Feature:Cheap table-banking group loans gaining popularity in Kenya

Working for a non-state health organization in Nairobi, Beatrice Akoro belongs to a Sacco in which she saves a fraction of her salary every month.

She joined the Sacco as soon as she started working for the institution about four years ago.

However, despite saving money in the financial institution that serves workers in the health sector, she has only taken a loan from the Sacco once -- five months after joining.

"Whenever I have financial challenges, I do not borrow money from the Sacco, I go to our table-banking group because the interest is lower," the 37-year-old said on Tuesday.

Akoro has been a member of the table-banking group for the last three years, and borrowed money from the informal savings outfit countless time.

"I save 30 U.S. dollars in the scheme every month. We have a bank account where we keep the money and lend to each other. The largest sum I have borrowed from our group is 990 dollars," she recounted.

The informal savings groups, which are in their thousands in the East African nation, are luring many Kenyans, particularly women who make majority of members from Sacco loans, due to their low interest rates.

While Saccos charge members at least 12 percent interest per annum on loans taken, Akoro pays only 3 percent on money borrowed from her table-banking group.

In table-banking groups, members contribute an agreed sum of money every week, fortnight or month with the purpose of lending it out at a small interest to each other.

The practice is called table-banking because the transactions are done at or around a table. The women congregate, collect and lend out money at the table, normally in members' houses.

When starting, members of the group normally set rules of engagement that include how to relate to each other, deal with errant members, how to lend out cash, at what interest rate and mode of repayment.

Members, for instance, have to contribute a certain amount of money as shares first before they can be able to take loans.

"For us, one can take about twice the amount of money saved as long as they find two people to guarantee them. But when taking money that is less than one's shares, you do not need guarantors," said Sylvia Mueni, a media worker and a member of a Sacco who also belongs to a table-banking group.

Like Akoro, Mueni borrows money from the table-banking group whenever she has a need, and not from the Sacco.

"In our group, we have agreed that one pays 3.5 percent interest on money borrowed. Depending on the amount, the repayment period is up to a year, which is a better deal than what Sacco's offer," said Mueni, who has taken loans that range from 99 dollars and 990 dollars from the savings group.

Some micro-finance institutions charge interest rates of as high as 28 percent per annum on loans while banks average 20 percent, making the unregulated table-banking groups the better option for people seeking small loans.

"For table-banking groups, we operate mainly on mutual trust, which means Saccos are more stable. With Saccos, one can also access other services like having a salary account and a debit card. Besides, you cannot put all your eggs in one basket," said Akoro, explaining why they still save money in Saccos.

Ernest Manuyo, a business management lecturer in a private university in Nairobi, acknowledged that table-banking groups are fast growing in the East African nation.

"The groups are thriving because people have seen their benefits and they have become vehicles for investment. And people like them because they are in-charge of their affairs, which is unlike Saccos which are heavily regulated and members have to employ people to run them," he said, adding the future of the groups is brighter.

Initially, many of those in the schemes were small businesspersons, mainly women, but salaried people are joining them because of the benefits, Manuyo noted. Endit