Burning Bush Inc. has expanded its outreach in central Kenya to include microlending initiatives and has put a process in place to ensure that all microlending projects are properly organized. A group begins by meeting together for a period of at least six months to discuss an opportunity and determine if there is support for moving forward. Each member contributes the equivalent of one dollar at each meeting. When sufficient funds are accumulated, a member of the cooperative can borrow money for a specific use, or the group can vote to acquire items in bulk for members to divide among themselves.
Members continue to meet once a month. The group then applies to the Ministry of Cultural Affairs for registration. Once registered, the group sends a proposal to BBI requesting funding, which BBI wires to the cooperative’s checking account. Any loans to members of the cooperative are repaid over time, usually at an interest rate of 10 percent. The startup money is never returned to BBI, and there are no strings attached by BBI for its use.
The first group was formed in 2007 by 28 women, who each received a cash loan of Kshs5000 (about $69) and a water tank. News of the group spread through the community, and four other groups of women requested funding for their projects. Burning Bush sent funds so that each of the women in those groups could also receive a loan of Kshs5000. Two of those groups dissolved the next year, after paying off their loans.
Today more than 260 women in the area are participating in microlending groups. Most new participants have joined existing groups, rather than start a new group. The maximum size of any group is 60 members, and when a group reaches that size, it is usually split into two subgroups so that operations can be managed more effectively. At present, the two largest groups have 58 and 57 members, respectively.
After receiving and repaying initial loans of Kshs5000, some women have gone on to borrow larger sums. The most that has been lent to one individual is Kshs50,000 (about $685). Others have borrowed anywhere from Kshs8,000 (about $110) to Kshs20,000 (about $275). The capital for the loans comes from Burning Bush’s initial grants, plus money the women are required to set aside to guarantee each other’s loans. In addition, the women are charged a fee of about one percent of the loan, as insurance in the event of a member’s death, and these funds are added to the pool of money available for loans.
Since there has been such a demand for loans to cover school fees, Njeri Kaburu, BBI’s microlending administrator, reports that they have decided to use the money Burning Bush allocated for secondary students as a revolving fund to provide short-term loans for school tuition. She says, “So far we have God at work in the lives of th[ese] women through th[ese] loans and I keep asking myself what the greatest achievement in this work is, and I think that there are more children going on to high school and staying in school [be]cause their parents can afford to take loans to pay their fees. And this is great step for us here, and in future, poverty will be reduced as th[ese] young people find better jobs.”
