Kenyans Thrive on Loan Program
YOU can measure progress along the dirt paths of a slum here in terms of more shoes, doughnuts, and beds. From a narrow display rack made of sticks, proud Kenyan merchants Julius Gikonyo and his wife, Esther Wanjiru, have started selling dark leather shoes, and brightly colored plastic shoes of red, green, yellow, and blue. A few yards away, the couple is also selling more Mandazi, or doughnuts, than before, in their tiny, two-table cafe.
And on a nearby path, Daniel Ngigi Mungai has expanded his small carpentry business, with new kinds of wood, and greater production of wooden beds.
Using $400 ``peer-pressure'' loans (if you don't repay, your friends have to) these are among the small Kenyan merchants boosting sales and incomes under a program sponsored by the United States Agency for International Development (AID) and the Ford Foundation.
And, unable to get bank loans because they are considered too poor, these borrowers are also showing that the poor can be a good investment. Their loan payback record is better than perfect, because many borrowers are paying off the loans faster than required. When loans are paid off, new profits from the expanded businesses may be small in global terms, but locally they can make a big difference.
``If I can make more profit I can buy land,'' Mr. Gikonyo says, as he and his wife arrange their display of shoes next to the clothing they already were selling. He owns two acres in central Kenya but would like to buy more. He used most of the $400 loan to buy the shoes and the rest to buy a greater stock of flour, boosting sales of doughnuts in the cafe.
His wife has a plan, too, on use of added income: ``I want to buy a sewing machine.'' By doing tailoring work, she could further supplement the couple's income to support three young children.
At his carpentry shop, Mr. Ngigi also plans to buy more land, and perhaps move to the country, escaping the crowded Kibera slum with its culverts of raw sewage, lack of running water, and sparse electricity.
Ngigi's wife, Miniffer Muthoni, wants to expand the inventory in their small, general store, from where their young son, Jimmie, likes to look out through the grill-covered windows.