Feed the Future
This project is part of the U.S. Government's global hunger and food security initiative.

First Sharia-Compliant Savings and Credit Cooperative in Kenya Supports Growth

Authored by

This blog post was written by Sylvain Roy, CNFA President and CEO. The organization aims to stimulate economic growth and improve rural livelihoods in the developing world by empowering the private sector.

Hamra Adulai is part of the 50-member Bura Iftin women’s group that sells poultry in the northeastern part of Kenya. Hamra explained to our staff that her group wanted to expand its operations, but they first needed to find a reliable funding source.  Hamra, as a follower of the Islamic faith, was discouraged by the current loan system in Kenya.  Kenyan banks offered limited Sharia-compliant banking products, particularly through microfinance institutions. Their vision to expand stalled until Hamra and the other women learned about the Community-Owned Finance Institution (COFI), Kenya’s first and only Sharia-complaint Savings and Credit Cooperative Organization (SACCO) that focuses on livestock, animal production, and agriculture.

COFI was established under the Kenya Drylands Livestock Development Program (KDLDP), funded by USAID and implemented by CNFA, a U.S.-based international development organization that specializes in agriculture, livestock, and agribusiness. As part of the U.S. Government’s Feed the Future Initiative, the three-year program was designed to address the many obstacles pastoralist households face in northeastern Kenya to achieve both economic and food security across the country. During community mobilization, the program identified a perception among the pastoralists that major banks in the region lacked Sharia compliance and had limited reach. Just like Hamra and the Bura Iftin women’s group, they were unsatisfied and wanted Sharia-compliant financial products and services with peer group guarantee mechanisms. After several consultations and five district visits to meet with stakeholders and beneficiaries, the implementation of an in-depth feasibility study, and the development of a robust business plan, the project agreed to officially support the launching of COFI.

The Kenyan Minister of Development of Northern Kenya and Other Arid Lands launched the SACCO in December 2012. Two weeks after the launch, COFI had registered 320 members and 10 groups with savings of Ksh 4.2 million (US$48,837) in the bank. COFI’s first office opened in Nairobi and extended to Garissa, in northeast Kenya, where its headquarters resided during August 2013. The new office helped intensify the membership drive and reach organizations like the Bura Iftin women’s group. As of October 2013, COFI had doubled since its inception, with women representing 46 percent of its membership. The savings had grown to Ksh 10.5 million (US$128,443), with COFI dispersing credit amounting to Ksh 8.54 million (US$113,752) to 49 members. 

I’m proud to report that Hamra and the IFTIN women’s group received their loan to expand their poultry production. Their story is just one of the hundreds that have started to benefit from COFI. COFI symbolizes how important it is for development programs to collaborate with its beneficiaries. Through meetings with community groups, government officials, and smallholder farmers, we were able to meet a need that serves an underrepresented group. Pastoralists in northeast Kenya now have a new opportunity to receive financial assistance that aligns with their beliefs. This will improve their businesses, incomes, and livelihoods. 

While KDLDP has officially closed, COFI continues to grow under the leadership of its Board of Directors and members. Watch the video below to find out more information about COFI. To contact COFI directly, please email Salesio Njeru.