Village Development Funds In News

VDF Progress Report


This VDF concept was developed as a consequence of discussion with management and program staff of WEMIHS, where they expressed the need to prepare poor people to be healthy, productive, and engaged citizens; believing that well trained, employed, and engaged people possess the power to solve the toughest problems facing communities.

Recognizing that no one sector of society alone has the resources or expertise to effectively address the myriad challenges facing today’s society, WEMIHS intended to constantly mobilize a community of businesses, government departments, and civil society organizations – each committed to developing the power and promise of poor people.

WEMIHS has mobilized, recruited and trained low income individuals in targeted villages. The targets clients are organized in groups of about 25-30 people who are mainly absolute poor women and men in the rural areas. The organization presently serves more than 95 groups.

WEMIHS assisted in fundraising for community development assistance and secured seed capital from Africans in Diapora (AiD) Foundation in the year 2013. The funds so raised were transferred to VDF to support community development initiatives. VDF maintained and managed the funds for the benefit of community groups and deliver financial services directly to the groups. Groups in turn retail credit facilities to individual members.


The goal of VDF is to realize financially independent persons, generating income and contributing to society’s future prosperity.

1.2 Objectives

  1. To increase the communities’ served access to financial services, to pursue entrepreneurship and self-employment interests through financial and technical support.
  2. Appropriate community structures and responsive financial intermediation technology have helped to mobilize and allocate financial resources effectively and efficiently for community benefit.

1.3 Strategy

The VDF is based on an approach that empowers participating communities to actively identify, implement and manage their own service delivery mechanism. This concept is aimed at accessing the poorest members of society with high quality and effective financial and related services that meet their unique needs. It is designed to harness community structures and build upon existing informal accumulating savings and credit association (ASCA) system; enabling participants to establish, own, control and manage their own service intermediary facility.

Its establishment involves organizing the community into appropriate structures from the group level to the district level, mobilizing financial resources, managing finances with least exposure to risk and allocating finances responsibly. Internally financial resources are mobilized from participating community members, through their groups. There are plans to mobilize external financial resources from private sector corporate bodies, individuals and the public sector to boost the kitty and allow many vulnerable communities to participate.

Training on entrepreneurship and managing community organization are standards-based curricula that are employed to reinforce existing knowledge through real world hands-on activities. Participants work individually or in teams to start and run their own small businesses and learn the basics of money management, saving, investing and entrepreneurship.



The following activities were conducted during the period of May 2013 to January 2014.

2.1 Identification and working with financing institution that offer community friendly products and services

During the month of May 2013 WEMIHS met with two FI cooperative banks (K-Rep and Faulu). The funds were initially deposited in a WEMIHS saving account  as modalities on identification for most appropriate finance institute that add value to VDF was sought. Finally WEMIHS settled on K-Rep Bank and an account was opened. The account no. is 01012040037845 and four (4) signatories who continued to appraise and approve cheques upon proposal approvals.2.2 Reviewing and planning with core staff to harmonizeunderstanding of village development fund (VDF) implementation.

A meeting was held with 4 project officers with discussions centered on VDF implementation. They all agreed on integrating the initiative to existing community managed structures established by WEMIHS (eg; GRANI Networks, Sustainable Livelihood Groups and Girls Own Space Project) in order to reduce cost and sustainability.

2.3 Reviewing community groups readiness for VDF

Community friendly self-assessment tool developed by WEMIHS was adopted to help assess readiness and eligibility of the 57 groups in sustainable livelihood program to VDF. The tool will track the following:

  • Group leadership
  • Registration certificate
  • Updated constitution
  • Functioning ASCA
  • Functioning Welfare fund
  • Available bank account
  • Group plans
  • Bank deposit shares


Sustainable Livelihood Report (May, 2013) demonstrated that over 90% of existing groups targeted for VDF had well-functioning credit and saving schemes,  good leadership and constitution and would benefit from funding to boost access to assets.


2.4 Training and supporting of vulnerable community groups on enterprise and linkage to market.

WEMIHs conducted trainings which aimed at improving the community’s capacity and increase their chances to succeed as financial service providers, in order to competently support the low income and marginalized living in rural areas to pursue access to financial services, income generation, entrepreneurship and self-employment interests.

Through its Sustainable livelihood Project WEMIHS had previously trained all the households from the 57 groups on entrepreneurship to empower them to make sound life decisions; for example by starting an income generating business on their own.The training also aimed at assisting the beneficiaries to establish the VDF.

The training adopted an approach that sought to strengthen existing systems among the community groups and analyzed the product specific parameters and applicable conditions, which developed appropriate instruments for recording transactions, tracking loans and providing feedback between community groups and the organization; and advice on good practice quality standards.

The training of group representatives from one network culminated in establishing actual structures for the VDF. The group leaders were the members of the network. Each network elected one representative to the VDF Committee 9 members (4men, 5women). 170 leaders were trained females on village development concept and climate change adaptations strategy.

2.5 Up-dating the district level committee to agree on VDF operations (roles, responsibilities in community financing).

WEMIHS team and District VDF Committee

WEMIHS team and District VDF Committee

VDF concept was repackaged and simplified for the training of VDF committee. The training guide was completed and utilized in training the district level committee on VDF operations (roles and responsibilities and operational tools.

10 VDF committee members were trained and oriented on operational tools, agreed on the constitution and recommended all groups in WEMIHS programs to join the VDF.




2.7 Mobilizing group to access VDF funding using guidelines

171 group leaders from 57 SL groups were oriented on VDF operations at location level. They agreed to generate shares amongst the members and deposit to the KREP bank account. As at September 2013 a total of seventeen (17) groups have deposited Kshs 250,000 at KREP bank.

The VDF committee received a total of 27 applications for loans from the groups which were apprised by the committee based on the guidelines.  However, only 17 groups that had made deposits were able to access a loan of Kshs. 50,000 each from the VDF Kitty which had been boosted to the tune of Kshs. 500,000 through the support of Africans In Diaspora(AID) Foundation. Initial loan repayable in six months with 6% interest rate and a grace period of three months as per MOU signed with groups

2.8 Official launching of the VDF

On 10th December, 2103, the project organized an official launch at Kamahuha location with five groups registered with VDF attending. The groups were:Igakanga, Kiaruigi, Kamahuha Livelihoods, Muhohoyo and they each obtained a cheque of 47.000 each.


Later in the month another launch event was held at Ithanga market where another six groups were also awarded with their respective cheques amounting to Kshs. 47,000.In attendance was local area chief and KREP bank representative who had the honor of presenting the cheques.The groups awarded included the following: Kirathani Central, Tambia Tui, Ihigaini, Umisyo wa Ngii, Utheri wa Kinyangi, Mianyani.

WEMIHS Programs Coordinator awarding cheques to groups during the launch of VDF

WEMIHS Programs Coordinator awarding cheques to groups during the launch of VDF


The remaining groups which include Tumus, Matanya Wema, Kamuiru and Munyu Mwihoko received their cheques from WEMIHS Field Officers

A total of 201(20 men and 181 women) group members attended launch events that also had the community members do presentations and get entertained by the local artists and entertainers.

groups receiving cheques from field officers

groups receiving cheques from field officers 


Graph 1: The groups that benefited from VDF Loan

graph 1


A total of 405(327women, 78men) beneficiaries have directly benefited from the loans from VDF. The groups have embraced saving culture within households with participation of up 98% participating.

proportion of VDF beneficiaries

A group member receiving cash from VDF Committee

A group member receiving cash from VDF Committee

2.9 Repayment of loans by groups

14 groups that were advanced credit initially have been paying back the loans at a 100% success. The other 3 groups are still on a 3 month grace period as the received the crdit advancement in December 2013 and will begin paying back in May 2014.



A total of 39 households have benefited from the welfare fund.

Proportion of utilization of welfare funds

A group member receiving welfare funds upon hospitalization

A group member receiving welfare funds upon hospitalization


WEMIHS has forged a strong partnership with the government, both at the central and local levels, and non-government organizations (NGOs) at the grassroots level. Local NGOs are central to the operation of WEMIHS as they link it with the community organizations and facilitate day-to-day activities. WEMIHS has been working closely with the line agencies of the Ministry of Devolution and the Ministry of Agriculture, Ministry of Livestock Development & Ministry of Youth, Sports & Culture in the planning and implementation of sub-projects, as well as in securing helping community groups apply for additional resources.


There was significant demand for loans from vulnerable households to engage in small income generating activities as evidenced by 27 groups applying for loans amounting to Kshs. 1.4 million. Other groups have continued to also save as they year begun thus this is far beyond WEMIHS capacity and hence a critical need for additional funds.

The household’s income is still low comparative to large family sizes that average 6members thus still are in need of short term capital in almost every crop season. Often, because of lack of collateral for a loan from micro finance institutions, they mostly rely groups they belong to which doesn’t have sufficient pool to borrow from.

Small business development is another important area in need of microfinance services. These businesses help to generate employment in rural areas. Due to the lack of capital available, entrepreneurs who have established small businesses are unable to access the greater amounts of capital required to expand their businesses



As a result of the increased access to credit, women’s increased contribution to household incomes has led to tangible gains for poor families in achieving a more balanced economic contribution from men and women. They are now able to support in school fes of the children, buying of farm inputs to improve household food security including purchase of food and household assets.

Participation in VDF has grown individual capacity and confidence of women and has widened their own and their households social networks. Consequently, women are now playing much larger roles in both family and village-level decision-making.

For success of VDF there is need to do the following:

  • Set clear policies and procedures.
  • Conduct thorough appraisal beforehand.
  • Vary loan terms and conditions to suit borrowers.
  • Charge affordable rates.
  • Encourage upfront weekly savings by loan candidates.
  • Provide on-going mentorship and advisory service.
  • Ensure proper record-keeping.
  • Institute close monitoring and supervision



WEMIHS as an institution now requires improving her capital base to 5million to support 57 vulnerable groups’ access minimum loans of ksh 100,000 per year.


Group Name Men Women Total
Igakanga 0 27 27
Matanya Wema 5 6 11
Kiaruigi 5 16 21
Kirathani Bidii 2 19 21
Kirathani Central 11 13 24
Muhohoyo 0 26 26
Mianyani 3 23 26
Tumus 4 20 24
Tambia Tui 5 24 29
Kamuiru Wendani 1 22 23
Uumisyo Wa Ngii 3 25 28
Ihigaini 2 10 12
Kamahuha Livelihoods 5 15 20
Utheri wa Kinyangi 10 17 27
Komo Mwihoko 4 11 15
Kioneki 5 16 21
Mumuka 6 24 30
Ngatho Arahuka 7 13 20
Grand total 78 327 405