Frequently Asked Questions

What is Microfinance?

Microfinance is the extension of small loans to entrepreneurs too poor to qualify for traditional bank loans. It a proven, effective and popular measure in the ongoing struggle against poverty, enabling those without access to lending institutions to borrow at bank rates, and start small business.

How does your MFI work?

Five people form a group and join an existing Yehu centre. The group meets weekly in their village with several other groups and a Yehu worker. Each member contributes a small amount of savings for six months. After successfully saving for six months, a small loan is made to one member of the group. Money is loaned at a market interest rate. Loans are repaid on a weekly basis over a 6-month term.

What is "social collateral?"

Though a loan is made to an individual in the group, the entire group is responsible to repay the loan. The group encourages solidarity among members who effectively co-guarantee each other's loans. Loan amounts are small and the members have incentive to pay them back to be eligible to receive a larger loan.

Is Yehu For-profit or Non-profit?

Yehu is a non-profit organization. While the bank's goal is to make enough money to pay its own operating expenses, no part of that money will be distributed as a return or dividend to any group or individual (e.g., founders, contributors). Any funds not required for operation will be re-invested into Yehu for continued growth and additional programs.

What interest rate do you charge?

Yehu charges interest on its loans according to market rates in Kenya. Most loans currently have a simple interest rate of 20%. The alternative for most rural villagers is to borrow money from loan sharks who may charge 10% per day! Access to a Yehu microcredit loan lets them get out from under the oppressive grip of these loan sharks-if they have any other access at all to credit.

What are the loans used for? What types of businesses?

These micro-loans are typically used to start or expand a small enterprise such as raising goats or chickens; opening small kiosks to sell basic necessities such as soap, eggs, salt and candy; planting and harvesting cash crops such as mangos, cashews, cassava or coconuts; selling kerosene; sewing or fishing. Many of the women are skilled in various handicrafts and sell skirts, mats or woodcarvings. Some women use this money to buy additional inventory; some to buy products in bulk at a better rate; and still others to buy bicycles so they can travel from village to village to sell their goods.

What kinds of repayment rates do microfinance institutions get?

Most microfinance institutions around the world have repayment rates that are incredibly high, around 95% or higher. This attests to the creditworthiness of poor borrowers around the world, despite not having collateral for their loans. For most poor people, a microcredit loan represents someone putting faith in them and it is their chance to make a better life for themselves. Invariably, most microcredit borrowers want to pay back their loans, prove their creditworthiness, and create a good credit history for themselves.

Why do women default on their loans?

In our experience, the majority of those who default on their loans do so because there is a death or illness in the family and medical expenses consume all available cash, leaving nothing left for a repayment. Many of our borrowers are also subsistence farmers who rely upon rainfall to water their crops and when the rains fail to come, crops die and there is no source of income to repay a loan. Rarely does a client default on a loan because they have squandered their resources or because they are trying to defraud the bank.

Is Yehu self-sufficient?

Yehu Microfinance, after 5 years of operation is roughly 60% self-sufficient. We expect to be 100% self-sufficient by mid 2008.

How many loans have you made to date?

As of the end of January 2007 Yehu has made 16,060 loans to rural villagers in Kenya.

What is your operating budget?

Our annual budget is typically around $175,000 USD per year.

How many members do you have?

As of the end of January 2007 Yehu had 8,600 members in 5 branches.

Why do you only help women?

Roughly 80% of our clients are women. In most of the developing world, women are the ones who find a way each day to put food on the table for their family, cloth their children, and provide for the educational and health needs of those children. Typically, in the developing world, the women not only prepare the meals, keep the house clean and get the children off to school, but they spend their day as microentrepreneurs, finding any way they can to make a meager income that will put food on the table and buy the medicine and school uniforms and clothes for their children. The family revolves around the mother and mothers will always do all they can to ensure their children don’t starve to death. Time and again, microfinance institutions have found that women are excellent credit risks and if you want to help children and families, it is through the mother that you can do so.

How many Kenyans are employed by Yehu?

As of January 2007 Yehu employed just over 40 Kenyans.

Why should we help someone overseas when there are poor people in our own backyards?

There are certainly enough poor to go around and there are people in need wherever we may live. However, one of the great benefits of spending dollars in the developing world is the leverage that dollar can get you. A dollar spent in Kenya is multiplied many times over giving you a tremendous “bang for the buck”. Just a few dollars can save a life in Kenya.

How can I help?

Yehu is in constant need of capital to fund new loans to clients and to expand into new areas to serve more clients. The best way to help is to make a donation. You can be a cheerleader for Yehu and talk to friends and associates about microcredit and other poverty interventions. Help us create awareness. Encourage others you know to get involved. Join us on an executive expedition to meet the women in Kenya and let them change your life!

Do you take interns?

Occasionally, Yehu will take interns in Kenya. We are generally looking for people with business, accounting or microfinance experience. Interns typically pay for their own airfare and living expenses while in Kenya and Yehu will provide housing for the duration. Interns typically spend 2-6 months in country at a cost to the intern of $2,500-$3,500 which would include airfare. If you are interested in becoming an intern for Yehu, please contact us and send us your resume with a cover letter expressing your interests.