Why You Need to be in a Self Help Group

Forming and managing groups can be an effective way to not only make money but also acquire management skills and work experience.

Many young people graduate from high school or college with no employability skills. They also lack the entrepreneurship skills to help them start and run businesses. To overcome these hurdles and gain critical life skills, it is important to form or join a Self Help Group (SHG).

What is a Self Help Group?

This is an informal group consisting of individuals seeking to address mutual challenges. SHGs are premised on the idea that common problems are best solved collectively. These groups are critical to community development because donors prefer to deal with organized groups and not individuals.

The evolution of SHGs has seen them adopt formal organizations. This means that a group can transition from being informal to being registered by the Department of Social Services. This safeguards group members from exploitation by fellow group members and outsiders.

Requirements for Forming a SHG

1. Have common / shared interests: The strongest groups are those formed by members who know one another personally and are drawn together by similar interests. For example, if you work in the same organizations, attend the same church, or belong to one family, you are likely to have a strong SHG that will last many years.
2. Share a geographical location: Because SHGs meet regularly and handle members’ money, it is important for members to live in close proximity. A shared neighbourhood, village, estate, or work premise is critical for the success of SHGs.
3. Have goals and objectives: What is it you want to achieve as a group? Do you want to save money and invest in personal and/or group projects? If someone wanted to join your SHG, what would you tell them they would benefit from?
4. Carefully select your members: From the onset, it is important that you only admit committed members to the group. Once the core team is in place, vet all others who want to join.
5. Fill out the requisite application forms: The government registration process requires that the informal SHG fill out the application form provided by the Department of Social Services. Attachments to this application form include group minutes (indicating who the leader is), group by-laws, a list of group members and their ID numbers, and/or ID photocopies.
6. Pay the Registration Fee: The government charges a minimal fee for the registration of SHGs. It also requires each member to pay Ksh 100 for a registration card.
7. Open a Bank Account: Upon being satisfied that the group has met all requirements for registration, the Social Services Officer will then write an introductory letter to the group’s preferred bank, authorizing the three officials (chairperson, secretary, and treasurer) to open an account on behalf of the group, as signatories.

What Next?

Once the group is registered, the following activities will help it grow:

1. Regular meetings, preferably monthly.
2. Monthly contributions that constitute savings for individual members.
3. Table-banking structure, which entails members borrowing from the group every month and repaying the loan with a 10% interest rate. (Borrowing is proportionate to the amount a member has saved multiplied by three.).
4. Strict adherence to the group’s by-laws is important, especially when disciplining members and holding elections.
5. Holding regular elections to ensure as many members as possible get a chance to lead and that there are fresh ideas all the time.
6. Applying for grants and loans. In government, you can apply for grants from the National Government Affirmative Action Fund. Loans are available from the Women-Enterprise Fund, Youth Enterprise Development Fund and the Uwezo Fund.
7. Keeping proper and updated records, especially minutes and financial documents,.
8. Managing your funds effectively and prudently.
9. Utilizing loans and grants efficiently and repaying loans on time

Final Thoughts

Self Help Groups are good starting points for youth who lack money and entrepreneurial skills to learn how to do business. Here, you can learn how to manage group projects and then borrow money from the group to start your own small business. With time, you will transition to borrowing from SACCOs and banks as your business grows.

What are you waiting for? Get some friends together and register a SHG at the nearest Social Development Office or Huduma Centre.