The Mavuno saving system relies on members’ initiative and ability to practice farming as a business.

A group of small-scale farmers from Mali travelled to Kenya early this year to study the Mavuno saving system, which was launched in Kenya in the year 2007 by Swisscontact, a development organisation from Switzerland; within few months, 89 Mavuno saving groups had been founded in Mali, with a total of 2,089 members. Next year, a delegation from Burkina Faso will come to Nairobi to gather more information about Mavuno. What are the characteristics of this Mavuno saving system that is attracting even small-scale-farmers and people running small businesses from West Africa?

“The primary purpose of a Mavuno group is to provide simple savings and loan facilities for a community with limited access to formal financial services”, explains Helen Masinde, the Mavuno project manager at Swisscontact. The functioning and success of the savings and credit system is based on three pillars:

- The strong relationship within the group members; a typical group has between 15 and 30 members.

- The strict rules, regulations and the accurate and transparent record keeping that is laid down in the group constitution.

- The power of the membership assembly, guided by the core values of transparency, respect, accountability and integrity.

How the Mavuno system work

Each group has to undergo training and operate under an elaborated constitution, tailored more or less on a model constitution offered by Swisscontact. This constitution describes the policies and procedures on membership criteria, savings amounts and frequency, interests to be charged, meetings etc. This constitution is binding and has to be signed by all group members.

Let’s explain how the Mavuno system works with an example of Beehive Mavuno Group. The group has 20 members. They have successfully completed training and have a constitution.

Leadership: The group elects a committee with a chairman, secretary, and treasurer, together with two so-called money counters. Unlike the conventional groups such as savings groups (merry-go rounds) or even farmers’ groups, the Mavuno system committee members have reduced power. The real power rests with the members: All transactions are carried out at meetings in front of all members of the group to ensure transparency and accountability. That means that no group leader can misuse the group for their own benefit, the committee cannot decide secretly about group issues. Even more, Swisscontact warns: “Members who hold public offices and who are perceived by the group members to have undue influence are not given committee positions.”

Meetings: The Mavuno groups can meet weekly, fortnightly or even monthly. The Beehive Mavuno Group meets every two weeks. All members must be present in every meeting. According to the Beehive constitution, members who are late for meetings or are absent without apology, have to into the group’s Social Fund.

Contribution: The groups themselves decide what the monthly contribution to the Loan Fund should be; KSh 100, 200, 500 or 1,000. This amount will be kept for the entire Mavuno-cycle, typically 12 months. Most groups, in order to simplify their activities, choose to have a uniform contribution. The Beehive members agree on monthly KSh 500.

Lending out: At the first official meeting, the 20 Beehive group members pay KSh 500, the total KSh 10,000 is recorded in the Loan Fund. Five members ask for a loan of KSh 2,000 each. This is recorded. They have to pay back the loan within one month, together with an interest rate of 10 %. As the Loan Fund grows, members may opt to increase the loan term to no more than three months during the first cycle (12 months). In general, to avoid the risk of defaulting, individual members are not allowed to borrow more than 5 times the amount of their savings. Even if a member can pay back the loan within three months, he has to pay the constant monthly contribution to the Loan Fund.

Social Fund: All groups need to establish a Social Fund for the purpose of emergency assistance, funeral contributions, and group training expenses or for tea at the meetings. The Social Fund is recorded separately from the Savings and Loan Fund. The group decides what to do with this Social Fund. The Beehive Mavuno Group has a regular, fixed contribution to the Social Fund of KSh100.

Time frame:  The cycle of savings and lending is time bound and all loans must be repaid by the last day of the cycle (12 months). At the end of a cycle, the group has the following options:

• Sharing out only the interest earned and continuing to accumulate their savings into the next cycle;

• Sharing out all the interest plus a portion of their savings;

• Sharing out all of the interest and all of their savings, beginning the next cycle from scratch;

• Disbanding the group altogether.

Mavuno groups in Kenya

In Kenya, there are 678 Mavuno saving groups with a total of 14,960 members. In Uganda, 102 groups with 1,650 members, in Tanzania 30 groups with 650 members. Since the start of the Mavuno Saving Groups in Kenya, they have accumulated savings worth KSh16.4 million, and handed out loans worth KSh 84.07 million.

Training is paramount

Members of a Mavuno saving group have to undergo training. The basic Mavuno curriculum is a six-day, two to three-hour training with the following modules:

• Self-screening and group member selection

• Group formation and leadership

• Group Fund Development: Groups learn how they can build their own fund, and why they should charge interest on their own money

• Importance of a constitution

• Record keeping

• Entrepreneurship: Group members need to assess their entrepreneurship potential as individuals. This module teaches the groups on how they can come up with business ideas so that they can borrow money from the group and invest.

How to apply;

Swisscontact does not give any financial capital, but brings farmers or small-business people in contact with trained Community Based Trainers (CBTs). The groups have to pay the trainer an amount that is collected and paid after 6 or 12 months. Farmers and small-business people, willing to form a Mavuno saving group, apply in writing to:

The Organic Farmer, P.O Box 14352 00800 Nairobi, info@organickenya.org, SMS 0715 916 136 or call 0717 55 1129, 0735 390 715. TOF will collect the applications and hand them over to Swisscontact who will connect the groups to the nearest CBTs. The next trainings will start in the first quarter of 2012.