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Better Globe Microfinance

Official opening of Better Globe's micro-financing

By Jan-Tore Øvrevik, Director of Development, T4E

On May 2, 2013, Better Globe officially opened its microfinancing program in Sosoma, Kenya. This is a partnership between Better Globe Forestry Ltd. and K-Rep Fedha Services Ltd., which is the largest and most recognized microfinancing company in Kenya. The initiation of this partnership started already in 2010. Guests and the first employees of the project were welcomed to the ceremonial opening day.

Hundreds of families on their way to join the opening ceremony of the microfinance bank.

At its inception, 450 families joined the microfinance1 project. More than 600 families got involved in the project during 2013. Several of those families have already undergone training for how they can save money and lend to their own projects. Financial literacy is also being taught, to help change perceptions on how people can financially survive. The management is assessing the levels of income and is reviewing the product offering to meet the needs of the larger community. An agriculture product (that would enable members acquire irrigation equipment to boost tree production) would go a long way in assisting farmers improve their income levels and encourage them to become outgrowers. However, this will be tailored into the product line when the liquidity position of the FSA bank is better.

In May 2014, the Better Globe-funded FSA bank had 1,130 shareholders and 34 lending groups. The loans have been funded partly through the donated equity from Better Globe Forestry and from share capital mobilized by the members of the bank. The microfinancing bank plans to be self-sufficient after 3-4 years of operation.

The members of our funded FSA bank, take loans to meet their needs and pay them off. For now, most loans that are acquired are used for (domestic) purposes, school fees, and small businesses. With the help of microfinance, children are able to go to school consistently, and members can acquire assets for domestic use like household items.

Though insurance was previously unavailable to impoverished people, members of this bank are finally eligible for insurance. Every member with coverage receives an insurance benefit of ksh20,000 (Kenyan shilling) in the case of death. The members also own the bank and whatever comes out as profit in the end will be used to give the owners better possibilities for growth.

1 Microfinance, is the provision of financial services to low-income people to help them out of poverty. The object is to serve as many poor and near-poor households as possible to have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, payments, and fund transfers. Microfinance institutions and other financial service providers have worked over the past decades to develop products and delivery methods to meet the diverse financial needs of low-income people. For example, unlike other forms of lending, microcredit loans use methodologies such as group lending and liability, pre-loan savings requirements, and the gradually increase in loan sizes to evaluate clients’ credit worthiness. Microfinance providers today continue to improve their understanding of the financial needs of their target clients and tailor their products and methodologies accordingly.
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Opening of the Microfinance bank in Mboti, Sosoma. Jan Vandenabeele, Executive Director of Better Globe Forestry, on the right.
Two of the leaders in Better Globe Forestry's microfinance project.
One of the groups of women using our funded microfinance bank.