This note draws on the experience of MicroSave’s Action Research Partners (ARPs), involved in providing consumer loans to low income salaried workers. Under these loans monthly deductions are made from salary accounts maintained with the financial institution or payments are made through direct payroll deductions and remittance in the lender’s accounts. It cautions the MFIs which intend to provide such loans that these loans can outstrip funds very quickly. It also suggests managing risks and explains the strategies such as using pilot tests to identify operational constraints, managing employer-employee relationships, controlling repayments, ensuring affordable loans to customers, strengthening credit control and administration, and using technology for further reducing the risks.
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Grameen II – The first five years 2001-2005
MicroSave conducted a study in 2006 to understand the transition of Grameen Bank in Bangladesh to Grameen II. The study was carried out by Stuart Rutherford in association with MicroSave. Grameen II is only a partial redesign of the classic Grameen model, focused mostly on changes in the range of products offered and their terms and conditions.
Grameen II offers more need-based services to the clients and also makes access to these services significantly easier. Processes have been simplified and streamlined. The staff have been trained in better process management to handle the volume of transactions involved to deliver efficient functioning. The other dimension considered was portfolio diversification through renewed emphasis on public deposits. Besides, new and attractive services such as the special savings account, special purpose loans, etc. based on client demand were introduced.
The study also highlights the areas for improvement for a possible Grameen III to emerge, such as better use of information technology, better marketing of products and services offered and desirable regulatory environment for emerging players in the microfinance sector in Bangladesh.
Costs and benefits of market research and pilot testing for new product development in microfinance
To attract and keep clients, Microfinance Institutions (MFIs) want to introduce new products that meet these demands. One of the most pertinent questions facing many MFIs today is “how?” Significant resources have been invested in the research and documentation of a market-led approach to product development, which is now widely accepted by the microfinance industry’s technical service providers.
The approach includes five steps, two of which—market research and pilot testing—have rarely been adopted by MFIs, despite the fact that they are the core of the client driven approach. Why is it so, is a matter open for discussion.
Drawing from existing literature and the experiences of ten case study MFIs in seven countries, this document explores that hypothesis and summarises the costs and benefits recorded by institutions that have chosen to incorporate market research and pilot testing into their new product development processes.
Building a Bridge Between MFIs and the Health Sector, Innovative Health Care Financing Scheme for the Low-Income Community
The Health Care Financing (HCF) Project brings together a diverse consortium comprising of AAR Health Services, AAR Credit, K-Rep Bank and K-Rep Development Agency to develop and test an innovative, private sector-driven, commercially viable and replicable health financing scheme to reach low-income groups. Through the project and its consortium, a range of health care financing products have been developed and are being pilot tested. These products will contribute towards quality, accessible and affordable health care financing services for the low-income groups. This is achieved through the establishment of franchised health centres in the low-income areas of Nairobi city that offers both fee-for-service and also provide health care to families covered by the AAR Afya health care financing plans.
During the product development phases and the pilot test period, the project faced several challenges that resulted in its slow growth. Despite these challenges, the results of the Afya products are promising. Overall, the findings from the project provide reassuring indications that the health care product(s) tailored for low-income groups do indeed have a huge market in Kenya.
Grameen II’s Membership
Grameen’s ‘members’ are its clients, who own a share of the bank and gather in small groups to receive its services. The most startling fact about membership since the launch of Grameen II has been its rapid and accelerating growth. This note looks briefly at the reasons for this growth, reviews Grameen’s membership policies, and then offers some observations on the composition of the membership.
What CEOs Need To Know About Software Implementation
Once the right software system is chosen, it has to be put into place properly. Inadequate planning often leads to project delays and unmet expectations. This note distils some of the lessons (good and bad) gleaned while implementing the selected software solution. Key issues addressed in the note include – planning and project management skills, sponsorship, roll out process, communication and connectivity, hidden costs, scope creep, vendor relationship, training staff etc.