In 2001, Equity Building Society, Kenya, approached MSC to understand the reasons for the low uptake of their credit products. The resulting research, re-structuring of the products, and supply-side support put Equity on the path to transform into a bank. Equity was subsequently listed on the Nairobi Stock Exchange.
MSC supported Equity in strategy, product innovation and design, product marketing, digital transformation, costing and pricing, business process re-engineering, risk management, staff incentives, branding and corporate identity, and many other areas. From 2010, we also worked to build Equity’s model to deliver digital financial services. This involved agent network development and management, digital transformation, product-mix assessment, channel, and product differentiation, new product development, testing and roll-out, marketing and communication, customer service, and digital transformation.
MSC’s close collaboration with Equity Bank over the past two decades has helped the bank’s customer base to grow from 109,000 to over 12 million across six countries. Over 97% of Equity Bank Kenya’s transactions are conducted outside their branches, while customers initiate over 70% of transactions on their mobile phones. Today, Equity is the most respected mass-market bank in Africa.
The Government of India launched the Electronic National Agriculture Market or eNAM platform to enable trading of primary agricultural produce. The platform connects 585 agricultural markets (or APMCs) through an online platform. MSC has been supporting the central and the provincial governments in design, policy reforms, and implementation of the eNAM program.
MSC undertook an extensive study of physical and electronic agricultural markets across multiple states and markets. MSC supported the government in the state of Uttar Pradesh to improve the functioning of eNAM across several APMCs. We worked with the government to implement our recommendations and to support operational and policy-level changes in the state.
MSC also created a blueprint to improve the design and implementation of electronic agricultural markets across India. Many of the design improvements were accepted and implemented. From 2016 to 2018, over 10 million farmers and 150,000 traders or commission agents had registered on the eNAM platform across India. The cumulative volume of electronic trade on eNAM had crossed about INR 482 billion (USD 6.5 billion) by September, 2018.
MSC provided technical assistance support to design and test a digital financial services ecosystem to digitize coffee value chains in Uganda. We conducted the project for MM4P, MTN, and Kyagalanyi Coffee Ltd. Kyagalanyi is one of the leading coffee factories in Uganda that deals with coffee purchasing, processing, and export. MSC, together with Kyagalanyi, MTN and other stakeholders digitized the coffee value chain payments for over 75% of their farmers.
As part of the project, MSC developed a bulk payments toolkit that helped different stakeholders in a range of agricultural value chains to plan and implement bulk payment digitization. The successful design and implementation of this project helped MM4P, MTN, and Yo! Uganda develop a strategy to digitize various agro-value chains, such as seed oil, tea, dairy, and maize, among others, in the country.
MSC and Cordaid Netherlands won a USD 1-million grant from the EU Microfinance Program and the Secretariat of the Africa, Caribbean and Pacific Group of States (ACP-EU) to work with banks and MFIs. MSC collaborated with Cordaid to provide technical assistance to seven MFIs in Africa. The collaboration developed agricultural finance products to improve access to financing among farming households. We helped the MFIs conduct market research, develop strategies, analyze value chains, develop credit products, and establish linkages to agricultural service providers.
MSC was tasked to design, develop, and pilot-test agriculture finance loans in four countries in Africa. We worked with seven financial institutions to understand the needs of farmers and the financing gaps, which resulted in the design of seven credit products.
MSC’s efforts facilitated a total of USD 3 million in commercial funding to about 500,000 smallholder farmers across coffee, sugar cane, maize, livestock, and dairy value chains. The intervention enabled the MFIs to disburse USD 3 million to smallholder farmers, ultimately reaching 1.3 million smallholder farmers. The overall ACP-EU program phase I had an impact on 52 of 79 ACP member countries and facilitated access to finance for more than 5.5 million financially under-served people.
MSC engaged with the Avahan project in India to generate insights about the specific financial needs, attitudes, perceptions, and behavior of commercial sex workers in the country. Avahan started in 2003 supported by the Bill & Melinda Gates Foundation. It aims to reduce the spread of HIV in India by working with high-risk groups, which include female, male, and transgender commercial sex workers (CSW).
MSC generated insights about the specific financial needs, attitudes, perceptions, and behavior of CSWs. We employed sensitive and thorough qualitative research through our Market Insights for Innovation and Design (MI4ID) tools and designed savings products for NGOs under Avahan. The insights fed into informing product design.
This project was unique as it considered India’s 3 million CSWs as a customer segment for financial product development.
The Sri Lanka based MFI, Arthavida Foundation (AVF), a sister concern of Arthacharya Foundation (AF), approached MicroSave seeking consulting to improve its portfolio quality. Until 30th June 2011, AF was engaged in both microfinance and non – microfinance activities. In June 2009, the PAR (>30days) of AF stood at an alarming 24%, which further rose to 40% by June 2010. The active loan clients and loan portfolio outstanding had also gone down. AF decided to transfer its microfinance operations to AvF on July 1, 2011. However, AVF faced severe challenges of improving portfolio quality. Rabobank Foundation, commissioned MicroSave to offered the technical support in 2009.
On account of the technical assistance and proactive implementation by AvF, amongst several efficiency and productivity gains, the PAR (>30 days) was systematically reduced from 40% to 5%, within a short period of two years. This case study covers the challenges of AF and how a tripartite approach of intense engagement of a donor/investor, financial service provider and MicroSave came together to successfully address the problem of delinquency.