blank pixel spacer Kakamega integrated conservation project
Credit provision

Credit facilities have been introduced into the project area to raise both on-farm and off- farm income opportunities for the forest adjacent households. Credit and financial services allow communities to diversify their income opportunities, subsequently easing over-dependence on forest resources. Credit facilities are being provided to the local communities in partnership with the Kenya Rural Enterprise Program (K-REP).

  • The K-REP introduced the Financial Service Association (FSA) or village bank to the community at Shinyalu in Kakamega. It is a shareholding financial enterprise directly linked to a formal financial institution in a commercially sustainable manner. Through it, rural communities have access to a comprehensive range of financial services, including credit (both consumptive and productive loans), saving facility, money transfers, etc. The FSAs become sustainable quickly because they charge a high interest rate. The high interest rate is a reflection of the local money market or rate of return in rural areas.

  • The FSA established a locally accessible, locally owned and managed financial institution. Community members wishing to utilize the services of the FSA have first to become shareholders since the village bank does business only with its own members rather than the general public. Farmers, traders and civil servants among other villagers can access a safe savings facility in case of in-flows of cash crop payments such as tea and coffee, cash transfers, remittances, salaries and pensions, sale of honey and silk moth cocoons and "Naturub". Similarly, the village bank enables the shareholders to obtain loans for micro and small-scale businesses and related investments as well as meeting unforeseen consumption expenses. Subsequently, the members of Shinyalu FSA also benefit from an inexpensive life insurance facility.

Village Bank
The Financial Services Association (FSA, 'Village Bank')
  • Shinyalu FSA had, at the end of December 2001, attracted 346 shareholders (207 men, 89 women and 49 groups) with share equity of $5,013. As at the end December 2001, $19,434 had been mobilized in savings. The total loans given out was $ 11,603. ICIPE's extension workers at the Kakamega Forest collect their salaries through the "Village Bank". The money transfer service has been made possible by the establishment of a linkage between Shinyalu FSA and Kenya Commercial Bank Limited - Kakamega Branch.

Inside FSA Bank
Community members deposit money and access credit from the FSA

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