Grameen Foundation & Musoni Kenya Using Data to meet the Credit Needs of Smallholder Farmers How evidence-based research informed the development & implementation of Kilimo Booster Loan Presentation by Brigitta Nyawira, Group Lead Grameen Foundation
The partnerships World s poor, especially women Eliminate poverty & hunger Partnerships, digital technology, self-help solutions The next generation MFI All-mobile, world s first 100% cashless MFI Technology & Data driven
Defining the Problem Space 2013 2014 2015 2016 Time & Effort Kickoff & Planning Research & Ideation Concept Development Product Testing Pilot & Launch Planning Pilot Testing Product Rollout & Scale Grameen Foundation s User-centred Solutions Innovation Process The initial solution used principals of design thinking to pull qualitative insights from farmers on what was working and what wasn't. Based on this qualitative evidence, we created Kilimo Booster, a techenabled product specifically tailored to address smallholder farmers financing needs. Also aligned to Musoni, the product now represents 25% of Musoni's portfolio, up from <5% in 2014.
Key Research Findings Research & Ideation Credit without formal collateral was a benefit Ineffective loan delivery channels Financing for diversification limited by lack of experience Existing technology could address issues analogue solutions could not e.g. TAT Perceived riskiness of Ag (for farmers & financiers) Training on how to how to increase productivity is key Repayment cycles did not fit the farming cycle Farmers liked the idea of growing together Shocks were urgent and loans took too long I have to stop working to travel far to get financial services Livestock was not just another asset Income and land size were not always proportional How to maximize the investment for greater returns Using research to understand the farming activities and financial behaviors of farmers helped the team appreciate the unique operational challenges of agricultural lending Receiving and repaying my loan through mobile money is convenient
Key Research Findings Segmentation Small Small land, no livestock Mid- Size Land, some livestock Large Well utilized land, profitable Unstable business, susceptible to shocks Main goal: Secure a stable income Susceptible to shocks, but livestock provides daily income Main goal: Grow current business or diversify Sophisticated, streamlined operations Main goal: continue growing Product Focus Areas Higher income, Quick TAT for operational cash Strategic partnerships & business knowledge Competitive loans, minimal collateral partnerships Agricultural Considerations Agricultural Value Chain; Facilitate relationships to mitigate risks e.g. price fluctuations Farming financial calendar; Match repayment schedules with farming cycle. Short TAT to avoid impacting farming High diversity; Customize product per region, or offer a product that can serve a wide variety of needs Why farmers borrow Emergency; TAT should be short Operations: Short TAT, connect with input suppliers Pivot; Training as they may lack experience in this new venture
Designing a Better Loan Concept Development Outcomes of the research pointed to the need for an agricultural product focused on innovation around loan delivery, risk management, and creating a holistic system. Delivery Using technology to market, administer and collect loans in order to drive time & cost savings to the farmer. Risk Management It was important to build loan repayments around farming cycles, to coincide with times when the farmer had money. Insurance to cater for immitigable environmental risks, 360degree view of the customer Holistic System It was important for farmers to have access to financial services, value chain interactions and supporting services for holistic growth
Aligning Kilimo Booster to address the farmers challenges Repayment Schedules Urgency of Shocks Growing Together Individual repayment terms Grace period of up to 6 months Periodic or one off balloon payment Diversification Varied financing areas Repayment pegged to an existing money making activity, not only the venture the loan is taken for Technology to enhance processes DFA & Mobile) for 24hrs- 72hrs disbursement Land Size Vs Income Training on GAP to enhance productivity Farmer s income is considered holistically Group coguarantee Education & support towards growing together attitude Farming Risks Credit life insurance Animal insurance
innovations. Data is continuously used to drive change at Musoni Early Concept (2013) Scaling (2016) Pilot (2014/2015) Gathering data upfront and continuing to review evidence and iterate throughout has resulted in product & channel Product Rollout & Scale enhancements and improvement of operational efficiencies at Musoni. Using data technological developments have been implemented and are now providing new data sets that will be analyzed and iterated for further product, process & channel
Evidence-to Action is not a one time initiative, it's an iterative process
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