Mobile Payments And Traditional Methods Reshape Kenyan Microfinance
Dailycsr.com – 25 June 2019 – The regional director of Whole Planet Foundation’s east and south African units, Zoe So informs that when the Whole Planet Foundation organises a meeting of microfinance partners it also generated lot of paper contents in the form of “piles of cash, thick record books to record attendance and meeting minutes; repayment schedules; group loan balance reports; passbooks”.
While, the branch offices too have to deal with “more paper: stacks and binders and file cabinets full of applications and loan contracts” which happens to be the “by-products of best practices in microfinance”. They reflect accountability as well as transparency, however, when documentation turns extensive it costs more in terms of money for the company as well as the clients, while high cash volume transactions could give opportunity for “security and fraud risks”.
Recently, the buzz has been doing the rounds about Sweden pushing for a cashless economy, as other countries are following the same. As a result, debit, credit, and mobile payments are gaining popularity. However, cashless economies always face the criticism that its dependency on technology will “exclude vulnerable populations”.
Therefore one could wonder if microfinance institutions turns cashless and yet provides “last-mile credit services”. By harnessing the “leapfrog technology”, the microfinance pioneers are attempting to do exactly the same thing. According to So:
“Musoni Microfinance, established in Kenya in 2009, strives to provide 100% cashless and paperless services. It serves as the real-world testing ground for the Musoni System. This cloud-based core banking solution is built specifically to help microfinance organizations integrate new mobile and digital technologies to improve efficiency, reduce costs, and expand rural outreach”.
However, this doesn’t mean that Musoni has altogether eliminated paper but they are moving in that direction with the focus on “entry level clients”. Furthermore, So added:
“Whole Planet Foundation recently pledged $500,00 over three years to support the scale of Musoni’s most digitized loan product yet: the M-Nawiri group business loan product”.
In this M-Nawiri loan all the records are digital and So recalled:
“At the group meetings I visited I often saw just two physical documents: The group members brought a record book, where they keep track of all group meetings and minutes; and the loan officer brought a one page print out of the group’s loan balance. There was no physical cash on the table; repayments were all made through mobile money which then directly posts to the loan account”.
More and more the microfinance industry is turning digital while an increasing number of institutions are choosing “tools to help streamline tasks”. Technology gives “wider outreach and scalability without the costs of a physical presence”, while often sacrificing “too many know-your-client best practices”.
So remarked that the above mentioned trends can especially be witnessed in Kenya as nearly “90% of Kenyans own mobile phones and 52% of the total population uses mobile money”. Mobile money growth has ushered in “growth in financial services” while giving way to “a crisis in over-indebtedness”. And So wrote:
“In this context, Musoni’s M-Nawiri loan uses technology to replace paper and money, but it also steadfastly retains many of the aspects of a more traditional microfinance methodology”.
For further information about Whole Planet Foundation’s work in this line, visit the link given below:
https://www.wholeplanetfoundation.org/
References:
3blmedia.com
While, the branch offices too have to deal with “more paper: stacks and binders and file cabinets full of applications and loan contracts” which happens to be the “by-products of best practices in microfinance”. They reflect accountability as well as transparency, however, when documentation turns extensive it costs more in terms of money for the company as well as the clients, while high cash volume transactions could give opportunity for “security and fraud risks”.
Recently, the buzz has been doing the rounds about Sweden pushing for a cashless economy, as other countries are following the same. As a result, debit, credit, and mobile payments are gaining popularity. However, cashless economies always face the criticism that its dependency on technology will “exclude vulnerable populations”.
Therefore one could wonder if microfinance institutions turns cashless and yet provides “last-mile credit services”. By harnessing the “leapfrog technology”, the microfinance pioneers are attempting to do exactly the same thing. According to So:
“Musoni Microfinance, established in Kenya in 2009, strives to provide 100% cashless and paperless services. It serves as the real-world testing ground for the Musoni System. This cloud-based core banking solution is built specifically to help microfinance organizations integrate new mobile and digital technologies to improve efficiency, reduce costs, and expand rural outreach”.
However, this doesn’t mean that Musoni has altogether eliminated paper but they are moving in that direction with the focus on “entry level clients”. Furthermore, So added:
“Whole Planet Foundation recently pledged $500,00 over three years to support the scale of Musoni’s most digitized loan product yet: the M-Nawiri group business loan product”.
In this M-Nawiri loan all the records are digital and So recalled:
“At the group meetings I visited I often saw just two physical documents: The group members brought a record book, where they keep track of all group meetings and minutes; and the loan officer brought a one page print out of the group’s loan balance. There was no physical cash on the table; repayments were all made through mobile money which then directly posts to the loan account”.
More and more the microfinance industry is turning digital while an increasing number of institutions are choosing “tools to help streamline tasks”. Technology gives “wider outreach and scalability without the costs of a physical presence”, while often sacrificing “too many know-your-client best practices”.
So remarked that the above mentioned trends can especially be witnessed in Kenya as nearly “90% of Kenyans own mobile phones and 52% of the total population uses mobile money”. Mobile money growth has ushered in “growth in financial services” while giving way to “a crisis in over-indebtedness”. And So wrote:
“In this context, Musoni’s M-Nawiri loan uses technology to replace paper and money, but it also steadfastly retains many of the aspects of a more traditional microfinance methodology”.
For further information about Whole Planet Foundation’s work in this line, visit the link given below:
https://www.wholeplanetfoundation.org/
References:
3blmedia.com
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