Moran Savings and Credit Cooperative Organization (SACCO)
This is an extract from an article NRT CEO Mike Harrison wrote for Forbes online
Would You Give A Loan To An Uneducated Young Warrior With An AK-47?
Can start-ups really be the answer to an arms race that has defined and constrained a region for decades?Forget handouts – business incubation is the latest beneficiary of the United States Agency for International Development’s North Kenya support. In 2016, over 200 warriors - most of them illiterate - surrendered their AK-47s to pursue entrepreneurial avenues to peace and profit.
Inhabited largely by semi-nomadic cattle herders, northern Kenya has a history defined by rampant insecurity driven by ethnic rivalries, the ivory trade, cattle theft, and competition for natural resources. Unschooled young men are usually on the front line – charged by their communities to drive cattle for months at a time across the dry season landscape looking for grazing, fed stories about unfinished business with enemy tribes. These young warriors (or ‘morans’) used to be kept in check by their elders, but such traditions are breaking down, they become easy targets for incitement by self-interested politicians, and illegal weapons are easy to come by.
In 2004 this narrative began to change with the birth of the community conservation movement, which I describe in the first article of this series. By their very nature, they are ‘grass-roots’ – organizations created by the people, for the people. Yet, until recently, there wasn’t a dedicated drive to involve the very demographic that instigated - and suffered the most fatalities from - ethnic conflict and regional insecurity. The ‘morans.’
A new initiative has now started to bridge this disconnect between conservancy institutions and the morans, the Moran SACCO (Savings and Credit Cooperative Organisation). Started in 2016, the SACCO received seed funding from the United States Agency for International Development (USAID) and aims to mobilise young men, for the first time, to accrue savings and borrow money for investment in small businesses. The member-driven cooperative uses mobile money to make savings and credit accessible even when the nearest bank is hundreds of miles away, and is helping to create an environment for businesses to thrive in remote conservancies.
The SACCO is designed to create ownership among the morans – both on an individual and community level. This is vital, not least in tackling the ‘hand-out’ mentality incubated over generations by well-meaning NGOs. Indeed, changing cultural attitudes towards business support from aid organisations is one of the SACCO program’s biggest challenges. When expectations of free financial injections are dampened, many of the young men quite literally walk away. Those that join have to pay a 500-shilling membership fee (equivalent to around $5) and are asked to invest in a $10 share capital with a minimum monthly deposit of $3. To govern the SACCO, warriors elect a ‘star moran’ and a ‘superstar moran’ from each of the groups they form. These men must be good leaders and peace ambassadors, and have good business instincts. They are charged with debt collection, overall running of the SACCO, and raising financial awareness among their peers.
The SACCO creates the platform for morans to develop and scale businesses through an attractive loan scheme. After a 6-month membership, the SACCO will loan members three times their savings, with no interest and just a 10% administration fee. This money is an attractive alternative for morans looking to move away from the vicious cycle of conflict; after all, running a business leaves little time, or incentive, for waging war on your neighbours. Members understand that this opportunity only comes as a result of the conservancy they’re a part of, and to sustain this connection conservancies take a 2% levy on the admin fee. The rest is split between the star and superstar morans (3%) and the SACCO (5%).
The first year of the SACCO saw widespread engagement, with over 200 financially illiterate warriors joining the program. Although 90% of the businesses created so far are livestock-related - which is, after all, their entrepreneurial comfort zone, others have diversified into opening small shops, selling phone credit and motorbike fuel.
“There is huge potential here to steer these young men toward socially and environmentally friendly enterprise,” says Ture Boru, Community Director of NRT Trading, the Northern Rangelands Trust’s commercial arm. “This would include incubating businesses around solar technology – solar lamps, charging panels, things like that. Most of these villages have no access to electricity.”
The SACCO provides more than just economic benefits for the region. It is helping to change mindsets and redefine relationships between different ethnic groups. “We have noticed they’ve been quiet for months now. We think they’re too busy with their new businesses to fight,” remarked a Samburu warrior talking about his Turkana neighbors at a recent peace meeting.