by Claude Nikondeha
A recent report of the Burundian central bank estimates that only 3% of all Burundian use financial institution for their banking needs.
“Son, after 50 years of ministry, your mom and I decided to retire. We will always be grateful for the opportunity we have had to serve through the local church. The only challenge is that the $50 monthly income that we receive from the church will now stop.” That was a letter I got from my dad back in 2002. My immediate response was: “Kelley and I decided to send you and mom the $50 monthly, so please send me your bank account details and we will make sure you have the funds.” His response: “Son, we’ve never owned a bank account. You see with $50, you cannot open a bank account today.”
My dad along with 97% of other Burundians who live on less than $2 a day would be considered those at the bottom of the pyramid and therefore not bankable.
The primary mission of Kazoza Finance is to understand the dynamics of those living at the bottom of the pyramid and develop innovative financial products to serve them.
The first product of course is a bank account and access to basic banking services. They can open an account with $5 and maintain an account at $0.40 a month.
The second product is group lending, the creation of solidarity groups (5 – 20 people in a group) based on their local community and common interest. After 6 weeks of basic accounting and saving courses taken together, they can borrow up to $500 each with no other guarantee than the other members of the group and their collective savings.
Recently, we opened 40 important accounts in our small & medium business department. Those accounts belong to 40 associations of people who are in local transportation business using bikes. In Bujumbura alone, there are 16,000 people making a living as bicycle taxis. They have organized themselves into 40 associations and each one contributes $0.20 cents per day into the association account. Now that is a very, very small amount but at the end of the month, they collectively have over $75,000 in their accounts!
With this kind of collective savings, they will be able to borrow up to $150,000 collectively – buy new bikes, start new businesses and take care of all their social issues (hospital, funerals, weddings etc…). Access to banking services will allow them to grow their business, care for their families and move forward.
The future of banking in Burundi is at the base of the pyramid. For a long time many commercial banks assumed that the people at the bottom could not be served and that they are not a viable market. But we, at Kazoza Finance want to serve the working poor, give them an opportunity to go to the next level.
We believe that if you are not serving the working poor you will not be in business for long in Burundi. Attention to the small economy solves daily social issues and helps stimulate the larger economic climate of Burundian society.
Kazoza Finance aims at offering banking services to all the working poor: mamas running a fruit kiosk, taxi drivers, builders, bakers… and pastors like my father. We want to help them grow businesses, provide for their families and infuse tangible benefits in their neighborhoods.