Root Capital contracted MSC to assess the market for wholesale lending and advisory in Kenya, Rwanda, Uganda, Tanzania, and Zambia. Root Capital is a non-profit social investment fund that provides wholesale lending and advisory services to agricultural enterprises. The organization envisions a thriving financial market that serves agricultural businesses—thus generating long-term social, economic, and environmental sustainability for small-scale farmers and their communities around the world.
As part of the assignment, MSC identified the nature and scope of constraints that last-mile agricultural businesses face in terms of access to finance. MSC provided key insights into their needs and aspirations. We also conducted a landscape mapping of financial institutions and other finance distribution channels, such as input suppliers or equipment leasing companies, to assess the state of supply of financial services to the segment. Based on the mapping activity, MSC developed products for either wholesale capitalization or advisory services to entities that can lend to agricultural businesses in the last-mile segment.
MSC created recommendations on the design of the business model based on partnerships with existing financial institutions. We also developed the wholesale lending products for these financial institutions to foray into financing agricultural enterprises. At the time of writing, in line with MSC’s recommendations, Root Capital had started financing the segment through a partnership approach in Kenya. Root Capital had also been implementing the strategy to replicate the approach in Rwanda, Uganda, Tanzania, and Zambia in the period 2018-2020.
MSC has provided technical assistance and advisory services to Equity Bank since 2001. Our key services to the bank on products and channel development include:
- Agency banking channel: We developed a new agent management system; re-engineered the business processes and risk analysis of the entire agent network channel; set up a system for customer and channel satisfaction measurement and management; and prepared a strategic marketing approach to optimize marketing and communications for the agent network.
- Product development and rationalization: We conducted market research and segmentation to understand the use of Equity Bank’s services by its customers; rationalized the existing, over-complex savings, credit and insurance product suites; assessed the potential for delivering the simplified product suite through various channels—branches, agents, and self-service by clients using mobile phones; and prepared a suite of new digital savings products, specifically for delivery through the agent network and client self-service.
As a result of our support, the bank has deepened financial inclusion and broadened access for users. There has been a significant growth in depositors and deposits as well as borrowers and loan book for the bank. By the first quarter of 2018, over 97% of the bank’s transactions occurred outside its branches and 70% were self-service. The use of alternate delivery channels improved the cost-to-income ratio from 47.1% in 2015 to 44.8% in 2016.
MSC was contracted to work on a key component of a pro-poor tourism development project of the Department of Tourism, Government of Uttar Pradesh—the largest state in India. The project amounted to USD 57 million and was funded by the World Bank Group.
MSC’s role was to identify and develop roadmaps for select creative industries in three regions of the state that have a large tourist footfall—Agra, Braj region, and the Buddhist Circuit. The rest of the project revolved around providing ecosystem services to these creative industries. This was a unique research where MSC covered multiple aspects—livelihood, tourism, gender, and youth.
MSC’s mixed-method research mapped and assessed all possible creative industries that either are, or can become, a source of livelihood for the low-income population in these regions. We used the insights from the mapping and assessments to create intervention roadmaps for the creative industries that have the strongest synergies with the tourism market.
The output of our work directly feeds into the next stage of implementation of a proposed USD 10 million program.
In 2002, MSC had trained 10 of what was then Equity Building Society’s staff on its Market Insights for Innovation and Design (MI4ID) tools. This team worked with MSC to re-engineer Equity to be a market-led institution. Together, we overhauled the organization’s product suite, tested marketing campaigns prior to launch, and worked to understand clients’ needs, aspirations, and perceptions of customer service. As Equity Building Society transformed into Equity Bank, the same team worked with MSC to assess the perception of the existing brand to refine it for the new bank.
In 2010, as Equity Bank began its journey to transform digitally, it asked MSC to train a new research cell comprising 12 staff. This cell then worked with MSC to develop a range of digital savings products, optimize communications, and assess customer experiences at agent outlets. The team also worked to optimize Equity Bank’s product suite and customer experience for its expansion into five adjacent countries—Uganda, Tanzania, Rwanda, Southern Sudan, and The Democratic Republic of the Congo.
Equity’s CEO, Dr. James Mwangi has credited MSC’s MI4ID-based, market-led approach as being the key differentiator that allowed Equity’s phenomenal growth. Over the years, Equity has transformed from an organization that struggled to serve 109,000 customers to a regional bank that serves over 12 million customers.
Soil Health Cards (SHC) had been a key component of pilots on the Direct Benefit Transfer (DBT) or Aadhaar-enabled Fertiliser Distribution System (AEFDS) pilots across India. The Indian government had entrusted MSC to support and scale up the pilots from the start. SHCs inform farmers about the appropriate use of fertilizer and nutrients for crops. The use of SHC was supposed to influence the decision of the farmers while buying fertilizer. We discovered that farmers were not at all influenced by SHC while buying fertilizers, as they were either not aware of it or did not find it useful.
MSC conducted a human-centered design-based research to understand the factors that influenced farmers when they applied fertilizers to their fields and their perceptions about SHC. The research explored channels to inform farmers about SHC and identified the nudges that change farmers’ behavior. We used the insights derived from the research to design an outreach campaign that the district authorities used to increase the uptake and usage of SHC among farmers.
A leading advertising agency, Ogilvy & Mather (O&M) used our insights to design the campaign, comprising informative radio jingles and posters. This was test launched in Krishna district of Andhra Pradesh. MSC’s interventions led to farmers using SHCs actively in Krishna district—at the time of writing, this was the only district in the country to do so.
Safaricom’s M-PESA is one of the world’s most successful mobile money providers. It was designed and developed in Kenya through matching investments from Vodafone (UK) and the UK’s Department for International Development (DFID). The partnership involved a number of partnering organizations, including project managers and technology and payment experts sourced by Vodafone (UK), Consult Hyperion, and Safaricom. Commercial Bank of Africa managed the escrow account, while FSD-Kenya represented DFID. MSC’s role involved conducting market research and pilot test reviews, testing user interfaces and user experience, and developing material for agent training. Faulu Kenya, a microfinance institution, participated in the pilot test.
During the pilot test, the MSC team ascertained that the principle use-case for the M-PESA solution was not as a payment vehicle for microfinance clients, but as a person-to-person payments platform. MSC helped launched the solution with 300 agents with a promise to “send money home”—a specific need in Kenya related to the prevalence of split families. Most families in the country have sons and daughters working in the city, while the retired parents live in villages.
MSC’s work alongside the Safaricom pilot test team was instrumental in ensuring that M-PESA could launch successfully with minimal issues and ensure that it could go to scale rapidly. MSC’s extensive work on user experience meant that even new users could adapt to the platform with minimal instruction. Today, M-PESA is the leading mobile money platform in the world with 20 million users in Kenya.
