Newsletter Archives
News Update
David, our Coast Coconut Farms manager reported today that "Kofi Annan managed to get Raila and President Kibaki to sit down yesterday and today there were pictures of them smiling and shaking hands. We hope this is the beginning of the healing process for the country."
Also the parliament put in a member of the opposition party as the speaker, so that did ease some of the pressure coming from the opposition party since they now have a stronger voice in the parliament and they now have a significant majority of the seats.
Read the following letter from Yehu Microfinance Trust CEO, Adet N. Kachi, for insight into the political situation in Kenya.
Dear Elisabeth,
Yehu Microfinance Trust has been receiving many inquiries regarding the post general elections political instability in Kenya. We are all grateful for your concern and will try and fill you in here.
Kenya went through a general election for local government, Parliamentary and Presidential representatives on 27th December 2007.
The mood in the country was generally for change against the incumbent government. The stakes seemed however to be very high with the presidential elections, with very close contest between President Mwai Kibaki and his former ally, turned political foe, Mr. Raila Odinga.
Early results showed that Mr. Raila Odinga was going to win, albeit with a relatively small margin. However, the sitting President, according to the Electoral Commission of Kenya (ECK) closed down the margin and was later to be announced the winner. He was duly sworn in for his second and last term in a hurriedly swearing ceremony at the state house.
The opposition has raised credible issues citing irregularities in the tallying of the presidential votes especially in the strongholds of the president.
It is against this background that protests from the supporters of the opposition leader, Hon. Raila Odinga have led to loss of human life (estimated at 500 going by the government figures) and loss of property valued at millions of Kenya shillings especially in the western city, Kisumu (rural home of the opposition leader) and parts of the Rift Valley in a city called Rift Valley.
The Impact of the Political Violence in Coast Province, Mombasa.
Yehu Microfinance Trust has all its activities in Coast Province with its headquarters at the coastal city of Mombasa.
The political skirmishes did not spare the region and especially in urban centers where protesters who were mainly hooligans went about destroying property and especially small businesses that lacked appropriate security. The Mombasa city itself was hardly affected because of the continuous presence of security personnel. The violence tended to concentrate in high-density residential areas where the low-income people dwell.
Further, the violence in this area became discriminative, targeting largely one community, the Kikuyu where the President hails from. This community also happens to be relatively more enterprising in business terms across the country and hence has dominated the business sector.
The biggest impact of the violence has been on the tourist industry and Mombasa and the coastal strip in general being the lifeline of the industry has suffered major losses. Already it is estimated that 20,000 direct jobs have been lost due to cutting short of holidays and cancellations by the tourists. If nothing changes, it is estimated that the figure will rise to 120,000 by the end of March 2008.
Impact of the Violence on Yehu Microfinance Trust Activities.
We are glad to state that none of our staff members was physically injured by the skirmishes.
However, our peri-urban clients in our two branches of Likoni and Kisauni where the violence was strongly felt suffered disruption of their businesses, their goods being lost through looting and in some instances complete damage of their business premises.
As a result, a number of our upcountry clients have relocated to their ancestral homes for fear of attacks, others have temporarily relocated to the neighboring country, Tanzania and quite a number have not been able to re-open their businesses for one reason or the other.
We are still gathering more information to establish the exact degree of impact on our activities but our preliminary estimate is about 10 per cent of our clients in these two branches may not be able to run their businesses assuming restoration of peace soon, without special financial assistance in terms of additional capital injection and write-off of previous outstanding loans. This percentage in monetary terms translates to about USD 17,600.
The downward trend of the tourist industry in the region is of great concern as it does directly affect a significant number of micro-enterprise activities dependent on this sector.
Way Forward.
The current political stalemate has not been resolved in spite of the attempted international mediation between the two parties by the Africa Union Chairman and Ghana President, Mr. John Kufuor. The former UN General Secretary, Mr. Kofi Annan, assisted by Graca Machel (Wife to Nelson Mandela, former South Africa President) and Benjamin Mkapa (Former Tanzanian President, a neighboring country) have been mandated by the international community to facilitate mediation between the two leaders so as to reach a compromised political solution.
In the meantime, the opposition has called for peaceful demonstrations to protest the results so as to pressurize the Kibaki government to step down because they do not trust the judiciary system in being partial without the undue influence of the government in dealing with the matter in dispute. The government on its side takes the position that it is only the courts that can determine whether the presidential results were flawed and therefore call for re-elections and are therefore using the police to counter any demonstrations by the opposition and its supporters.
We have taken the "wait and see" predisposition at the moment pending the kick-starting of the international mediation and the proceedings in the parliament. It is our firm belief that with the opening of the Parliament and the pressure from international community and especially USA and European Union that the impasse shall be resolved.
The last two weeks have experienced calmness in the region and our center activities are going on though attendance has gone down to an average of about 60 to 70 per cent. All should be well if this calmness remains in the next couple of weeks.
We may call upon our supporters to make further sacrifices in supporting the programme once the situation is clearer. Meanwhile, we still want to go by the well spelt out financial plan and the budget proposals for the year 2008.
We sincerely appreciate your concern and prayers during this very trying moment.
Adet N. Kachi.
Chief Executive Officer
CEO's Corner
Yehu Bank, serving the marginalized poor.
Yehu Bank has carved for itself a narrow niche of the lower end market segment of largely women entrepreneurs.
We provide the opportunity to improve lives through responsive sustainable financial services to our valued market segment.
Located at the Coastal region of Kenya (East Africa), this intervention through Yehu bank since inception has benefited 13,440 women through microloans ranging between USD $71 to USD $2,100, cumulatively loan disbursements amount to USD $2.2 MM.
We are committed to mainstreaming the socio-economically marginalized with a bias to women through sustainable micro enterprises as well as creation of self-employment opportunities.
In this regard, other than the diversified business loans and savings products, we are introducing a friendly school fees loan product for our loyal current client base of about 9,300 of whom 95 per cent are women. Plans are also under way for a housing loan scheme to enhance the living shelter conditions of our predominantly rural clients.
There have been many challenges for me in particular as the CEO of Yehu bank for the last 8 months. But the results have been exciting; from watching the build up of assets, to seeing increased household income, improved health outcomes, more children being sent to school, as well as the enthusiasm, excitement and the total commitment of especially the women in the program.
Year-End Update
Dec 2006
Click here to download the PDF version of the update.
CEO Newsletter
Dec 2006
THE FOUR MONTHS EXPERIENCE AT YEHU MICROFINANCE
The last four months at YEHU Microfinance have largely been a period of learning and discovery.
The gap in the rural population for financial services was re-affirmed and strongly legitimizes the need for YEHU Microfinance.
From the external environment, the most promising activity was the passing of the microfinance bill by parliament and is awaiting the President’s assent to become law.
Internally within the institution a number of discoveries were made which I feel are worth sharing and will consume the remaining portion of this article.
Leadership and corporate governance
The board has maintained a strong focus on delivery of services to the poor in the rural areas with a bias to the women.
However, all the downstream tiers of the institution commencing from the second level of management had not embraced a clear mission with supportive core values to have a focused result oriented organization.
The microfinance lending model
The group lending methodology designed alongside the grameen bank model is suitable particularly to the women as it emulates the traditional “merry go round” model.
Its refinement in terms of checks and balances could add value to the programme.
Information management systems and financial controls
A recent installation (about 1 year) of generic microfinance software - loan performer was a long overdue investment.
While the usage has not quite permeated across all the tiers of the institution its capacity and capability to generate accurate timely information throughout the organization in a timely manner for responsive management decision making is invaluable.
Financial systems may have been the critical Achilles’ heel of the institution.
The hitherto manual information system coupled with the inadequate financial control systems show that past reported performance indicators may not have been accurate and reliable.
For instance the repayment rate for the organization as at November 2006 was 60% with a delinquency rate of 40%. The latter is attributed to lack of provisional policy, a conventional prudent practice in the microfinance industry.
The gist of the matter is the apparent relative dismal performance is largely owing to the introduction of systems and adequate controls that have resulted to accurate information.
The previous numbers reported may have been more impressive but not necessarily accurate owing to the limitation cited.
The need for automated information systems as well as adequate financial controls cannot therefore be overemphasized.
The CEO has spent much part of his time so far in streamlining this area.
The emphasis has been to enhance the capability of management to harness and use technology so as to mitigate the risks of fraud and degeneration of the portfolio as well as improvement of service delivery and timely corrective action whenever problems emerge. I can confidently report that the initial results are positive.
Institutional capacity
Both the “hardware” and “software” components require capacitation with the urgent need for the latter.
The CEO is embarking on the development of a skilled second- tier management through mentoring and coaching as well as the inculcation of sound values and ethics we strongly believe are critical for an institution like this one about to experience rapid growth.
The ultimate goal is decentralization of decision making process with adequate controls. It’s my considered opinion premised on experience with other MFIs that a strong system of human resource management is essential and staff learning, growth and development needs shall be given priority in the immediate couple of months.
It is against the foregoing that management appreciates the recent training on lean thinking offered by two senior staff members of US Synthetic and graced by Louis Pope and Troy Holmberg.
The training was revolutionary to the mindset of the participants in the contexts of efficient processes and procedures as driven by the imperative of customer satisfaction.
The possible outcome for the training could be summarized as below:
- Positive attitude to change for continuous improvement
- Customer focused processes and procedures
- Result-based performance
- Favorable disposition to capacitation
- Empowered staff
Short term goals
The CEO is committed to radical turnaround of the organization
There was consensus at the end of the training among participants who were inclusive from the perspective of stake holders to attain the following goals within a period of 6- 12 months:
- Repayment rate of 95% from current 60%
- Operational cost ratio of 30% from the current 64%
- Financial self sufficiency of 80% from the current 55%
- Loan processing time of about 7 days from the current 3 weeks.
The strategic steps to achieve the above short term goals include:
- Capacitating of downstream bank workers and clients within 3 months
- Adaptation of visual management across all tiers of the institution within 2 months
- Cutting down of current loan processes and procedures by half within 6 months through the employment of lean thinking techniques.
We believe that the support of the board and other partners shall remain enthusiastic at this critical moment.
I would wish to reiterate my commitment and dedication to the realization of the vision of nurturing Yehu Microfinance into a responsive, effective and sustainable MFI of first choice among the low income rural poor entrepreneurs in Kenya through enhanced accessibility to sustainable financial services.
This is driven by my personal belief that poverty tackling is not just an urgent economic or development imperative. Rather it is more fundamental and compelling as a basic human right.
Poverty has exhibited itself among all people through systematic discrimination particularly as faced with women who have not been able to access education, healthcare, food and shelter, high mortality rate at birth, contraction of HIV/AIDS etc
I would wish to quote the former UN Secretary General (United Nations, 1993) within this context, the dehumanizing phenomenon brought about by poverty.
“Deprivation is a multi dimensional concept, in the sphere of economic deprivation manifests itself as poverty, in politics marginalization, in social relations as discrimination, in culture as rootlesseness, in ecology as vulnerability. The different forms of deprivation reinforce one another. Often the same household, the same region, the same country is the victim of all these forms of deprivation. We must attack deprivation in all its forms. None of the dimensions of deprivation however can be tackled unless we address the problem of poverty and unemployment”
I consider it a great privilege to be in a position through the microfinance intervention at YEHU Bank to add marginal value to the thousands of suffering members of the human race.
Speaking from the Heart
W. Darryl Fry, Dec 2006
It is with great expectations and feeling of joy that my wife, Gwenn, and I join the Yehu Bank Board of Directors and simultaneously throw ourselves into the great cause Yehu represents.
We are business people who have, with lots of helping hands, built a business over the past 26 years. The business has exceeded our expectations, and as we consider stepping back from the day to day activities, it was clear that retirement held no interest for us. Changing our focus from business success to something closer to the heart only seemed appropriate.
Ten years ago, I heard Dr. Woodworth speak on micro-finance as a tool and a methodology to lift the poorest of the poor out of poverty. At the time, I tucked the concept away in my mind for retrieval when the time was right. Seven years went by before I could pull the idea out and take a measured look at the micro-finance movement.
We contacted Todd Manwaring, the head of the Center for Economic Self Reliance, and attended several conferences at Brigham Young University. We became a supporter of the center.
We discovered that if one wants to step away from something they love, like a 26 year old business that is wholesome and good and full of people that you love, you first need a place for which you can feel equally passionate. For us, it has been the micro-finance movement and more specifically Yehu Bank.
Why Yehu Bank?
- We have developed a great respect for Louis Pope and Troy Holmberg and know their hearts and we trust them.
- As a financial supporter of an NGO, you want to know that your contributions will be well used and it will go to the people. Yehu delivers in this area extremely well.
- Coming from a business background, we wanted our financial support to make the biggest impact. It is doing so with the poor people of rural Kenya, via Yehu Bank.
- When you feel your heart yearn to do more and when tears come to your eyes as you talk about the plight of the rural poor in Kenya and what Yehu means to them, then you know your direction is right.
- When you realize that Louis Pope and Troy Holmberg have bootstrapped the development of Yehu Bank from startup to assisting over 8,000 of the poorest of the poor in Kenya, you want to cheer them on and join in the effort.
For those and other very personal reasons that revolve around a desire to move from success to significance and share the blessings of success with others, we are committed to the Yehu cause.
We have hosted several “Evenings with a Purpose”, in which we shared with our circle of friends the Yehu cause, and in the process invited them to:
- Invest in the Kenya poor via Yehu
- Evaluate their circle of friends and hold their own “Evening with a Purpose” in their home
- To join with us in a wonderful trip to Kenya in July of 2007 to see our investment at work in the lives of the rural poor of Kenya.
Out of two evenings and because of the generosity of our dear friends, along with matching funds, we have been able to raise $ 79,580 in Yehu funds. One couple has already held their successful “Evening with a Purpose” and four more individuals have committed to duplicating an “Evening with a Purpose” with their circle of friends.
Is there a limit to what Yehu Bank can accomplish? No! No limit. Limits are placed in our minds because we cannot see the vision. Reaching 100,000 people in the next three years is within the possible. Having Yehu Bank be financially independent and self-sustaining is within the possible. What a wonderful cause in which to lose one’s self.
I invite all who read this to search their hearts and their will to say, “What can I do?” “Have I done all that I can do?” “Is Yehu Bank a cause in which I can lose myself?”