by Mutiso Mbithi(MyGov)
Judy Kitheka from Nguni in Kitui North dropped out of Form Three, got married, sired three children and immersed herself in a life of poverty until a unique Government and donor funded project came into her life.
The project, dubbed Programme for Rural Outreach Financial Options and Technologies (PROFIT) started off by giving this poor lady Kshs 1,500 for six months through M-pesa to buy food and chicken, and another Kshs 10,000 to buy goats.
Ms Kitheka is now a proud owner of 20 goats and several machines to bake cakes and owns shares totaling Kshs 68,900 in a loans and savings group.
Beneficiaries of the PROFIT programme testified that over 6,320 people who used to belong to the ultra poor bracket across 789 households can afford two meals per day, 794 households have savings above Shs 6,500.
Those who have benefitted from the PROFIT windfall added that another 996 households can access medical services through the National Hospital Insurance Fund (NHIF while 52 savings and loan groups accumulated Shs 15 million revolving funds for share out.
Another group of 748 households have benefited from enterprise set up, financial education, value chain addition , personal and family coaching trainings.
Speaking during the “graduation ceremony” for the ultra poor to financial prosperity in Kyuso, Mwingi North, it emerged that the 996 households who have acquitted themselves from extreme poverty to financial prosperity have an asset value worth Sh 61million which ballooned from a seed capital of Sh34 million invested which was extended to them by PROFIT.
Mr Patrick Makau, another villager was on the verge of giving up and indulging in alcohol abuse until PROFIT came knocking. Now Mr Makau is a proud owner of a retail shop and several boda bodas courtesy of the PROFIT programme which has delivered hundreds of his peers from abject poverty to financial security.
Another success story is Ms Wanza Nguku, a 43-year old mother of 5, whose life changed to the worst after her husband died. She was forced to leave her matrimonial home over succession issues and went back to her parents’ place in Tseikuru with her five offspring and nothing to eat or start life with. However, her life changed for the better after she got enlisted in PROFIT, was given a start-up capital of Shs 24,000 to start a vegetable selling venture.
Ms Wanza’s business has now grown and she has diversified into the sale of cereals after saving Shs 59,000 in the loan and savings project which has gone ahead to give her another loan of Kshs 100,000 to educate her hitherto desperate children.
But what is PROFIT? When the Kenya government in collaboration with the International Fund for Agricultural Development (IFAD) mooted the programme for the Rural Outreach of Financial Innovations and Technologies (PROFIT) in 2011, little did its authors know that it will turn around the lives of over a half a million Kenyans who hitherto used to live in extreme poverty besides subsisting on less than a dollar per day.
PROFIT, which kicked off with an initial combined capital of shs 8.5 billion from the government , IFAD and Commercial banks, has reached over 385,000 small holder farmers in Kenya through the provision of a conditional grant to engage in specific activities like small holder irrigation activities, starting of small kiosks, livestock keeping and poultry farming.
According to the PROFIT programme coordinator Mr. John Kabutha, beneficiaries of the prograame are identified by locational chiefs from the ultra,extreme poor bracket, trained, mentored, coached and monitored for a given period until they acquit themselves from the vicious cycle of poverty.
Mr. Kabutha who was speaking to MyGov at Kyuso Stadium in Mwingi North, Kitui County during the “graduation ceremony” of 996 households who have left the bracket of extreme poverty into financial prosperity courtesy of the PROFIT project said the project which is domiciled at the National Treasury has extended a soft line of credit to four Micro finance Institutions , the Kenya Women Finance Trust, Faulu Bank, Rafiki Micro Finance and SMEP totaling shs 600 million to enable rural poor acquire technical support to develop strategies and products aligned and responsive to small holder farmers.
“We did this after discovering that micro finance institutions operate very closely with their clients and have the potential to extend their rural outreach but have got challenges of mobilizing resources”.
This unique concept, Mr. Kabutha added, has helped extend credit facilities, financial services and loans to small holder farmers and business people from the financial institutions.
The Programme Coordinator added that in order to enable the extreme poor to break even and remain healthy and productive after getting support from PROFIT, “ we enroll them with the National Hospital Insurance Fund(NHIF) and pay monthly rates for them for eighteen months, supply beneficiaries each with a mobile phone through which we which we send him/her money through MPESA for six months at a monthly rate of shs 1500 besides giving them mentors from our programme to monitor how they are progressing “
Mr. Kabutha added that after this vulnerable group of Kenyans is identified and assisted to improve their lot, PROFIT puts them together through saving groups where they save their incomes for a rainy day.
“For instance, in Mwingi sub county which is arid and semi arid, we have mobilized over 1000 youth and women plus another 1600 women in Samburu county who have saved over Sh 20 million from the funds extended to them from PROFIT”, Kabutha told MYGov.
PROFIT, Mr. Kabutha said also links its beneficiaries to financial institutions and banks to enhance their capacity to borrow and meet their immediate household needs.
Mr Kabutha revealed that before PROFIT entered into these vulnerable people’s lives, virtually all htem were food insecure but are now very food secure.
Mr. Kabutha said the PROFIT programme chose to capacity build their beneficiaries through dairy farming, horticulture, livestock rearing growing and sale of cereals.
The programme, the coordinator added, has a risk sharing facility through which it helps and provides a partial credit guarantee facility to incentivize commercial banks to lend their own money to farmers and small scale business men who have graduated from extreme poverty to middle level income bracket.
This facility, Mr. Kabutha says, entails the signing of a programme between the banks and PROFIT which covers the risk should the banks encounter loses after lending their money to the agricultural sector “We assign banks technical support in order to develop strategies for lending to agriculture and and delivery models that will help them to reach smaller farmers”, said the coordinator.
To actualize this concept, PROFIT is partnering with the Agricultural Finance Corporation (AFC) and Barclays Bank.
This system of working through Barclays and AFC, Kabutha adds, we have discovered is more efficient and prudent because the two institutions are able to reach small holder farmers while going through Small and Medium Enterprises (SMEs) as long as a particular SME has a particular business model.
PROFIT, Kabutha added lends to SMEs to reach smallholder farmers. For instance AFCCON, an SME, uses the “whole sale concept” which lends money to Saccos which in turn lends small amounts to individual members who are small holder famers.
To strengthen this business concept, Kabutha says, PROFIT has hired business support consultants to train SMEs to make their businesses inclusive by focusing on small holder famers.
These consultants, the coordinator added are also training 55 financial institutions, the AFC and 44 saccos to develop strategies and products to support small holder farmers in order to align products with savings and more responsive to the needs and circumstances of farmers.
PROFIT also trains and builds the capacity of famers in terms of the productivity , access to finance and markets.
“So far, we have trained 25,000 farmers and 300 SMEs in various parts of the country. We also have a programme management concept which ensures that resources are efficiently managed for the benefit of the beneficiaries”, said the project coordinator.
The PROFIT programme which ends in June this year, Mr. Kabutha adds targets two thematic areas of the BIG FOUR AGENDA- food security and manufacturing through value addition by SMEs by creating jobs for farmers and at the value addition stage.
“The graduation ceremony at Kyuso in Kitui North was sponsored by CARE International which was attended by the Kitui Deputy Governor Dr Wathe Nzau, the Director of Financial and Sectoral Affairs in the National Treasury Mr Christopher Oisebe and national government officials led by Kyuso Deputy County Commissioner Mr Mwachaunga Chaunga