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> Posted by Jeffrey Riecke, Senior Communications Associate, CFI
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The Helix Institute of Digital Finance recently launched the Kenya Country Report 2014 as part of their Agent Network Accelerator (ANA) project. The ANA project is aimed at increasing global understanding of how to build and manage sustainable digital financial services (DFS) networks by conducting large-scale research among DFS agents and issuing training to providers and other stakeholders. In this two-part interview, Dorieke Kuijpers, Research Project Manager at the Helix Institute and co-author of the report, provides insight into the ANA project and the Kenya Country Report. The following is part two. Part one can be found here.
One of the big findings of the survey is that banks’ agents now account for 15 percent of the agent banking market in Kenya – a threefold increase over last year. What are some of the other key developments in the market?
We have identified a number of market developments by comparing the Kenya 2014 survey findings with those of the Kenya 2013 survey. Mobile network operators (MNOs) have led the success in the digital financial services industry in Kenya and historically have been considered better in marketing and distribution than banks, which is not surprising given that many MNOs in East Africa have more clients than banks do. Nearly a decade of development later, we see this changing: banks are now making large investments in the DFS business and they are approaching it in a very different way.
An interesting finding is that although we observe a significant increase in the market presence of bank agents, the products and services they offer are in many ways additive as opposed to competing with those of MNO agents. While MNO agents are still conducting a higher number of transactions (almost twice as many as bank agents), bank agents are offering a greater and more sophisticated array of services, including bill payments, savings, and credits. Also, the median amount transacted among bank agents is roughly 50 percent higher, which means their revenue is now similar to that of MNO agents. This is reflected in the fact that out of the 32 percent of agents that report wanting to open a new till for another provider, the overwhelming majority of agents would like to join a bank’s network, with Equity Bank being the most popular option.
> Posted by Bruce MacDonald, Senior Vice President, Communications, Accion
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My first love was Susan Morasky, but my second – and far more enduring – has been Africa. For that I credit Mrs. Walden, my third-grade teacher, who encouraged us to think big.
Sadly, even the loves of your life can let you down. In Nairobi last week to promote the Africa Board Fellowship, our new program on governance for sub-Saharan MFIs, all went well. Until, that is, I tried to go home. A 20-minute taxi ride to the airport became an hour, then two, then four.
I missed the KLM flight to Amsterdam, and of course the connecting flight home. As I sat in the cab, fuming in First-World frustration, I peppered the driver with questions. “What’s the cause of this?” Rain. “Can’t you go another way?” This is the only way. “Where are all the policemen directing traffic?” Incoherent response. And, finally, snippily, “How on earth do you people put up with this?” Obviously embarrassed, he finally stopped answering my questions.
Everything’s relative, especially in Africa – something I should have remembered, given the banking and finance conference I’d just come from, and the presentation by Amish Gupta, head of investment banking at Standard Investment Bank in Nairobi.
> Posted by Madeleine Dy, International Programs Manager, Water.org
More than 100 leaders from the water, sanitation, and finance sectors came together October 21-22, 2014 for the second East Africa WaterCredit Forum in Nairobi to share progress made and to brainstorm lasting solutions to the water and sanitation crisis affecting East Africa. In Kenya, for example, access to safe water supplies is 59 percent and access to improved sanitation is 32 percent.
Water.org, in partnership with The MasterCard Foundation, convened the Forum, part of Water.org’s five-year collaboration with the Foundation to bring safe water and sanitation to economically challenged communities in East Africa through the WaterCredit approach. Since 2010, the WaterCredit initiative in Kenya and Uganda has empowered almost 115,000 people to obtain financing from seven financial institutions (FIs) for long‐term, sustainable water and sanitation solutions.
> Posted by Nadia van de Walle, Senior Africa Specialist, the Smart Campaign
On June 18 and 19, I attended the “African Microfinance Pricing Transparency Leadership Forum“ in Nairobi, Kenya on behalf of the Smart Campaign. The conference convened key African microfinance market actors, including regulators, policymakers, and technical assistance providers, to discuss policies in support of pricing disclosure and client protection. It was hosted by MFTransparency (MFT), Planet Rating, and the Agence Française de Développement. Participants came from all over the continent, ranging from Ghana to Mozambique. As a new member of the Smart Campaign team, I took away a few thoughts for our own work.
The concept of transparency from MFIs is gaining ground. No longer can an MFI withhold pricing data without censure from peers. Participants voiced the need for greater intervention from their governments in the form of reporting standardization, regulatory oversight, and financial education programs so that clients can better interpret pricing information.
We should capitalize on this momentum and seek out partners who are truly committed to transparency and to improving the market environment. We should also encourage discussions among on-the-ground actors regarding difficult subjects such as pricing caps, improving small MFIs’ operating efficiency, and proper fee disclosure. And as MFIs commit to sharing more information, the industry should work to ensure that clients can understand and use pricing information to make good choices.
But many actors are reluctant to take on the responsibility and costs of bringing transparency to the market. Participants voiced concern about taking on greater costs and duties regarding regulation and providing recourse. Further, in some countries, confusion remains over how regulatory and oversight responsibility is allocated among government agencies.
Those working in microfinance can help lay the groundwork for sector transparency in Africa. We in the Smart Campaign should focus on forcefully communicating the incentives for transparency and the mid-to-long-term benefits to MFIs and their associations. We should support collaboration and knowledge-sharing among market actors and support the development of strong truth-in-lending legislation that protects borrowers. Actions must reflect the national regulatory context and engage local partners who understand specific local issues. Even with stronger legislation and increased regulation, there are many non-regulated actors slipping between cracks (e.g. very small, non-deposit taking organizations) and the Smart Campaign and others need to find ways to protect the clients of these institutions as well.
Populist policies are not always the most effective policies for client protection. MFT presented empirical evidence that, despite their recent popularity, pricing caps are not more effective than a client protection agency or strong client protection legislation. MFT’s evidence shows that if price caps are introduced, they must be comprehensive (i.e., address all fees and additional charges) and will result in the smallest borrowers and lenders being forced out of market. It is key to encourage legislative steps and the creation of a regulatory body rather than laws directly focused on interest rates and caps. At the same time, the lengthy timelines for legislation processes to introduce such protections can discourage people from taking action. Meanwhile, the thorough collection and effective communication of data being done by organizations such as MFT and MIX is an important part of improving the microfinance environment.
> Posted by Monique Cohen, Ph.D., Founding-President, Microfinance Opportunities
The following post was originally published on the Child and Youth Finance International Blog.
“I am not good at managing my money. I need some extra training so that I can know how to manage myself. Because you know money is like trouble. You get big money and it’s like big trouble, you know,” (A young man living in Nairobi, 2011).
Walk down any street in Nairobi, Dar es Salam, or Cairo, or in a small African town and it seems everyone, including teenagers, has a phone to their ear. Indeed, for those 18 and under, few have known a world without mobiles. Not surprisingly, school-age boys and girls (5-14), teens (14-18), and young people entering the labor force or tertiary education (over 18) are seen as a potential new market for the provision of financial services. While recent experimentation in this space has focused on savings, there is growing consensus that young people should be able to access a full range of financial services, with the priorities changing as they advance in their life cycle (see YouthSave, YouthStart, and Child and Youth Finance International). Not only are youth savings and youth financial education hot topics in the financial services space, but there is also a growing recognition that young people have money, and technology-based financial services offer a gateway for their financial inclusion. Read the rest of this entry »
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