On a cloudy Tuesday afternoon at Laini Saba village in Kibera, Mercy Mwangi attends to a customer who has just walked into her garment shop. The woman wants to buy a new dress for her daughter to wear on her tenth birthday. After looking around the small shop, she comes across an orange-and-white pleated dress that delights her.
“I think my daughter would look nice in this,” the customer says. “How much?”
“1,500 shillings,” replies Mercy, stopping her sewing machine. After a small negotiation, they agree on a price and the customer pays for the dress.
As she is about to wrap it in a plastic bag, Mercy receives a call from her friend Charity Mugoiri informing her that “the meeting” is about to start. She completes the sale and hurries off, leaving her shop under the watch of the woman who works next door.
Just six years ago, Mercy was selling sukuma wiki, a type of vegetable that is commonly eaten by the poor in Kenya. But thanks in part to these meetings of women’s micro-credit groups in the slums of Nairobi, she has managed to make the audacious leap to designing and selling her own line of clothes.
“I used to make a profit of about 600 shillings ($7 USD) per month when I was selling sukuma wiki, which was barely enough for my family’s expenses,” she tells me as we head to the meeting, up a flight of stairs to the rented room. “I started my current business from the first 2,000 shillings ($23.50 USD) that I borrowed from the group.”
Mercy belongs to the Blessed Women’s group, an assembly of 13 women who believe they have found a way out of their slum. Kibera represents a side of Kenya not seen in the tourism brochures. Although it is only a 15 minute drive from the city’s center, its living conditions are among the worst on the planet. Poor housing, pollution, disease, unemployment and extreme poverty are just a few of the problems facing the community.
With banking services out of reach for the majority of the people in Kenya, the hundreds of thousands of residents of Nairobi’s informal settlements have difficulty accumulating wealth. Micro-lending groups like Blessed Women offer the much-needed credit required to start or improve a business. Interestingly, the group started as a weekly prayer group meeting, hence the name.
“Sometime before 2006 we started having prayer meetings on a weekly basis at one of the members’ houses. During these meetings, we also discussed issues facing us and we realized poverty was the main problem,” says group member Gladys Wanjiku. “To counter this, we started a merry-go-round where the group would visit [the home of] one member at a time and contribute some money to the host.”
“Our decision to switch to micro-credit amongst ourselves was reached after we attended a workshop on savings and entrepreneurship,” adds the group’s chairwoman Nancy Wanjiku.
The group meets twice a month. During meetings, each member deposits 200 shillings with treasurer Mercy Mureithi. They used to deposit only 50 shillings, but as the members’ financial stability has increased they’ve adjusted it upward.
The money is then consolidated into an account that members are allowed to borrow from, repaying their debts within a month at 10 percent interest. They have two types of loans – a short-term loan allows a member to borrow a maximum of 3,000 shillings and a long-term loan with a ceiling of 5,000 shillings. The interest earned is added to the group’s account to increase their lending capability.
In order to be allowed to borrow, you must have saved with the group for a couple of months. First-time defaulters are required to pay twice the interest amount; defaulting three times will get you expelled. Luckily, that’s never happened so far. At the time of the meeting I attended, a total of 39,500 shillings had been given out as loans. Members are encouraged to borrow more so they can improve their lives.
For instance, Gladys, who has just borrowed 3,200 shillings, says she plans to use the money to buy more stock for her charcoal business. She recently repaid 2,800 she owed to the group. “I am expected to pay back [the loan, plus interest of] 310 shillings,” she says, “which is quite cheap compared to asking a loan from a bank. Banks have a lot of bureaucratic procedures which make it impossible for poor women like me to borrow.”
The group’s vision is to give every member a chance to relocate from the slums, and it seems they’re on course — every woman in the group has started a small business with the money they were able to borrow. In fact, in February of last year the group collectively bought a piece of land in Thika, on the edge of Nairobi, for 250,000 shillings. They are planning to build some houses there as an investment. Right now they are attending workshops on entrepreneurship to get the skills they’ll need to develop the land.
Vincent Achuka is the Editor-in-Chief of the Ghetto Mirror, Nairobi’s most widely read slum-focused newspaper. Click here for more information.