World Renew works with local partners, often churches or church groups. Training and facilitation are provided, and sometimes funding for the cost of getting groups started.
Graham Seel, a World Renew volunteer, has been exploring whether VSLA groups can link to other financial institutions to make them even more effective in improving community livelihoods. Not surprisingly, with 30+ years in banking, he feels that banks can really help – if they want to!
Earlier this year, Graham visited WR Kenya and Uganda to take a closer look at a few of the communities in which World Renew is working. In the photo is Graham Seel and the partner team in Kabale, Uganda
An important discovery was made when he and WR Kenya staffer, Chris Shiundu visited two of Kenya’s biggest banks to ask about their services to savings groups.
- Co-operative Bank provides products for savings groups. But their motivation in doing so is to unlock some of the savings tied up in savings groups (called chamas in Kenya). It is thought that nearly half of all savings in Kenya are in chamas, mostly in cash form, rather than in bank accounts. Co-operative Bank want to get at these savings, to give them access to cheap (interest-free) money. They can then lend this money out at high rates of interest to drive up profits. They provide savings group banking products that incent savings groups to bank with them. But these services alone are not enough to really make a difference to the communities banking with them.
- Equity Bank, on the other hand, seems to have a much greater focus on the well-being of the very poor communities served. They provide similar products to Co-operative Bank. But they also create relationships with the communities they are serving. They assign a relationship officer to each community. The relationship officer carries out extensive training, visits the community regularly, and tracks the progress being made in the community.
In a report for World Renew last year, Graham concluded that savings groups should benefit from linkage to banks, but often don’t get the hoped for results. Visiting these two banks really brought home what is perhaps the most important factor: the mission of the bank that groups link to.
Co-operative Bank has as its vision “to be the dominant bank in Kenya and the region, riding on the unique Co-operative Model providing innovative financial solutions for distinctive customer experience.”
Equity Bank’s purpose statement stands in stark contrast to the market dominance and profit goal of Co- operative: “We exist to transform the lives and livelihoods of our people, socially and economically, by availing them modern and inclusive financial services that maximize their opportunities.”
The difference is obvious, and has to do with Equity Bank’s double bottom line. Certainly Equity seeks to make a profit – this is essential so that shareholders continue to invest in the company. But they also have a social purpose that is core to their mission, so they balance profit and impact in a way that a pure for-profit bank will never do.
In all areas, not just savings and banks, we need commercial partners with missions that are well aligned to World Renew and its local church partners. They are few and far between, but they do exist.
May God lead us to them!
Graham Seel is a long-time volunteer with World Renew who brings his 30+ years of financial services experience to the financial inclusion table. He has been a part of the Economic Livelihoods Working Group for several years.