A REPORT ON THE OSIENALA BEACH BARN

Introduction

The OSIENALA Beach Barn initial called OSIENALA Beach Bank was launched in April 2004 in Nyandiwa Gwassi Suba District to address some of the issues, which touched on the development of the Lake Victoria region. The OSIENALA Beach Barn was a micro- finance initiative of OSIENALA that was charged with the provision of financial services for the fisher folk. A study carried out in the various beaches showed that the fishermen earned a lot of money, but there is nothing on the ground to show for it in terms of development and improved livelihoods. The fishermen indulge in lavish life styles and waste all the money without saving even a single cent. The Beach Barn was to sensitize the communities to cultivate a culture of saving and to enable them access credit facilities to expand their respective lines of trade thereby providing a stable source of income and to improved food security. In other words, Beach Barn was a pro-poor strategy that offered a comprehensive package of basic financial services for sustainable development and poverty alleviation among the rural poor. It was a demand driven focused, borrowing heavily on the needs and experiences of the affected communities to boost their capital base.

The Beach Bank also focused heavily on the gender imbalance within the region specifically on resource allocation and distribution by empowering financially the women and other vulnerable groups. The Beach Barn rode on the goodwill and confidence that OSIENALA had built over the years among the Lake Victoria communities. This gave the Beach Barn a competitive advantage, during its formative stages.

Identified Problems

The Problems that Beach barn tried to solve were traced to the following factors:

• Most of the beaches are located in very remote areas with poor infrastructure. This made it impossible for main stream commercial banks to open branches there. The nearest bank was more than 50 kilometres away.
• Lack of a savings culture amongst the fishermen as it is something they have never been used to.
• There was some element of sceptism and reluctance to save amongst the fishermen after some bogus saving schemes disappeared with their savings without trace.
• The migratory nature of the fishermen makes them to be viewed by the banks as a generally risky group to lend funds to.
• Overdependent on fishing as the only source of income.
• Lack of collateral to guarantee credit.
• Lack of financial management skills.
• Their small savings and accounts were uneconomic for the big banks to maintain.
• The fishermen cannot afford the exorbitant charges being levied by commercial banks to access their services.

Vision:

To enhance the community understanding on saving, credit and investment so as to improve their livelihood as well as acquire economic independence by employing sustainable techniques to exploit Lake Victoria resources.

Mission Statement:

To provide meaningful economic interventions in the Lake Victoria region in order to assist the communities exploit the existing resources to create wealth and improve their livelihood.

Objectives

The objectives of the Beach Barn were:

• To provide safe custody, prudent and efficient management of the fisher folk savings with the aim of maximizing returns
• To provide affordable credit facilities for the development programmes of the fisher folk
• To sustain a high level of professionalism in management and service delivery at all level of its operation
• To expose the fisher folk to viable investment projects through research on investment opportunities i.e. export of fish products, eco-tourism, fish processing and storage facilities and other infrastructure development.
• To assist in the negotiation of better prices through creation of linkages with fish processors and manufactures of fishing gear 
• To provide affordable health coverage to the fisher folk through linkages with health insurance providers
• To research and expose fisher folk to new fishing technologies
• To promote safe environmental practices within its areas of operation and amongst its clients as a social responsibility
• To initiate, enhance and sustain a savings and investment culture among fisher folk and lake Victoria basin communities through training
• To use quality and cost effective technology that makes the Beach Barn efficient, attractive and competitive.
• To formulate policies and guidelines that are transparent, accountable and protect and empower its employees to seek growth and self actualisation 

Membership and Geographical Coverage

After its inception in April 2004, Beach Barn established a strong network with 16 branches strategically situated along the beaches from Muhuru bay (along the Kenya-Tanzania Border) to Sio Port beach along the Uganda-Kenya Border), thus covering the whole of the Lake Victoria shores on the Kenyan side. The customer base stood at 5,000 with a total savings of Kshs. 20 Million. The number of the fisherfolk who benefited from the credit facilities offered by the institution was about 1,000 with about Kshs. 5 Million disbursed as loans for various purposes.

The Beach Barn had a membership of just over 5,000 customers with a total savings of about Kshs 20 million. The amount given out as loans for various purposes amounted to Kshs 5 million.

Products and Benefits

The range of products included the following:

• Savings Account
• Emergency Loans
• Welfare/Benevolent Loans
• School Fees Loans
• Asset Financing 

With the cheap credit facilities, members were able to:

• Educate their children.
• Pay medical and hospital bills.
• Buy outboard engines and boats.
• Construct business and residential premises.
• Buy water pumps to irrigate their farms.
• Buy construction and building materials.
• Buy Mobile phones
• Diversify and expand existing businesses.

Employment Creation

The Beach Barn had 48 employees out of OSIENALA’s total labour force of 79. This represented 60 % of the total number of employees. These people are now jobless.

Reasons for Closure of Beach Barn

The closure of the Beach Barn was done after much thought and consultation with the various stakeholders given its massive benefits to the fisherfolk community. A number of financial institutions expressed interest in partnering with OSIENALA to salvage it but are yet to come up with concrete and acceptable proposals.

• The Beach Barn was grossly under-capitalised right from the start. The working capital injected was minimal with the hope that it would pick up with the injection of additional capital. Due to limited resources this never materialised.
• High operating fixed costs coupled with inadequate working capital started eating into the savings of members. Appropriate and immediate measures had to be taken before member’s savings were depleted, hence the closure.
• New fiscal requirement by the Central Bank of Kenya of Kshs 20 million to be deposited with the Central Bank of Kenya by all micro-finance organizations before they can be allowed to operate. This further dealt a blow to Beach Barn as OSIENALA could not raise the amount at such a short notice. This directive came after some unscrupulous saving schemes disappeared with members’ money.
• Lack of professional banking knowledge, skills and experience among staff to run a microfinance scheme.
• Poor management and lack of sustained field supervision due to lack of resources to move around the various branches which are both far in-between and from head office in Kisumu.

Future Prospects

Beach Barn has a very high potential of transforming the social and economic lives of the community in the Lake Victoria region, especially the fishermen. It is because of this that the fishermen are still pushing for the revival of Beach Barn. Although, over Kshs 10 million has been refunded to the members, some still hold on by not withdrawing their savings hoping the scheme will be revived.

Fishermen are happy with OSIENALA for being the first organisation to refund members’ savings in full. A number of micro-finance organizations went under with thousands of member’s savings. They are therefore very much willing to support any initiative to revive Beach Barn. One of the possibilities being explored is to engage a strategic financial institution/bank as partner to help run and manage the Barn by injecting the required funds until it can stand on its own.

OSIENALA exploited its goodwill on the ground and amongst the fisherfolk to lobby and persuade the fishermen to join the Beach Barn when it was launched. It was not easy for other players to convince the fishermen to join them, given past experiences where some ran away with their money. OSIENALA still enjoys same goodwill to date and this is what can still be banked on to revive Beach Barn.

Further information

OSIENALA (FRIENDS OF LAKE VICTORIA)

P.O. BOX 4580, KISUMU