The Cordaid-Rabobank Foundation-MSC Indonesia microfinance development program supported a selected group of 15 microfinance institutions (MFIs) spread across Java and Bali islands in Indonesia.
MSC subsequently provided assistance to strengthen the MFIs’ operations through strategic business planning, market research, product development, testing and rollout, process re-engineering, risk management, and a variety of other key interventions. MSC also trained local consultants so that they could provide quality services in a sustainable manner to the partners and to other financial institutions.
In a subsequent phase of the project, MSC strengthened the effectiveness of microfinance institutions in augmenting the livelihoods of the low-income segment, served by the partner cooperatives. Across the two phases, over 345,341 micro-entrepreneurs, including 30,000 smallholder farmers, benefited from accessing enhanced financial services.
MSC worked to strengthen over 65 MFIs in remote rural areas of India for the Royal Bank of Scotland Foundation and DIA Vikas. Under the program, MSC undertook the following activities:
- Helped partner institutions conduct market research, develop strategic business plans, design, test and rollout products, set-up robust systems and processes, manage risks, and optimize financial reporting systems.
- Trained local consultants to provide sustainable technical assistance.
- Developed a “MFI-in-a-box” toolkit for wider use of the practical and ready-to-use tools, templates, and material prepared under the program.
Three of the MFIs supported have now transformed to become small payments banks. Together, the 65 MFIs now serve more than 40 million customers.
REGMIFA contracted MSC to support Access Bank in Tanzania to boost its deposit mobilization. The move aimed to transform the institution from a largely credit-focused institution into a commercial bank that could successfully compete for deposits within an increasingly competitive banking sector.
MSC worked with the bank to strengthen its deposit mobilization activities across a wide range of interconnected areas. These included human resource management and staff incentives, marketing and communication, liquidity management, products and services, brand and image analysis, brand re-positioning, training, and business process re-engineering.
MSC’s intervention resulted in the bank being able to diversify its deposit base gradually, first through raising a wider range of fixed deposits, then by expanding the number and range of customers who use its savings and current accounts actively. As of the end of December, 2017, the bank had customer deposits of USD 87.4 million sourced from over 269,000 depositors served from 15 branches.
MSC helped transform Proximity Finance’s microfinance program from a credit-focused project to an institution that provides a comprehensive range of financial services, including savings and deposit products.
MSC was responsible for developing the transformation plan for the client, which included legal and institutional transformation. Proximity Finance currently reaches over 78,000 active borrowers with an outstanding gross loan portfolio of USD 15 million and PAR>30 at 0.34%.
MSC helped HFC Bank in Kenya to roll out its digital transformation strategy for low- and middle-income customers. We conducted market segmentation, behavioral research and design, digital product proof of concept, and pilot testing. We also carried out a comprehensive digital readiness assessment to enhance HFC Bank’s insights into what the bank offered and the current gaps and opportunities that could be addressed through digital financial services.
Based on insights from the assessment, MSC developed a comprehensive business case that identified the approach, constraints, roadmap, and viable options to offer better inclusive digital banking services. We used insights from the research to make recommendations on HFC Bank’s digital roadmap. The roadmap prioritized the enhancement of HFC Bank’s digital product offering with a customer acquisition plan, unique selling propositions, as well as growth and retention strategies.
HFC’s digital strategy meant a re-focus of the financial services business from value to volume. In July, 2018, HFC launched its HF Whizz mobile application to offer a full suite of banking services for low- and middle-income segments.
By the end of September, 2018, the HF Whizz app had acquired over 100,000 new virtual accounts and mobilized over KES 100 million (USD 1 million) from them. HFC also disbursed over 15,000 loans on the app with a cumulative loan book of KES 58 million (USD 0.5 million). During this time, the app facilitated transactions worth KES 686 million (USD 6.8 million), which contributed to the non-funded income of KES 5.86 million (USD 58,000).
Financial Sector Deepening Trust (FSDT) wanted to encourage sustainable change among policymakers. FSDT contracted MSC to undertake a review of micro and small enterprise formalization requirements in Tanzania.
MSC produced a report that highlighted the key constraints to business formalization that young entrepreneurs in the country faced. The report included recommendations for improvement, best approaches to business formalization, best practices and lessons from other markets, and suggestions to develop the capacity of youth to enhance business formalization.
These reports anchored key changes in the business formalization processes and prompted the establishment of MSME formalization coordination committee spearheaded by Bank of Tanzania. The formalization committee has worked to simplify the processes to secure approval for the formalization of enterprises. It also relaxed the presumptive tax regime as a requirement for enterprise formalization in Tanzania.