Analogue to Digital: Alternative Banking by Kenya's Poor

Kibera sits at the margin of Nairobi, a concentrated sight line of rusted corrugated roofs and bustling heaps of humanity pressed up against the immaculate greens of a private golf club. The subject of much international attention, academic study, art and literature, it remains a microcosm of thriving poverty.

UN-Habitat reports that Kibera is the second largest informal urban settlement in Africa with approximately 500,000 to 700,000 fluctuating residents. However unofficial accounts state numbers swelling well above the million population mark.

In one of the makeshift mud structures, a group of women gathers. Each member takes a turn placing her meagre earnings on a centralized table to be calculated, documented and ultimately lent out to the most in-need of the collective. The recipient is allotted a repayment timeline and beholden to her lenders. Sometimes there is nothing to be put forth. However, when there is, all is recorded.

Inhabitants of the slum call this table banking; a form thereof has likely existed since the advent of commerce. This practice was also the genesis of self-launched Kijiji Cha Upendo (KCU), or village of love, a community-based cooperative registered with the Kenyan Ministry of Gender, Children and Social Services in 2010. Since then, the group has grown, with a 90 percent repayment ratio.

Today the members of KCU are the primary caregivers or providers of 30 different Kibera families, predominantly the mothers or grandmothers of the households. Each operates a micro-business to support their children, typically biological plus 1 to 6 adopted AIDS orphans. UNAIDS estimates that 1.1 million youths were orphaned due to HIV/AIDS in 2011. Together the family's care for more than 100 at-risk children. Guardians also support one another, emotionally and financially by guaranteeing the others' loans. The borrowers must have the backing of five other members to receive funds.

Stepping out of the dark coolness of the one-room hut and into the dusty crowded roadways awash with all manifestations of human survival, it is only a quick sidestep to a cluster of mobile money agents situated in brightly painted stalls. These shacks are where locals can deposit their earned cash before darkness consumes the day. The dollar amount is added to their mobile phones, waiting to be transacted as needed another time. This daily ritual is considered the utmost method of securing money, as carrying large sums in Kibera is an advertisement for robbery by gunpoint. A light complexion is the other billboard.

Kenya has been at the forefront of this alternative banking platform with millions of users and billions of transactions. Due to the explosive growth, the Central Bank of Kenya stated that it "continues to monitor the developments in this sector in line with the Government's policy of enhancing financial inclusion and deepening especially for rural/urban poor and the un-banked."

Obama may have built a bridge over the open river of human waste, but to survive here, a mobile phone is a necessity. Indeed, the women of KCU rely on mobile money purveyors for the daily cash operations of their micro-businesses, electing to employ a form of banking improvisation. Living at the margins excludes one from affording the formal client experience and resulting fees of an established financial institution. The majority of slum dwellers have embraced the fact that they have been left to their own devices, a self-identified segment of society structurally muscled out of Kenya's political economy. And thus, one can see instinctive entrepreneurship and inventiveness at every turn. Such frenzied activities: point of sale, bill payments, borrowing/lending and wage distribution, are all exchanged via cash in-hand and mobile phones. The prevalence of agents in Kibera reveals the ubiquitous use of this service.

Harnessing the critical mass threshold crossed by the mobile money market and coupling it with the micro-capital raising cultural variant known as 'changa', M-Changa was rolled out to the public in late 2012. The SMS-based crowd funding app is a prototype for the industry in evolution. Market observers are watching with keen interest. Already, individuals, micro-charities and similar-sized non-profit groups have been early adopters, foreseeing the advantage of another donation mechanism. The relatively new interface offers users the ability to target domestic donors versus the international donor community, which is typically engaged through online portals, nepotistic relationships or government representatives.

In the daily enterprise of living, the women of KCU have succeeded in etching out a near base-line existence in the slum market. However, surviving at the frontier of humanity and breaking through the poverty wall are two separate life-courses. As this sub-sector expands, the implications for those under-served by conventional means could be far-reaching.

Recently elected president Kenyatta campaigned on change and mobilised the youth vote by appropriating a catch phrase. A populace saying delineates the 'old ways' or outmoded things as being 'analogue', and all things new and good as being 'digital.' With almost 80 percent of Kenyans below age 35, this demographic is clearly in a position to drive policy. Unabashedly the youth of Kenya claim the future as their own. Riding on this optimism, as poverty and digital collide, one hopes the former becomes obsolescent.