Financial inclusion is listed as a target paramount in achieving eight of the seventeen global Sustainable Development Goals (SDGs). However, women have often been left out and are unable to access loans from commercial banks. Table banking is an increasingly popular concept that is helping level the playing field for women unable to meet conditions such as the need for collateral demanded by traditional banks.
What is table banking?
Table Banking is a group based funding system where members of a group make weekly or monthly monetary contributions to form a kitty from which members can borrow. The group holds regular meetings where issues are addressed, fines paid, loans administered and defaulters confronted. In cases where the group gets funding from outside e.g the Women Enterprise Fund and microfinance institutions. Group guarantee comes into play where members act as guarantors to each others’ loan and when one defaults, the rest can’t access finance, which in turn motivates members to keep each other accountable. Table banking is common amongst women but there are exceptions with mixed gender and men’s groups also in existence.
Difference from Chama
Table banking differs from Chama, with the main difference being how money is handled. In Chamas, members also make regular financial contributions, but in every group meeting the money is given to a different member-mainly the host of the meeting, and the model keeps rotating member after member until everyone receives the money. Hence the term merry go round- a Chama is basically a group meant to help members save. Table banking groups, on the other hand, don’t give their contributions to any member but use them to form a kitty where members borrow from.
Chamas are formed for a variety of other reasons apart from saving, among them is to foster camaraderie among friends, strengthen family ties as members of family-based Chamas visit each other and get to know where their kin lives; especially common in cities. Some are formed for welfare purposes – to get support during difficult times, death or sickness.
There has been a recent evolution of some Chamas into table banking groups although locally, members may still refer to them as Chamas as the lines between the two keep on blurring.
Advantages of Table Banking
- The ‘table bank’ is group owned, thus gives members a sense of pride, also, interest earned from loans still goes back to the groups’ kitty.
- Table banking can be used by the poor, with contributions as low as Ksh 50 and no need for collateral, it promotes financial inclusion.
- The close interaction between members fosters an exchange of knowledge and skills in regards to making investments.
- It is a convenient banking option as they are located within communities-easy access and tailored to members needs.
Potential of Table Banking
Table banking is not just for rural women groups with small investments here and there. The working class are in for the ride too. Among the numerous groups in existence, Milele Alliance stands out, in an interview with Daily Nation, the group reveals an investment profile of Ksh 35 million Kenyan shillings. Initially, 10 in number (two have since left) Milele Alliance members started out by each contributing a minimum of Ksh 30,000 a month for eight months. Their first investment was a 1.25-acre plot in Juja and 2 acres in Elementaita, the plots were retained as their value increased. They later bought a residential property in Thika and started renting it out and have since expanded to a car cleaning service in Nairobi.
The biggest example out there of the Table Banking principle at work is Grameen Bank in Bangladesh, founded by Nobel Laureate Professor Mohammed Yunus in 1976 who is hailed as the father of microfinance. Currently, with nearly 8 million borrowers who own 90 percent of the bank, Grameen started out as a slight variation of Table banking with Professor Yunus giving villagers in groups access to a kitty of funds where they were able to get small loans guaranteed by the group. To his amazement the Professor found members’ repayment rate was amazingly high due to social pressure from the group thus he replicated it village after village.
In Kenya, group guarantee enables small groups to access bigger loans from external institutions that willing to work with them e.g Faulu Kenya. Table banking groups are growing in number and strength countrywide. Organizations such as the Joyful Women Organization (JOYWO) currently with 12,000 groups under them, are helping build capacity and strengthen their value proposition through training and providing linkages with other helpful organizations. An initiative surely to boost the status of Table Banking in the country.