike banks and saving and credit
cooperative societies (saccos) which have been able
to counter, savings groups are feeling the pinch
because of their informal nature.
"Banks and saccos have started digital apps
ring-fencing their market but table banking groups
are scattered all over and each operate individually
with members setting own rules.
"They cannot fight back," he said.
Mwaso noted many members of savings groups were
small businesspersons, the same market that digital
loans has gone for.
"Digital loans are expensive because they offer
loans at one-off interest of 15 percent but ease in
access of the money is their selling point," said
But even as Kenyans go for the digital loans,
Central Bank of Kenya (CBK) is pushing for their
regulation noting most are exploiting borrowers due
to high interest rates. Over six million Kenyans are
hooked to the loans, according to CBK.
"The pricing of mobile phone-based loans is
outside regulatory control.
The charges are not part of that interest cap
law," said recently Patrick Njoroge, the CBK