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Elias Mbau
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Mrs Rachel Ruto
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Wanjumbi Mwangi
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Investment groups cure for poverty, experts say

Savings, credit and investment oriented self-help groups have widely been billed to be the panacea to financial insecurity and indebtedness especially among the lower and mid-level earners. They are touted as the cure to poverty by enhancing savings and investments. Yet, many that are formed get wound up without achieving their goals.

According to an economist, former Maragua MP Elias Mbau, self-help groups link members to microfinance institutions. FILE PHOTO | NMG

Savings, credit and investment oriented self-help groups have widely been billed to be the panacea to financial insecurity and indebtedness especially among the lower and mid-level earners. They are touted as the cure to poverty by enhancing savings and investments. Yet, many that are formed get wound up without achieving their goals.According to an economist, former Maragua MP Elias Mbau, self-help groups link members to microfinance institutions.“Members who can’t raise capital to start their businesses are enabled by these groups,” he says.He says the country has not invested effort in educating Kenyans on how self-help groups work and how to make them sustainable.He adds that the government should develop policy guidelines on how to encourage, support and grow such groups.Mr Wanjumbi Mwangi, a personal finance trainer, says such groups need to be designed and managed properly to succeed.“Lack of know-how and experience ihas been the major cause of the break-up of the groups without having achieved their goals,” he says.

Mr Mwangi says government’s involvement in formation of these groups is only by way of charging registration fees but do not follow it up by policy support.“Financial institutions are also to blame since they rarely support these groups by way of advice and guidance,” he says.As a result, those that are lucky to get off the starting blocks become nothing more than an avenue for taxes for the government and customers for banking institutions.Deputy President William Ruto’s wife, Mrs Rachel Ruto who has been very active in bringing women together to found table banking groups says a lot has to be done to make self-help groups work.“We should, as a nation, encourage a culture of strength in united savings. We should be concerned that many of such groups do not succeed and ask ourselves what is wrong with the whole concept. It is only by way of insisting on group savings among the poor that we can start the journey of building them economically,” she says.She says the concept of group savings is widely known and embraced in the country but there is a major shortcoming in terms of structures due to a lack of knowledge, guidance and strengthening programmes from both the government and the private sector, adding that, without this, no meaningful achievement will be realised.

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