Mother of Kenyan Microcredit Expands into Health Insurance, Housing for Poor

Wednesday, October 17, 2007

She feels all the work she’s done in her life has been preparation for what she is doing now: giving hope to the thousands of poor people living in slums around the Kenyan capital, Nairobi. But Ingrid Munro says it’s the most important job she’s ever held in her life, though it isn’t exactly an easy job, as it entails convincing the desperately poor that there is a way out of the poverty trap.

“They don’t believe in tomorrow; to them everything is now,” says Ms. Munro, originally from Sweden, in an interview in Ottawa last week.

Nine years ago, she had just retired from a United Nations agency based in Nairobi, where she had an opportunity to work with a group of women beggars, mostly in the Kenyan capital. Together with these women, she started a small microcredit finance scheme, which has since grown tremendously. The scheme is known as Jamii Bora, which means “good families” in the Kiswahili language widely spoken in Kenya.

Her inspiration? Muhammad Yunus, the Bangladeshi Nobel laureate who pioneered microcredit finance in his country. She met him in the mid-1980s while she was still working with the UN. In the late 1980s, she invited him to Nairobi to give a talk and took him on a tour of a Nairobi slum.

As in many developing countries, there are many institutions in Kenya that offer microcredit loans, but none have been as successful in reaching the poor as Jamii Bora. The reason is simply because no institution wants to take the risk of offering loans to the poorest of the poor. From a handful of members when it started nine years ago, today Jamii Bora has more than 170,000 members with 72 branches all over the country.

Here’s how it works. Jamii Bora gives small loans, about $20 (US), to slum dwellers willing to invest this money in small enterprises. It may be a kiosk or a market fish stall. Borrowers repay this money in small amounts. Once they complete paying off the loan, they are eligible for more.

News about the loans spreads very quickly in the slums through word of mouth. And the loans are changing lives. Take, for example, the story of Joyce Wairimu. A victim of politically instigated violence, she was forced out of her town and sought shelter in a church. She later took the one step that transformed her life from being helpless to being an entrepreneur. Ms. Wairimu is an example of what Ms. Munro calls a fast climber, borrowers who have the business acumen that propels them to new heights. Today, she says, Ms. Wairimu has six small-scale businesses and employs 62 people.

For some loan recipients, success takes a long time. Ms. Munro says such people tend to have a physical disability and can’t see beyond their handicap most of the time. For example, it took six years to convince one lady, who had lost an eye, to get off the streets and do something worthwhile.

“She was so focused on the one eye she didn’t have that she forgot she had another eye,” says Ms. Munro.

The lady is currently employed as a counsellor with Jamii Bora.

Jamii Bora’s growth is also a result of shrewd management, which involves a holistic understanding of the issues and challenges the poor face in their day-to-day lives. The ability to convince borrowers to pay back their loans is tied to understanding these issues, and often it requires finding a solution to these challenges. Six years ago, Ms. Munro found that a lot of people were falling behind in their loan payments. She and her workers visited every family that had a loan to find out what the problem was. It turned out that 93 per cent of the borrowers had a family member who was sick and every penny was being used for buying medication. And that’s a good enough reason for not paying, Ms. Munro says. Unhealthy families can’t work and won’t be able to pay back their loans.

“You can’t expect a mother to let her child die because she has to pay her loan to Jamii Bora.”

A health insurance plan was thought of immediately. But when the idea was pitched to the insurance companies, none were interested. The job fell on Jamii Bora to come up with an affordable plan. Now members who subscribe to it have a cushion to fall on when they or their family get sick. Today, Jamii Bora has partnerships with 41 hospitals throughout Kenya for treating the poor.

In her quest to improve the lives of Kenya’s poor, there’s no stopping for Ms. Munro. Now Jamii Bora has started a housing scheme and has to date bought land and built 2,000 homes, complete with shopping centres. These homes will house an estimated 10,000 to 14,000 people in eight neighbourhoods south of Nairobi.

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Source: Embassy Canada (link opens in a new window)