Empower women chamaas through financial literacy programmes

Magret Kang'ombe, 49, crushes ballast at a quarry in Kilifi County. [File, Standard]

It is that season again when chamaas, mostly those with women membership, share out their savings to meet January's (some call it 'njaanuary') financial obligations.

In the past decade, I have observed that despite women having far more financial obligations than men, few of them are banked, take investment risks, and apply for large loan amounts.

Low levels of education, income and limited access to cheaper credit have been associated with the exclusion. To survive the challenges, women form chamaa groups in order to access affordable financial services.

But even, with their pool of savings, most groups do not have access to finance and credit services, particularly from banks. This may mainly be attributed to lending conditions such as collateral for the loan. A good number of women may not be able to provide collateral due to their limited savings.

They resort to borrowing from digital lenders. This type of finance may be expensive and is inadequate to cater to all their needs. Other challenges faced include slow progress in growth as they largely spend their savings at the end of every year. Then there is the issue of bad faith and mistrust in informal savings groups.

However, progress has been made, albeit slowly. Most banks have developed women-specific products or have value additions such as lower account opening fees and operating balances that are targeted at women to drive them into opening bank accounts. But even with these efforts, the growth rate is still under 50 per cent.

Women have been recognised for thrift saving and seen as potential for group savings accounts. With these developments, some banks have developed a women’s group exclusive product, where savers make deposits and request loans through mobile technology. I am not overlooking these efforts but the bank's focus has mainly been on driving financial inclusion and accumulating deposits while creating convenience and transparency, leaving out savers' financial health. 

With the recent year’s events, notably the impact Covid-19 had on the women population particularly those in informal economies and the pre-existing inequality, it will be beneficial for banks to rethink the needs of the women segment while championing Sustainable Development Goal five (5) on Equality through affirmative action.

Various institutions, particularly some State corporations under the national treasury and select microfinance institutions have shifted focus to financial health through their financial literacy and savings education efforts to have women in control of their finances. Financial health encompasses proper financial management, the ability to earn additional income, the amount one puts aside for retirement, and funds saved for the proverbial ‘rainy day’. Understanding these aspects comes with financial stability.

With that said, effort must also come from savings groups. It is important for women savers to have a self-regulated constitution that governs the behaviour and contributions of individual members.

Many groups have been faced with challenges among them slow progress in growth  largely because they distribute all their savings periodically amongst themselves. Through financial literacy, banks may be able to identify the unique challenges faced by women groups and address them accordingly.

The impact of offering financial health and wellness to groups cannot be underestimated as it translates to financial freedom and empowerment. It is this empowerment that is significant to the bank’s impact on society.

Being exposed to financial wellness reduces the vulnerability of households and businesses. Hopefully, we will see more banks engage in financial literacy efforts and savings' groups shift from Merry-Go-Round arrangements to Micro, Small and Medium enterprises.