How An Extra $220 Changes Lives in Kenya

Margaret Wanjiru, Micro Finance Loan recipient and small business owner.
Margaret Wanjiru, Micro Finance Loan recipient and small business owner.

Catherine Muthoni makes table cloths and beaded bags. For a long time she powered her lights with kerosene. She knew it wasn’t good for her - each hour with the lights on was about as harmful as smoking a packet of cigarettes – but she had no other choice: she couldn’t afford electricity.

Phyllis Wanjiku Kamau began training as a hairdresser but dropped out when her mother became ill with HIV. She’s 28 years old and has three children aged 9, 6 and 1.

Margaret Wanjiru has lived in a tent since the 2007 Kenyan election violence that saw 1,500 people killed and 600,000 displaced. She wants to support her family through bead work and a green grocer business because she says her husband is drunk most of the time. Alcohol is a big problem here. It’s gotten so bad that women have gone from town to town demonstrating against the sale of cheap liquor; in some cases breaking into bars and trashing them.

Australasian charity So They Can has started a micro financing institute (MFI) in Kenya to help people like Catherine, Phyllis and Margaret. Its CEO Cassandra Treadwell says she started the business after becoming concerned at the tactics used by MFIs’ whose bottom line was turning a profit. “They’ll give money to anybody and get them to sign contracts to say ‘If I don’t pay, you can take my house’,” she says. “I don’t like money being lent to poor people who have no capability of repaying it and then they lose the house.”

Catherine Muthoni.

So They Can set up a different model. First, the women need to train at a business school. Over six 4-5-hour sessions, they explore what kind of business is most suited to them and learn about bookkeeping and how to find and retain customers. Then the women can then apply for a loan of 15,000 Kenyan Shillings, about NZD$220, which must be repaid over a year with interest of 16%. The standard bank interest rate is between 18%-35% and loan sharks charge 35% a month. A month! So They Can Micro Finance Officer Susan Kimani says she tried asking the banks for loans for the women to start small business and was turned away because of a lack of collateral.

Once the $220 loan is repaid, it’s loaned to another woman.

Treadwell believes the model – which has a 100% repayment rate - works because they know the women in the community and take the time to put them through the business school. If things go wrong, and at times things do, business mentors step in to help and a new repayment plan is worked out.

The results are great to see. Catherine, who makes tablecloths, used her micro loan to rent a space at the shopping centre and increased her sales. She now has electricity and doesn’t need to use kerosene.

Phyllis used her micro loan to open a hairdressing salon. She’s attracting customers from all over the region and plans to apply for a second-tier loan of 25,000 shillings to buy a specialised chair, hairdryer and straightening irons.

Phyllis Wanjiku Kamau.

Margaret now runs a small green grocer business from her newly built home in the Internally Displaced Persons Camp.

She’s been here three months, after eight years living in a tent and is proud of what she’s achieved. She told me “my husband is a very good drunkard but I don’t care because I have my own business.”

Sam Hayes is travelling courtesy of Trilogy.