Solidarity Funds for Development (FONSDEV) are a unique model of community microfinance that encourages local savings, access to credit and self-managed financial services. INADES-Formation Kenya supports six FONSDEVs, namely Kathama in Machakos County, Kauma, Musengo and Yatta Kwa Vonza in Kitui County, and Ngaamba and Yikivomwe in Makueni County.
One of the brightest examples is Kauma FONSDEV, which stands out as a leading unit among the six supported by INADES-Formation Kenya, showing steady growth and a strong impact on the community.
Empowering local communities through local financing solutions
In the quiet village of Kauma, Kitui County, a community-based journey towards financial inclusion began in 2009. The goal was simple but ambitious: to create a reliable, accessible and locally managed financial system that meets the specific needs of the population. The solution came in the form of the FONSDEV (Solidarity Fund for Development), introduced by INADES-Formation Kenya as a model for sustainable rural financing, tried and tested in seven African countries.
Laying the foundations: mobilizing the community
INADES-Formation Kenya launched the initiative, working closely with the local administration. A baraza (public forum) was organized, bringing together residents and leaders to discuss the concept. The response was positive and membership recruitment began. Interested community members agreed to contribute 50 shillings towards the registration fee and 500 shillings towards the share capital. Of the 1,018 people interested, 354 fully committed, forming the nucleus that would launch Kauma FONSDEV in 2012.
Capacity building: training members in financial management
INADES-Formation Kenya organized a series of capacity-building workshops focusing on financial literacy, cooperative governance, loan management and community responsibility. As a result, Kauma FONSDEV leaders and members are now ready to manage funds responsibly and transparently. Building on its skills and increased confidence, the group opened a bank account with Equity Bank in 2011 and launched its first loan distribution program. Under the leadership of Mr. Benard Kitonyi, then Managing Director of INADES-Formation Kenya, members were able to obtain loans of up to Ksh20,000 at an interest rate of 1% per month. Thanks to full repayments and the absence of any major defaults, Kauma FONSDEV recorded its first profit of Ksh 48,000.
Promoting trust and ownership through shared benefits
Following this initial success, Kauma FONSDEV declared dividends of 20 Ksh per share, a sign of transparency and member confidence. This initiative reinforced a strong culture of ownership and commitment. Membership has continued to grow steadily, from 354 in 2012 to 799 in 2022, and then to 906 active members in June 2025, demonstrating that trust and shared values can drive community prosperity.
Investing in infrastructure: a permanent workplace for prosperity and progress.
In a bold and unanimous decision, the members agreed to redirect future dividends towards the construction of a permanent office building. In three years, they raised 1.6 million Kenyan shillings, with the support of INADES-Formation Kenya, which contributed to the cost of purchasing sheet metal and doors.
The completed structure is now a symbol of collective resilience, sacrifice and long-term vision.
Ongoing support and development of strategic capabilities
INADES-Formation Kenya has remained actively involved in training and capacity-building members in marketing strategies, which has improved member retention and recruitment.
Further training in accounting and records management helped to professionalize operations, which also led to the creation of a dedicated education committee, which continues to lead financial education efforts within the community.
Expanding services to meet community needs
Today, Kauma FONSDEV offers a diversified portfolio of financial services designed to meet individual and collective needs:
- Current savings: These are regular contributions made by members over time, which are held securely and remain accessible when needed. These savings provide a flexible financial reserve for planned expenses and unforeseen emergencies. Members, including group affiliates, contribute regularly throughout the year and can access their current savings at their convenience, ensuring reliable support for both planned needs, such as school fees and food, and unforeseen emergencies.
- Term deposits for long-term objectives :
Members benefit from an annual return of 0.5% on fixed-term savings, which encourages disciplined financial planning.
- Access to credit for economic empowerment
Loans of up to Ksh150,000 per member are granted every first Friday of the month. In this fiscal year (2024-2025), the total amount of loans granted was Ksh 7,613,637, while the total amount of savings reached Ksh 5,952,905 million. To manage risk, the Education Committee monitors loans, advises members and, if necessary, calls on local government to resolve disputes.
Promoting transparent governance and member participation
Kauma FONSDEV is governed by a structured committee system that ensures transparency, fairness and community representation:
- Coordination Committee: oversees strategic direction (Chairman and Secretary)
- Operations Committee: manages finances and transactions (treasurer and two assistants)
- Education Committee: oversees member training and loan monitoring (eleven or more members).
- Supervisory Committee: provides oversight and audits (two or more members) Elections are held every three years, reinforcing democratic governance. While the office is open every Friday, the introduction of Paybill services has added an extra touch of convenience, combining technology and local service.
Transforming lives, one limb at a time
Kauma FONSDEV has become more than just a village bank. It is a pillar of financial resilience, a learning space and a platform for inclusive community development. Women’s groups have access to capital to set up small businesses, families can pay school fees and individuals are now planning their futures with confidence. This proves that community models work: when people come together around shared values, the result is not just financial inclusion, but social transformation.
Financial strength
A study of the financial information reveals that there has been a surplus over the last five years, which is an indicator of the entity’s financial health. The unit has good working capital. With regard to liquidity and the ability to meet loan requests, the committee confirmed that for the six years 2020 to 2025, it was in a position to meet all loan requests. The committee indicated that it reviews loan applications on a monthly basis.
INADES-Formation Kenya
