Microfinance group helps Kenyans build a new life

KAPUTEI, Kenya - On the second night in her new house here, Jane Ngoiri told one of her children to get something out of the kitchen.

Then she started laughing.

"I told them, 'It is us talking about a kitchen. A kitchen!' " recalled Ngoiri, a former prostitute who moved with her four children earlier this year from a rented, one-room shanty in the Nairobi slum of Mathare.

"It's unbelievable."

Kaputei represents an audacious leap for both Ngoiri and the Jamii Bora Trust, a Kenyan microfinance organization that began a decade ago lending 50 women beggars money to start their own businesses.

About 22 miles outside of Nairobi, rows of cinder-block houses topped with red tile roofs spread across the plains - the first stage of a new, self-contained town that Jamii Bora hopes will someday be home to 10,000 people, schools, shops and small industry.

Ngoiri paid 350,000 Kenyan shillings -about $4,500 - for her two-bedroom house with a kitchen, toilet and bath. Her mortgage is around $40 a month - not much more, she says, than what she paid to rent the cramped room in Mathare.

To keep costs down, Jamii Bora is manufacturing the building materials on site, providing jobs to its members and others living nearby. Kaputei is also an eco-town of sorts, with houses powered by solar panels and an ambitious plan to recycle 70 percent of the wastewater through man-made wetlands.

"It's really beyond the wildest imagination of what most microfinance organizations are thinking about," said Ed Bland, who heads Seattle-based Unitus, which provides business and technical expertise and helps raise capital for Jamii Bora and other microfinance groups.

"They are taking on things that others just complain about."

In recent years, microfinance - providing credit and other banking services to the world's poor - has boomed as both a poverty-fighting strategy and a business.

A survey by the Microcredit Summit in Washington, D.C., found that from 1997 to 2007 more than 150 million people - two-thirds of them making no more than a few dollars a day - had borrowed money from microfinance organizations like Jamii Bora.

Some lenders that started out as traditional nonprofits have transformed into commercial banks for the poor, attracting financing from private investment funds and entrepreneurs.

And several of the big nonprofits have expanded beyond financial services.
The Grameen Bank in Bangladesh, the pioneer of microfinance founded by Nobel Peace Prize winner Muhammad Yunus, has dozens of spinoff ventures - some nonprofit, some for-profit. Those include a large cell phone company, interests in solar energy and fisheries, and even a joint venture to produce yogurt. BRAC, another Bangladesh microlender with 7 million members, runs a host of enterprises from schools to dairies to craft shops.

"Those kind of ventures are still rare but increasing," said Alex Counts, president and CEO of the Grameen Foundation, which advises other microfinance institutions. "A lot of people are looking at microfinance as a platform for social change, for providing a whole range of services to the poor."

Jamii Bora got its start when Ingrid Munro, a Swedish woman with long experience in African housing programs, offered the street beggars she was working with a deal: She would provide them small loans to start businesses like vegetable stalls if they first saved half that amount themselves.

It's now one of Kenya's largest microfinance organizations, with about 230,000 members. Jamii Bora also sells life and disaster insurance and has created a health insurance plan, where members pay about 40 cents per week for care in mission hospitals.

Kaputei, though, is a far more ambitious experiment.

Few other microfinance organizations have ventured into housing development.

Bland, of Unitus, said housing is a riskier enterprise for these groups, in part because many new homeowners will be jumping from taking out small business loans to mortgages worth thousands of dollars.

Some also worry it will be a struggle for Kaputei residents to transplant their businesses or make a living so far from Nairobi.

Jamii Bora said it purchased the land in 2002. But construction wasn't started until late 2007 because of lengthy permit battles, which it claims was partially driven by wealthy landowners nearby. As of June, Jamii Bora said about 700 of the planned 2,000 homes have been built or are under construction.

"As long as you are living in the slums, you will never climb out of poverty," Munro told The Independent, a British newspaper, this spring. "Families, of course, need economic opportunities to rise out of poverty but what good are they if you are still living in hell?"
Most of Kaputei's residents are drawn from the sprawling slums of Nairobi, where it's estimated at least 40 percent of the city's population lives.

Places like Mathare and Kibera are filled with shacks made of corrugated metal and mud, set along narrow pathways. Electricity is often a rare commodity, and residents pay to draw water from communal taps. Some lack access to latrines, relying instead on so-called "flying toilets" - depositing their waste in plastic bags thrown on rooftops or in trash heaps.

Before Ngoiri, a slim woman in her late 30s, talks about her life back in Mathare, she tells her teenage daughter to leave the room.

About 10 years ago, she said, a Jamii Bora organizer came into Mathare to talk to Ngoiri and other prostitutes about other ways to make a living. And she kept coming back to the meetings. Eventually, the group banded together to take out loans to start their own businesses. Some in the group never made it off the streets, and a few wound up dead, she said.

Ngoiri used her small loan to start a business sewing kids' clothes out of secondhand garments. She took out another loan to buy a sewing machine, borrowed more to keep her business growing and hired other women as it expanded.

"In Mathare, I lived with frustration," said Ngoiri. "The government should learn from what's happening here. They just assume we were born poor, we are meant to be poor. We're not that."