Page 61 - State-of-the-Industry-2013

Part 2 - mOBile inSuranCe, Credit and SavinGS

TexT BOx 18
in kenYa, microfinance is going mobile*

Musoni (‘M’ for Mobile and ‘Usoni’ for future) is a young but very promising MFI in Kenya. Established at the end of 2009, Musoni
believes the next generation of microfnance is mobile. Musoni’s vision is to substantially improve the quality and availability of
fnancial services to low income, unbanked, and underbanked individuals in the developing world through the establishment and
support of best practice MFIs with an emphasis on efciency, transparency, and client focus.

Musoni is the frst MFI in the world to go 100% mobile, using mobile money transfer services for all loan repayments and disburse-
ments. Musoni has successfully integrated its back ofce with the leading Kenyan mobile network operator, thus enabling seamless
processing of all transactions. Musoni’s success in taking advantage of the Kenyan M-PESA service, with its 45,000 agents and 18
million clients, has enabled it to ofer a fexible and convenient alternative to the traditional time-consuming and manual microf-
nance processes.

Musoni has cash-lite operations, but not branchless. The branches are places for clients to visit, to meet staf, and discuss issues at
hand, but are not used for cash transactions, which are made at money transfer agents and shops. After a little more than two years,
Musoni has set up fve branches spread across three cities, two of which are in and around the capital city of Nairobi.

CHALLENGE #1: REDUCING THE COST OF SETTING UP MFI BRANCHES…

Setting up brick-and-mortar branches is quite expensive for an MFI, and Musoni made the bet that this cost could be substantially
reduced if transactions were not in cash. For example, a strong room is an obvious requirement if cash is to be held at a branch. In
addition, tellers are required in the branches to process the cash repayments. In many MFIs, a number of the costs associated with
brick-and-mortar operations are eventually passed on to the consumer. And it’s not just about cost; it’s also about convenience,
speed of transaction processing, and fraud-related risks.

This is why Musoni decided to operate cashless. This way, using the same resources as other MFIs, particularly staf, Musoni has been
able to establish more branches and serve a much greater number of customers. Going forward, Musoni will be better able to set up
branches in more remote areas than a traditional MFI.

CHALLENGE #2: …WHILE IMPROVING qUALITy OF SERVICE

Loans are disbursed and repaid via mobile money, enabling Musoni to disburse loans much faster than traditional cash and cheque-
based models. Musoni guarantees its customers loan money within 72 hours of application. The MFI enjoys lower risks, less paper-
work, better customer service, and easier and more accurate transaction tracking.

The frst loan was issued in May 2010, and since then over 18,000 loans have been disbursed, totalling more than KES 500 million
(approximately USD 6 million). Musoni currently serves over 8,000 clients.

*This text box was adapted from a blog post by Claire Pénicaud published on the MMU website on September 6, 2012

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