Little wonder that poverty and inequalities have become global concerns.
Poverty can be generally defined as the inability to attain a certain predetermined minimum level of consumption at which basic needs of a society or country are assumed to be satisfied.
The core concept of this general definition of poverty is the fact that to be poor is defined by access to basic goods and services like food, shelter, healthcare and education.
65% of Kenyans
The food concept in this definition goes beyond just food passé but also includes clean water and sanitation services. Given this definition it is not surprising at all that in Kenya poverty is mainly a rural phenomena while urban poverty is mainly concentrated in slums and other informal dwellings.
About 65 % of Kenyans live in the rural areas deriving their livelihoods mainly from agriculture.
However over the years the subsistence agriculture sector has continued to suffer declining productivity. The declining agricultural production for small scale farmers has to a large extent been caused by erratic rainfall since most of the subsistence agricultural productivity in Kenya is rain fed.
ENHANCE PRODUCTIVITY
However, on the other hand even when the rural areas receive a reasonable amount of rainfall peasant farmers who form majority of farmers still have to content with low yields and food insecurity due to lack of proper or non utilization of farm inputs to enhance productivity and also lack of proper storage and preservation of farm produce.
Low agricultural production has serious implication on welfare not only in terms of food insecurity but also in terms of lost incomes thereby leading to inability to afford social services like health care and education.
The effect of this decline has been lost incomes, food insecurity and widespread poverty.
The poor constitute slightly more than half the population of Kenya, and three quarters of these poor population lives in the rural areas. Women constitute the majority of the poor and also the absolute majority of Kenyans.
Most poor people have very little money, so managing well whatever they have is a matter of considerable importance to them. The most pressing money management problem for the poor is building large lump sums of money out of small, irregular and fluctuating incomes.
The poor are faced with the following three expenditure needs which require large sums of money than is available in their purse; these include; Life Cycle needs – Such as births, deaths, marriages, and education etc, Emergencies like floods, cyclones, fires, divorce and Opportunities, that is starting or running a business, acquiring productive assets etc
Converting Savings into lump sums
This is achieved in the following ways;
Savings up – Savings are accumulated in some safe place until they have grown into a usefully large sum.
Savings down – The poor are lucky enough to have somebody give them an advance against future savings. Grameen modeled microfinance institutions offer such a service and do it at a lower cost and with greater reliability.
Savings through – Savings are made on a continuous and regular basis and a matching lump sum is made at some point in time. The services offered by Insurance companies whereby premiums are paid later is an example and Merry – go- rounds is also another example.
How the Poor should save
We look at how the poor save in three sectors:
The Informal Sector
Savings at home
“Home banks” is where you find a place to keep accumulating your savings as time moves. Many at times home banks get raided quickly despite the ingenious ways in which people curb the temptation to spend home savings.
Savings clubs
Groups of people who save together (but not jointly) monitor each other’s savings discipline. They control the disadvantages and risks inherent in other forms of home savings, particularly the problem of maintaining regular deposits.
Money guards
As the name suggests money guards guard money for you. This is usually for free, though of course money guards have the use of the money while it is with them.
Deposit collectors
They charge a fee for what money guards and savings club managers do. They are, however, meant to do it for a fee. Rotating Savings and Credit Associations
These are also known as Merry – go – rounds. A group of people wishing to build up a lump sum from regular savings agree to save a set sum per person at a set interval. On each occasion (weekly, monthly or any other occasion) the full amount of all deposits is given to one member. The meetings continue until everyone has received the prize.
Money lenders
These are the people who lend money in a systematic way as a financial service, rather than as part of normal social life, lending out the money generates extra money.
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