Jonathan Bellamy spoke with Five Talents UK about their successful model of giving small business loans, rather than aid, to individuals in Kenya, Uganda and Tanzania.

Steve Ellis
Steve Ellis

More than 200 billion worth of aid has been poured into Africa since 1970, while average incomes across large swathes of the continent have either remained the same or fallen. Handouts, no matter how carefully they are distributed, do not always work. Five Talents UK is an initiative trying to address this. Jonathan Bellamy spoke with Steve Ellis, the Stoke-on Trent representative from Five Talents UK, to find out more.

Jon: What is the primary role of Five Talents UK in Africa?

Steve: Aid in itself isn't always the answer. The Five Talents UK way is to provide people with small loans, in order for them to be able to generate some income for themselves to help them to live. We are talking about people whose material circumstances are very difficult. Ten pounds isn't a great deal, is it? In Kenyan money, 10 is worth a lot more and can really do a lot of good in helping people to help themselves and to use their own talents.

Jon: Describe that financial support and investment into these people and how it all works.

Steve: It's a really good system. If you take the model Five Talents UK has in Kenya, groups of people, who usually belong to a church, though it's not exclusively so, they get together and will make small savings week by week. Once they build up a small pot of money, they can come back to the group with a proposal for a loan. That loan will be more than the amount they have saved, probably by five times that much, but that loan will then help them to set up in business.

Five Talents UK, Kenya - Thika - Murera-Sisal - Anne Nyambura
Ndungu (Photo: Adam Dickens Photography)
Five Talents UK, Kenya - Thika - Murera-Sisal - Anne Nyambura Ndungu (Photo: Adam Dickens Photography)

It isn't a handout and the people will repay that loan at a very low rate of interest and then that money is used again to loan to someone else. We call it churning. A whole group of people together and Five Talents facilitates this, in order to set up these saving schemes and monitor the groups who are offered the loans.

Jon: How do you identify who to work with like this?

Steve: First of all, in the wider sense, it's important to have agencies in Kenya, or any country you're working in, who you can trust. We do this mainly through the Anglican Church in Kenya. They monitor this and will set up little groups within churches, in the various diocese.

We go out to areas where there's greatest need. These are rural areas, where people don't have the opportunity to get to banks. These are miles and miles away from the bank and so a savings scheme in their locality is just perfect for them.

The other beauty of it, is it is self-controlling, because the group who run the scheme in this particular area, will elect people who sit on the committee and will make the decision themselves. So they know the people who are coming for loans and equally, the people who have the loans are very unlikely to default because they know other members in the group who would lose out if they stopped repaying the loan.

Five Talents UK, Kenya - Kadakoi - Pokot Tribe - Chepokrop
Lokoulem (Photo: Adam Dickens Photography)
Five Talents UK, Kenya - Kadakoi - Pokot Tribe - Chepokrop Lokoulem (Photo: Adam Dickens Photography)

Jon: Why are we loaning money from the West? Why don't they just go to their local bank, or National bank in Kenya and look for a business loan?

Steve: Good question. Two reasons for that one. As I've just mentioned, in some of these places it is half a day's journey to get to a bank and that is difficult for them. The other thing is, understandably, the commercial rates of interest that banks charge are too high for the sort of people we are talking about. We loan it at rates of interest that are low enough to cover the costs of administering the scheme. Let's be honest, a commercial bank often doesn't want to lend to one person who wants to buy a cow, for example. That is not the sort of scale of business that they're in, so these people are left with little opportunity.

Jon: Is one of the issues that these people have, that they have nothing to put up as collateral for getting a loan?

Steve: Absolutely right, yes. That's why this kind of peer group pressure is important, because there has to be an element of trust.