Honestly, I shouldn’t be writing this. Or maybe I should update my personal “Africa” blog immediately after I finish this post – I’ve updated my family once since I got here a month and a half ago. But I’ve been very busy!
One of those things I’m working on is the website, which is currently “under construction.” We talked to a professional firm about it, but their base price was around $300 (USD). When weighing minimum-$300 against maximum-free (me), there was an overwhelming consensus amongst our distinguished staff. So I hope everyone is excited to see the finished product, I’ve been putting a lot of work into it and should be done in about 2 weeks.
What I wanted to post about today, however, is another project I’ve been working on: the micro-savings program. One of the ways that Lisha Mtoto plans on raising funds in the future is through the collected interest on micro-savings loans. We currently have a collection of about a dozen individuals who will be contributing to a micro-savings fund on a bi-weekly basis (200 KSH, or about $2.50). Micro-savings, or in some cases known as a “merry-go-round,” works by collecting small amounts of money from all members on a regular schedule and pooling it together. Then, when enough money has been collected, loans are given out to the individuals who have been contributing to the program. It is known as a merry-go-round because in some systems the loans are given out 1 by 1 until everyone in the group has gotten a turn. Then the cycle is restarted.
In most western societies, this wouldn’t be a necessary or a particularly worthwhile venture because the numbers are too small. But in the less developed world, credit is much more difficult to come by. For those who followed the intricacies of the recent financial crisis, one of the largest problems associated with the “credit crunch” was the inability of small businesses to cover the investments necessary to buy inventory. Most small businesses live and breathe on the credit necessary to buy their inventories, it’s no different in Africa.
In many cases, this means resorting to very high interest rates from loan sharks (known as shylocks in Kenya). These morally corrupt “banks” offer loans at rates as high as 10% per day, often taking advantage of uneducated borrowers who don’t understand the contracts that they’re signing. A micro-savings program provides a legitimate alternative option, allowing individuals to take out relatively low interest loans for whatever it is that they need. They are a particularly attractive option because many studies have shown exceptionally low default rates because the members of the group all know each other; there is both a contractual obligation to pay the loan back and an obligation to the other members of the group (who may very well tell your mother, or give you dirty looks at the market).
So on the one hand we’re arranging this service for locals who have a bit more money to spend (but still benefit from loans that are relatively small, hence the “micro”), but the kids are benefiting as well. The pool of money for loans is always increasing because of monthly contributions, but in our system the interest paid goes to the kids. This is slightly different than most programs, where the interest is paid back into the pool. That means that the pool will grow less quickly and loans won’t be as large, at least initially, but the members are very supportive of the program. International support is important, but Kenyans helping Kenyans is a pivotal piece of the puzzle as well.
So everyone wins. It’s great for the members (which will cap at 20, keeping the “social capital” incentive for paying back loans intact) because they are able to pay for things that are too expensive to normally afford up-front. Whether that be inventory for a business, a funeral, or a new plow for the farm. It’s also great for Lisha Mtoto and the kids because they’re raising non-restricted funds for the organization. Non-restricted means that they were raised with no strings attached, they can be spent on anything the kids need. These are crucially important for any non-profit, most grants and funds raised are attached to very specific programs and can’t be used for general needs. We hope that as the program grows, this program can provide a fair amount of money to help fill the gaps. It will, we hope, be an integral part of Lisha Mtoto’s growth and success in the future.
Africa is one giant dichotomy. Or at least that’s my current impression after living here for the last month and a half. I’m an International Development student, meaning that I’ve studied the developing world almost to the point of nausea over the last year. Tribal tensions, rising food prices, government corruption, massive urban migrations and the resultant overcrowding, I’ve read a hundred different opinions on how to deal with all of these issues. But to actually see what I’ve studied in living, breathing form is a different experience entirely. And what I’ve decided is that all the books and opinions fail to convey how wide the gap actually is between the developing and the developed within a few blocks of a city.
Example 1: upon leaving the airport, you drive down a road populated by minibuses flying by at top speed, Range Rovers with tinted windows to hide their (presumably) white and safari bound clients, motorcyclists driving in the median strip and between lanes…and then you’ll notice that your driver almost just ran over a man pulling a cart piled high with furniture, vegetables, clothes, or, my personal favorite, chickens. The chickens are part of another dichotomy, leading to
Example 2: Nairobi is the capital city of Kenya, and the city center does its best to look the part with its busy streets and tall buildings and men and women in 3 piece suits. But get outside the city center and there are the goats, grazing on whatever they can find. Chickens and roosters wander freely (I have my own personal rooster alarm clock….we wake up at 6am), and dog packs stroll through the streets. Talking about the city layout brings me to
Example 3: Kibera, one of the largest slums in Africa (where Lisha Mtoto is serving), is surrounded by neighborhoods with lovely new homes and highschools that look like college campuses. Right on the edge of the slum are modern apartments, built for the UN employees. Go down the hill just a little ways and you’ll pass a golf course, the gorgeous Safari Club Hotel, and manicured city parks. It is remarkably strange to stand on a hill in Kibera and look out across row after row of mud shacks and see in the distance modern apartments and the city skyline. The disparities here are stark. And it seems like most of Nairobi feels that if they don’t look in the general direction of Kibera, that takes care of the problem. As long as the slum keeps its problems to itself there’s no reason to try and change anything.
Overcoming that kind of indifference is a huge challenge. But for a child born and raised in a place like Kibera, the trick will be not only to get the outside world to notice them, but to show them how to take advantage of the outside world. After all, if you’ve never left the slum, how are you supposed to understand what a better life would even look like, or know how to get there? It’s about giving them the opportunity to choose to do whatever they want to do. Which, after all, is the underlying idea of development in the first place, right? To get rid of the invisible barriers that divide Kibera from downtown Nairobi, or the man with his cart of chickens from the guy driving the Range Rover.
My 6am rooster, however, definitely has to go.