Do you know how an SHG works in Africa?

Yes, I can explain how a Self-Help Group (SHG) works in Africa. SHGs are informal or formally organised groups, usually consisting of 10–30 people, who voluntarily come together to achieve social or economic goals. They are particularly common in rural areas and refugee camps, e.g. in Kenya, Uganda, Ethiopia, Nigeria, etc.

🌱 What is an SHG (self-help group)?

An SHG is a self-help group, usually consisting of women or economically disadvantaged people who:

• make small savings together,
• give each other small loans,
• solve problems together (e.g. health, education, gender issues),
• and often carry out income-generating projects.

🔄 How does an SHG work in Africa?

1. Formation

• 10–30 people with similar socioeconomic backgrounds come together.
• A simple constitution or set of group rules is drawn up.
• The group elects a leadership team: e.g. chairperson, secretary, treasurer.

2. Regular meetings

• Weekly or monthly to:
  • Collect contributions (savings)
  • Discuss loan requests
  • Check repayments
  • Discuss topics such as health or entrepreneurship.

3. Savings bank & microloans

• Each member saves a small amount (e.g. 50–200 KES/week).
• Members can take out loans with low interest rates (e.g. 5–10%) from the joint fund.
• The interest goes back into the group fund.

4. Use of profits

• Expansion of the savings bank or investment in community projects (e.g. chicken farming, vegetable cultivation).
• Financing of emergencies (e.g. illness, school fees).

5. Training and support

• Many SHGs receive training from NGOs or government agencies on:
  • Finance, accounting
  • Agriculture, entrepreneurship
  • Women’s rights, education

✅ What can an SHG do?

• Save independently and grant loans (within the group).
• Set up simple business projects.
• Organise training, workshops and education.
• Enter into partnerships with CBOs, NGOs or government programmes.
• Support members in need.

⚠️ What is an SHG not allowed to do (without registration)?

• Collect public donations or take out large loans from banks.
• Enter into formal contracts (unless it is registered, e.g. as a CBO or cooperative).
• Organise political activities.

Many SHGs grow over time into registered CBOs, SACCOs (savings cooperatives) or even cooperatives.

Would you like to know how to start an SHG in your camp or village – or what rules make sense?

Please

Great, here is a simple step-by-step guide on how to start a Self-Help Group (SHG) in your camp or village – e.g. in Kakuma Camp:

✅ Step-by-step guide to setting up an SHG

1. Form a group

• Find 10–20 trustworthy people who have similar living conditions or goals (e.g. women, young people, small farmers, refugees).
• The members should be motivated to save regularly and work together.

2. Establish basic rules (constitution) together

These should include:

• Group name
• Goals (e.g. saving, business development, mutual assistance)
• Membership fees (e.g. 50 KES per week)
• Meetings (e.g. every Saturday)
• Rules for loans (e.g. interest rate, repayment period)
• Election of officers (chairperson, treasurer, secretary)
• Consequences of misconduct (e.g. late repayment)

3. Hold the first meeting

• Elect the leadership team.
• Keep a simple cash book (who pays what, who receives what, repayments).
• Collect weekly contributions.
• Start with small internal loans to members.

4. Training & support

• Get training from local NGOs, CBOs or government projects, e.g. on bookkeeping or setting up a business.
• Some organisations such as CARE, ActionAid, World Vision or the Kenyan Ministry of Labour support SHGs.

5. Saving & investing

• Once enough money has been saved, you can:
  • Provide emergency assistance to members
  • Start a small group project (e.g. selling vegetables, raising chickens)
  • Purchase materials together (e.g. seeds, water canisters, school notebooks)

6. Optional: Registration

• If the SHG wants to grow, you can register as a CBO or cooperative to gain access to larger grants.

📘 Examples of SHG projects:

• Selling homemade food in the camp
• Sewing group for school uniforms or bags
• Community vegetable garden
• Making and selling soap or sanitary pads
• Solar lamp rental system
• Savings groups for children’s school fees