FINAL REPORT - FSD Kenya

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EXECUTIVE SUMMARY BACKGROUND There have been a number of initiatives recently to develop and strengthen social protection through cash transfers to the poorest and most vulnerable households in <strong>Kenya</strong>. A small pilot project has already started to make small cash transfers to households with orphans and vulnerable children (OVC). This pilot will be significantly extending over the course of 2007. If successful, the aim is to scale this up to reach national coverage by 2010. A second pilot project is planned to develop a cash based hunger safety net (HSN) system focused on vulnerable households in the arid and semi-arid lands (ASAL) which are subject to regular drought. DFID is simultaneously supporting the development of an integrated national social protection framework, which seeks to provide a more comprehensive programme of appropriate and cost-effective social transfers aimed at reducing extreme poverty, increasing the poorest’s access to basic services, reducing risk and generating growth. The main objective of the market research was to create a profile of the needs for, usage of and attitudes towards financial services, especially payment services, among current and potential recipients of OVC and HSN schemes. This report covers the results of a market research exercise carried out in Kwale, Garissa, Nairobi and Suba in November and December 2006. The research team used focus groups discussions (FGDs) and the following participatory rapid appraisal (PRA) tools and to collect data 1 . They also reviewed secondary information and statistical reports on the five districts that formed part of the background information for each district report. KEY FINDINGS AND RECOMMENDATIONS FINDINGS FROM GARISSA 1. Difficulties in Garissa and among respondents ii. Garissa is prone to drought and floods and temperatures are very high ranging from 20 o C to 38 o C. Apart from the areas along the Tana, the rest of Garissa is generally arid with poorly drained soils and low levels of rainfalls that cannot support farming. The main source of livelihood in Garissa district is nomadic pastoralism, but when there is drought or floods, animals die, leaving people with no source of livelihoods. When calamities occur, such as loss of cattle through drought or floods, Garissa town becomes the catchment area for such people who need employment or relief support. iii. Poor infrastructure (roads, hospitals, schools and telephone connectivity) in remote parts of Garissa causes difficulties in terms of cost of transportation and communication. Furthermore, the absence of infrastructural facilities like electricity hinders development of programmes in these remote areas. For example, mobile telephone connectivity ends 10kms away from Garissa town; road connections with towns such as Balambala and Dertu are some times non-existent and formal financial institutions including KPOSB are only found in Garissa town. This has pushed people to concentrate areas surrounding water points, market centres or areas with basic services like hospitals and schools. 1 See Annex 2.6.3 on tools used iv
iv. The respondents belonged to two categories: guardians or orphans and vulnerable children (OVC) or those who relied on relief agencies and governments for relief food (Hunger Safety Net) categories. The difficulties are briefly explained: a. Difficulties of paying school fees for children in secondary schools and difficulties in buying school items e.g. uniforms and books for primary school going children. The direct consequence of this is a highly illiterate society. b. Difficulties in getting paid employment due to high levels of illiteracy and absence of industries in the district. c. Difficulties in getting food as the soils cannot yield crops and the main source of livelihood, cattle, is sometimes wiped away by flood related diseases such as anthrax or rift valley fever or hunger as a result of drought. Investigation into the seasonal flows of incomes and expenditures revealed that respondents do not have any source of incomes for 8 months of a year. d. Diseases and long illnesses is another major difficulty among respondents who are either widows or women whose husbands have migrated to look for employment. Such women have difficulties in providing basic necessities like medicines, food and clothes. Diseases such as malaria and diarrhoea are rampant after floods while long illnesses like pneumonia may be associated with cold after rains or any other source that did not come out clearly. e. Lack of shelter is one of the major difficulties among respondents. The herios huts that are commonly built in Garissa leak are easily washed away during floods and harbour snakes or mosquitoes. 2. Cash Demands and Coping Mechanisms Respondents need cash to meet their basic needs that include the following: • To pay school fees for their children and the orphans under their care; • To buy food and repair their houses; • To buy drugs and cope with emergencies; and • To put aside savings (mainly in kind – in livestock) to meet life cycle events such as marriage of children. The respondents live from hand to mouth mainly on relief food or proceeds from sale of charcoal, casual employment, or petty trade. The main coping strategy among respondents used to be liquidation of assets to raise cash to pay school fees, emergency hospitalization, or to buy drugs. However, today, they do not have cattle and many of them depend on relief aid and friends for food and other support or migration to look for casual labour, pasture, employment or petty trade. A few respondents close to River Tana practice subsistence farming. 3. Demand for Financial Services: Savings, Credit and Money Transfer Garissa town has Posta and commercial banks such as KCB, PostBank, and Barclays Bank while the rest of the District does not have formal financial institutions. Discussions in remote rural areas revealed that no financial institution exist in the divisional towns or villages and almost all the respondents have never used any formal system to save or borrow money. Posta that was the institution for money transfers closed its office in Balambala two years ago and no one uses its services any more. The major sources of credit are friends, relatives, shopkeepers and to a small extent moneylenders while informal mechanisms for saving in Garissa District in terms of preference v
Page 1 and 2: FINANCIAL SECTOR DEEPENING, FSD KEN
Page 3: DEFINITIONS Acronym Definition ASAL
Page 7 and 8: 5. Cattle are the main source of li
Page 9 and 10: 1 Introduction 1.1 Background SECTI
Page 11 and 12: Table 1.1: Segmentation by Target G
Page 13 and 14: 2 GARISSA DISTRICT 2.1 Background I
Page 15 and 16: Due to the poor roads, there are a
Page 17 and 18: 2.3 What are the Cash Demands and C
Page 19 and 20: iii. Rotating Savings and Credit As
Page 21 and 22: the use of buses, and matatus. In t
Page 23 and 24: • Savings in groups (RoSCAs) whic
Page 25 and 26: 2.6 ANNEXES 2.6.1 ANNEX 1:- RESEARC
Page 27 and 28: 2.6.2 ANNEX 2: FOCUS GROUP DISCUSSI
Page 29 and 30: This tool was used with potential u
Page 31 and 32: How have you been able to solve som
Page 33 and 34: How do you keep some money aside fo
Page 35 and 36: friends or well wishers who would l
Page 39 and 40: Discussion Point The Discussion Wha
Page 41 and 42: eceive money from your relatives, f
Page 43 and 44: If you were to send or receive mone
Page 47 and 48: ii. Time Series of Crisis with Pote
Page 49 and 50: Explanation Crisis died • 10 year
Page 51 and 52: secondary education, which is very
Page 53: February savings are encouraged so

FINAL REPORT - FSD Kenya

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