Emmanuel Nyakwana Ongwae | April 26, 2021
When Esther Nyang’ara hears her phone beep and sees it’s a mobile money transfer, she smiles. She recently received about $30 US from her village savings and loan group, which was formed just a year ago. Every week, each group member sends about $1 US to the group treasurer—transferring the funds by mobile money. On the last day of the month, 10 group remembers receive their loan. This is a happy day. By using mobile money transfers, the group can support each other through the challenges of COVID-19 without having to meet face-to-face.
It’s early morning and Esther Nyang’ara is busy weeding her maize field and listening to music from a local radio station on her mobile phone. A text message beeps abruptly, interrupting the sweet music. Mrs. Nyang’ara quickly checks the message and smiles because it’s from a mobile money transfer service provider. She has received 3,000 Kenyan Shillings (about $28 US) from a village savings group of which she is a member.
She says: “What a day for me! … I will use this money to buy top dressing fertilizer for my maize. This is not easy to do during this period of coronavirus disease.”
Mrs. Nyang’ara hails from Chitago village in western Kenya’s Nyamira county. She belongs to a 50-member village savings group in her area, and the cash she received today is from the group’s savings.
She explains, “Every week, each member of our group saves 150 Kenyan Shillings (about $1.38 US). We send this money to our treasurer via mobile money transfer.”
The group created a constitution to guide them in managing their savings. The constitution helps the group deal with group members whose actions are contrary to the bylaws.
Luka Motari is the chairman of the village savings group, called Mwa Boto Farmers Self Help Group. The group is registered with the country’s Department of Social Services.
Mr. Motari says that every member sends a weekly savings contribution to the treasurer on Saturdays by 6 o’clock in the evening. The treasurer records this after receiving a text message alert.
Mr. Motari adds: “Every month, ten members are given 3,000 Kenyan Shillings (about $28 US) each from our village savings group. We use this money to help members with farming activities. I am happy that every member is obedient and compliant with the group’s rules that guide our operations.”
According to Mr. Motari, the last day of each month is a day of smiles for 10 members of the group because they receive money from the treasurer.
He says that the village saving program has helped the farmers for more than one year, since the outbreak of COVID-19 in the country. He adds, “COVID-19 caused many problems in the lives of farmers such as lockdowns, increased costs of farm inputs, and lack of markets for agricultural commodities.”
The challenges and impacts of COVID-19 on farming forced the farmers to think about forming the village savings group. Mr. Motari explains: “We thought of how we could help ourselves with the little cash we get from our farms to sustain our farming. We decided to pool funds so that this can help a fraction of us at a time. The arrangement is that 50 members help ten others to receive money that can help them buy seedlings, pay labour, or buy any other inputs.”
Mr. Motari adds that sending and receiving money through mobile phones has helped members meet face-to-face less often and avoid spreading the disease, in line with the government’s COVID-19 restrictions.
Patrick Mayo is a financial consultant in Nakuru. He says that most village savings and loans groups have been struggling because of the shocks of COVID-19 and advises that, for such groups to survive, they need to increase their membership and include members who have alternative ways of earning income.
Mr. Mayo explains, “If the savings groups include people that have alternative incomes other than farming, they will succeed in moving into the uncertain future.” Mrs. Nyang’ara says that starting a village savings group in her area has helped her continue maize farming, the main source of her income. She explains, “I project that my two-acre maize farm will give me a good harvest and I will sell part of the produce to pay school fees for my four children.”
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Photo: Adompoka Felicia Abanne in her irrigated fields in Ghana, 2016. Credit: Bill & Melinda Gates Foundation