Nancy Njoki, a mother of four carefully arranges empty water Jerrycans in the order of first come, first served basis, ready to be filled with clean water from her water point in the sprawling Mathare Bondeni area.
A water vendor, Njoki is a member of Muungano wa Bondeni women group, a local saving scheme of women that guarantors loan to small and micro entrepreneurs women in the Mathare informal settlements.
Njoki is among a group of women in the Mathare Bondeni area, some 6 kilometers northeast of Kenya’s capital Nairobi, whose businesses are helping transform lives and drive the local economy.
Unlike majority of women and youths in the informal settlements who are trapped in a vicious cycle of poverty due to lack of access to financial loans to start businesses, Njoki is a beneficiary of Muungano wa Bondeni, a saving scheme that helps women and youths secure loans from Equity bank.
Her three water points businesses set up through loans guaranteed by Muungano wa Bondeni group are supplying clean water to residents, kiosks, schools and dispensaries in an area that is often hard hit by water shortages.
During the pandemic, her water points played a pivotal role in supplementing the government’s efforts in curbing the spread of the novel corona virus pandemic. The water points have been the source of water for sanitization in Mathare Bondeni area.
Majority of businesses in the informal settlements lack financial loans and are often ignored by financial institutions as they lack collaterals or guarantors to help them secure loans for businesses.
The United Nations estimates that nearly 1 billion people live in slums where their survival often depends on the informal economy – activities such as hawking clothes, water, food and other goods on the street that do not fully comply with tax or labour market regulations.
In the informal settlement, lack of documents such as land titles to prove property ownership which are key in securing bank loans have remained a red tape for slum dwellers in securing financial loans yet the informal economy is a fundamental element of accelerating Africa’s long term vision for development.
However, the Muungano wa Bondeni women group is bridging the gap by providing loan guarantors to hundreds of women and youths in Mathare.
“In 2011 we were approached by an Equity bank field officer who advised us to start saving as a group to qualify for personal loans from the bank. We started saving as little as Ksh 100 per week and within a short period of time I took a personal loan which was guaranteed by Muungano wa Bondeni group to set up my first water point business,” says Njoki pointing at one of her three water points.
Njoki says since then she has secured several loans from Equity bank all guaranteed by the saving scheme. “I take loan every year, I started with Ksh 20,000 loans, but now I can borrow as much as Ksh 1 million,” says Njoki.
Njoki says that the gist of the saving scheme is that appraisal and decision on who gets a loan and graduates from one loan cycle to another is determined by the members of the group and not the bank.
Njoki is among a group of women beneficiaries who have secured loans thanks to a partnership with Muungano wa Bondeni saving group and Equity bank’s Pamoja initiative that is enabling women and youth access financial loans to start and expand their businesses.
The Bank in 2007 came up with group lending approach as a viable tool to address the financial needs of the small scale traders and enhance financial inclusion as a key component to fighting poverty through direct job creation especially among Youth and the Women.
The bank says through the approach, they ‘take’ the Bank to the Village, to the market where these members are. This has continued to enhance their confidence in approaching the Bank.
“They self-manage themselves through support of relationships managers in the groups whose membership is through self-selection,” says the bank noting that training is a key component in building cohesion and derisking the members.
The members have access to free pre and post loan disbursement training and mentorship from the bank.
The partnership with the bank is unlocking business potential for thousands of small and medium entrepreneurs in the slum who could not have secured a loan to start or expand their businesses.
Today, thanks to the loans, Njoki is among the leading water suppliers in Mathare, the business earns her enough money to educate her four children and buy households goods without straining too much.
“On a good day I can manage to walk home with Ksh 3000, my prices are relatively cheap at Ksh 5 per 20 liters can compared to my competitors who sell at Ksh 10,” says Njoki.
Though the group’s members have been facing challenges in servicing their loans as a result of the pandemic, Njoki says they have negotiated with the bank to restructure their loan payment arrangements.
“During the pandemic majority of our members had difficulties servicing their loans but they have since renegotiated with Equity bank and arranged for new payment arrangements,” says Njoki.
Today, the group members owns 13 water stations in Mathare, one in every village.