Microfinance Consumer Literac

CUTS ARC Nairobi in partnership with the University of California, Berkeley conducted a two day (23rd and 25th April 2012) micro-finance literacy training program in Kibera – the biggest informal settlement in Kenya, under the project titled “Expanding the Realm of Consumer Protection through Education: The Case of Microfinance in Kenya”.

The objective of the training was to help Kenyan borrowers to understand the cost, risk and investment of microfinance borrowing. Though the program targeted microfinance loan holders with small businesses, there was greater interest from individuals with no businesses but who had plans to start one. Over 100 microfinance consumers were trained on their consumer rights and responsibilities, contents of a financial loan agreement, important questions to ask a loan officer before signing a contract and consequences for not paying a loan. The participants were taken through a loan application form and a loan agreement. Key terminologies in the financial loan agreement documents were highlighted and defined.

The need to create more awareness for microfinance consumers with regard to their rights and responsibilities was evident as majority of microfinance credit consumers testified that they have never had the information before and often signed loan agreements whose contents they did not understand. Consumers showed a lot of interest in understanding the fundamentals of interest rates; they were enthusiastic to know how and why interest rates change, why they often fail to get insurance compensations in cases of risk occurrence and other key related micro-finance loan issues.

It is hoped that the training has armed these microfinance borrowers with requisite information that will give them confidence to seek loans and unleash commerce by expanding their small enterprises as each one of them was provided with the training manual and information on where to seek redress including the CUTS Nairobi Consumer Advisory and Complaint Cell.