The Miracle of Kaputei — Starfish Decentralization at Work

Seven years ago, Wilson Naima was a homeless, glue sniffing young thief, using knives and sometimes guns to extort the poorest of the poor in Kibera to earn his next meal or rush. As he slept beside the rusting tin shacks piled on top of each other, he sometimes rolled in human excrement that covers the paths and nooks of this wretched slum in Kenya.

Next month Wilson will move into a brand new clean home, built by the poor, for the poor in the Kaputei project north of Nairobi. The project has outside equity and debt capital, but every concrete block and roof tile will be paid for by Wilson who now owns four businesses. Wilson got a lift from Jamii Bora, a local microlending group that first loaned to Wilson back in 2000 when they first got started.

Now Jamii Bora is a well-managed, high growth microlending group headquartered in Nairobi. At the global Microlending Summit in Halifax Nova Scotia earlier this year, Nobel Laureate Dr. Muhammad Yunus proclaimed, “Jamii Bora defines Microlending 2.0. They are showing the entire industry the way forward.”

It all started in 1999 when 50 homeless beggar women asked Ingrid Munro, a former Swedish model and UN housing director who was trying to retire, to help them. After 40 years in the development sector, Ingrid was ready to take a long break, but the women told her they would probably die if she did not help them. She heeded the call.

The group those 50 women started with Ingrid has now grown to 130,000 members, with more than 700,000 family members served, using just drops of capital and no government aid. The secret to the success has been Ingrid’s “catalyst” style leadership which has helped unleash the take charge, entrepreneurial spirit of the poor themselves. They, after all, are now the ones running every one of the 26 bank branches, filling all of the other management roles, and running the various related projects and businesses, including the Kaputei Project.

Microlending is a decentralized starfish activity where the poor manage their own credit risk by saving and borrowing in circles of five people each, who all guarantee each other’s loans. This decentralization of the credit risk not only makes the microlending work, but with real and regular loan repayments, it also teaches the borrowers the responsibility of tight business and financial management.

When Jamii Bora first loans to a poor borrower like Wilson, the first loan is usually to provide $70 or less of capital for funding a new business. Once that business grows, and the loans are repaid on schedule, more capital becomes available. Given Wilson’s business success, he was able to take an increasing series of loans finally leading to four businesses.

The next step for many families is to then finance their children’s educations, the second most frequent use of loan capital.

Having steady income from better micro-businesses, and getting better education for poor students in slums where there are only enough public schools for 20% of the students, improves quality of life, but it only goes so far. For when you still live and walk in a slum with a density of more than 200,000 people per square mile with almost no toilets or sewers, you still live in smelly and unhealthy conditions. An average lifespan of 37 in Kibera attests to the challenges of staying alive in one of the worst slums in the world.

Traditional microlending can help the poor crawl up the rungs of a ladder from being homeless, to having some income, to renting a tin shack, to having some education, to getting some medicines. All of these rungs are important, but they do not fulfill the greatest need of the poor—clean and safe housing.

The Kaputei project is a breakthrough. After analyzing slums like Kibera and Mathare, Jamii Bora decided they could not rebuild or reengineer the current massive slums. It would be easier, instead, to build entirely new communities, and maybe someday cities.

So Jamii Bora bought 300 acres in the open Masai plains north of Nairobi. Then they had their members work together to come up with a housing unit and community design, including schools, a market place, social center, places of worship, an industrial park and even a series of wetland ponds for sustainable water sewage processing.

After three years of arduous lawsuits by various parties trying to block the poor, the project finally received the go-ahead from the Supreme Court of Kenya in July of this year.

Already, the first 246 houses in the first of 10 communities have been built. And Wilson’s dream home is near completion. The house is done, but the wetlands area for water processing, donated by a local businessman with environmental interests, must first be completed so that the local waters are protected.

So Wilson, sometime in October, will move into his new home. A home in a new project, built by the poorest of the poor, for the poor, who once they move inside, will have hiked up a major rung into clean, sustainable middle class living.

You’ve come a long way Wilson. You’ve come a long way Jamii Bora; congratulations on taking the starfish principles to the next level.

Rod has had the opportunity to learn from Jamii Bora firsthand with five visits to the slums and Kaputei since 2002. He has also served on the board of Jamii Bora Africa, Ltd since 2006.

In Kaputei the poor will build 2,500 homes, housing 15,000. Jamii Bora now hopes to start another 10 to 20 such projects, thereby allowing another 250,000 of the poor to purchase and live in their own homes. They are looking for $5 to $10M in funds to make that happen. Believe in Jamii Bora. Believe in miracles.


See photos of the Kaputei development

Learn more about Jamii Bora