By Millie Khosla with research by Vivian Msafiri
In Kenya today, women struggle greatly with financial independence. According to the World Bank, two-thirds of the unbanked population are women. This inequality trickles into the social fabric where women lack funding for opportunities and as well as representation. To correct this income inequality within Africa, a grassroots organization called Village Community Banks, or VICOBA, has stepped in with a microfinance model that emphasizes female empowerment.
Specifically, VICOBA offers short-term loans to low-income people so they can use to pursue employment opportunities or domestic stability. These loans, and the VICOBA process strengthens the community by creating a financial system within rural communities that promotes accountability and good governance.
VICOBA in Shinyanga – A Case Study
VICOBA has been particularly successful in the Tanzanian region of Shinyanga, approximately 500 miles from the Kenyan border. This VICOBA group, called the Rising Star Women, have been operating a VICOBA program for more than 8 years. In Shinyanga, the 30 female members meet monthly to take loans from VICOBA with a 10% interest rate. There is no limit to how much a member can borrow, which allows for members to have the financial freedom to purchase resources like food, water, and other essentials. Additionally, participating members pay into an emergency community fund which is used to pay for unforeseen circumstances, such as child delivery or medical costs. To further ensure accountability, three “referees” from the group of 30 are held responsible for the repayment of each loan.
Using this highly structured process, VICOBA has yielded significant results. In the Shinyanga, numerous women have testified that VICOBA brought life-changing financial assistance into their lives. Furthermore, the program’s reach has allowed communities to realize tangible improvements in children’s education, housing, and female leadership skills.
To join, a community must be referred by inside members or have a large party of individuals wanting to join. Once this is in place, sometimes an entrance fee must be paid to join – all of which is put back into VICOBA to benefit its members. The VICOBA branches which require an entrance fee base this price on the financial status of the prospective members – usually around 10,000 Tsh, equivalent to $4.30 – which is detailed in that branch’s constitution. For more information, visit this link: http://kitegacc.org/campaigns/village-community-banking-vicoba/.
The collective impact of VICOBA has been widespread female empowerment and a movement towards female financial independence as more and more women are freed from pressing financial burdens compounded by a lack of access to capital that previously impacted them. VICOBA’s success can be seen in its rapid growth. In five years, membership grew to over 50,000 members, accounting for nearly 30% of rural communities that were underserved by financial institutions. Furthermore, since its inception, VICOBA has been able to collect 30 billion Tanzanian shillings (Equivalent to 1.2 million USD) in a rotating fund for members. VICOBA’s highly organized model has been truly successful in empowering women and poorer communities across Africa and continues to grow today.