Overview

Smallholder farmers in extreme poverty receive the bulk of their income at harvest, once or twice a year.

• This income is highly volatile due to varied yields and erratic agricultural commodities price; which makes financial planning challenging.
• Formal financial institutions often do not service remote, rural communities due to low return from financial services to extreme poor and high operational cost arising from inaccessibility and economies of scale.
• Money saved on persons or at home is vulnerable to theft, renege, and natural disaster.

Without savings or access to credit, farmers liquidate productive assets (such as livestock) or use informal borrowing to cope with income shocks.

Our Goal

To equip rural communities in Kuria West District with money management skills and access financial services and build income opportunities so that these families can weather economic shocks in a sustainable and scalable way.

Our Big Idea

Provide people living in rural extreme poverty with access to financial literacy trainings and basic financial services as a pathway to semi-formal and formal financial markets.

How Community Economic Development (CED) Works

• We help smallholder farmers to form savings and loan groups so that these framers build the habit of savings.
• Members discuss and approve their Group’s Constitution and decide the minimum amount of savings they will contribute every two weeks.
• They learn the importance of savings through loan and savings management trainings.
• Using the collective funds the group has saved, members apply to the group to receive loans for household activities, school fees, micro income generating activities, and more.
• Group members approve or deny loan applications.
• Members who receive funds repay the loan to the group fund with interest and the income generated through this would retain within the community.
• Group continues to receive training, save, and disburse/receive loans.
• Those who acquire proven entrepreneur and excellent money management skills will graduate to MFIs or Banks.

Our progress

• As of March 2013 CED has helped the formation of 314 Savings and Loan Groups with a total membership of 2100.
• Members are saving a minimum of 200Ksh per month reaching total savings of 1.95Million Ksh in year 2012.
• Groups have loaned their members a total of 1.41Million Ksh in 2012.
• All loans are paid back with 100% loan repayment rate.
• Group loans are mainly used to fill the cash flow gaps of the borrowers, purchase food stock or start micro businesses.
• The loan service gives Nuru farmers the opportunity to get accessible credit with low interest rate.
• Group members received continuous trainings in money management skills including expense tracking; savings verses desire; loan management etc.
• So far each Group members participated in 4 trainings provided in 13 community centers.

Summary

• The CED Program leverages traditional savings groups combined with best practices from the microfinance sector in order to provide cost-effective financial services to community members.
• CED program is giving Nuru farmers a chance to learn money management skills through financial literacy trainings and get accessible and affordable financial service.