The Noble Fight: Eradicating Poverty in our Midst

Table Banking Services

Solidarity House CBO, an organization involved in fighting poverty in rural Kenya, works with groups registered with the Ministry of Gender, Children and Social Development as self-help groups or community-based organizations. We train these groups in the management of their funds (and those loaned to them from external sources) in a table setting, hence the name -“Table Banking”. Here, group members have access to funds without having to unnecessarily worry about the often strict loaning requirements imposed by most commercial banks, especially the requirement that they put up collateral for loans. The group is the overall guarantor for all external funds given to members through the group, but members are required to guarantee one another at the individual level. Practically, members contribute money as savings and borrow immediately. They are entitled to borrowing based on the amount of shares saved. All this is done openly on the table, and, conceptually, the revolving money is not saved in a commercial bank but goes with members who are expected to repay with a 10% interest within a month. The 10% interest is shared as follows: 7% goes to the group as dividends, 2% becomes the borrower’s additional shares and 1% is set aside for training and record keeping. Due to the duration of repayment, the loan is called “short term loan”. It accounts for twice the number of shares of the member seeking loan while “long term loan,” payable in more than one month, is thrice the number of shares. Unlike most microcredit institutions or commercial banks, this particular program distinctively underlines a ‘win-win’ character in its service delivery—that is, the program benefits all parties, not just microcredit institutions and banks.

Solidarity House CBO works with the poorest segment of the society; the vulnerable and the marginalized who often exhibit a considerable degree of illiteracy. As such, one of the greatest challenges of the organization involves building the capacity of its clients so that they apply the concept of Table Banking properly, thereby achieving the economic empowerment objective. But statistics still show that the level of education of a vast majority of members of these groups remains comparatively low in relation to others in the society. Apparently, most of the group members are women.

The Community Bank

Upon training more than 20 groups over a period of 7 months, Solidarity House CBO successfully led the groups toward the formation of a community bank in 2010, which is the fourth of its kind in the country. Approving the formation of the bank, the Ministry of State for Planning, National Development and Vision 2030, through its Poverty Eradication Commission, noted:

The Commission is impressed at the stage you have reached towards the formation of the district board…

Although the government believes in the power of the community bank in fighting poverty, no funds were available to this bank upon being approved. This led the directors of the bank to request Solidarity House CBO, which continues to train and provide technical support to the program and serves as the bank’s Financial Intermediary, to undertake fundraising on behalf of the bank in its Minutes of the Board Meeting held on April 6, 2010.