Musoni - the first 100% mobile microfinance institution in the world

Musoni - the first 100% mobile microfinance institution in the world

KenyaAmsterdam, Netherlands
a
Organization type: 
for profit
Project Stage:
Scaling
Budget: 
$1 million - $5 million
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

Musoni is a social enterprise that establishes best-practice microfinance institutions and uses technology to lower costs, reduce risk and improve efficiency.

About Project

Problem: What problem is this project trying to address?

Microfinance plays a key role in expanding access, yet all too often is expensive, inefficient and bureaucratic. Many microfinance institutions still rely upon outdated and time-consuming processes (such as manually entering repayment slips) and almost all struggle to manage and develop their IT systems. This results in poor products and services for clients, with large amounts of time spent travelling and in queues (both an inconvenience and a security risk), servicing loans that are expensive and confusing.

Solution: What is the proposed solution? Please be specific!

Musoni uses technology to lower costs, reduce risk and improve efficiency. We are the first MFI in the world to use mobile payments for all transactions, reducing back-office costs and improving security and flexibility for our clients. Our IT system is easy to use and provides up-to-date information to field staff in real time. Automated SMSs assist in managing portfolio quality. We pass on these cost savings to our clients, resulting in interest rates at the lower end of the market.
Impact: How does it Work

Example: Walk us through a specific example(s) of how this solution makes a difference; include its primary activities.

Musoni BV achieves its Vision through: • Setting up, establishing and governing new MFIs • Providing high quality and innovative IT and MIS systems and back-office support • Providing additional Musoni Services such as capacity building and advisory services The adoption of the Musoni System enables Musoni partner MFIs to handover many of the traditional problems experienced by MFIs to Musoni BV, allowing more time to be spent focusing on front-line operations and expansion. The use of mobile payments enables seamless and efficient data handling, translating into significant savings in back-office operations. There is less room for errors and fraud and data is available on a near real-time basis. In addition it reduces the time consuming process of loan disbursements and loan repayments and eliminates the inherent risks of cash handling. All our loans are disbursed and repaid by means of mobile money transfers. With a fast growing use of mobile phones and MMT and by providing mobile micro financial services to the financially excluded, Musoni BV is tapping into an extremely dynamic market that has big potential both in terms of the business opportunity and social impact.
Sustainability

Marketplace: Who else is addressing the problem outlined here? How does the proposed project differ from these approaches?

While the popularity of mobile money in the region has led other microfinance institutions and banks to partner with mobile money transfer services (such as SMEP or Faulu in Kenya), Musoni MFIs are still the only MFIs to remain completely cash-free, and thus take the maximum benefit from their use of MMT. Musoni is continuously developing both the IT System and the Musoni Microfinance System to ensure that Musoni MFIs continue to take advantage of the most innovative technology, and remain ahead of the market. Aside from its focus on innovation and technology, Musoni MFIs distinguish themselves through their attention to client needs.
Team

Founding Story

Musoni BV came about as a result of the experience gained by members of the Musoni BV team working in the field of mobile banking and microfinance in East Africa. Working with existing MFIs, the team was successful in rolling out the first partnerships between mobile money transfer services and MFIs in both Kenya (2008) and Tanzania (2009). These early pilot programmes demonstrated the potential in introducing innovative new technologies to the microfinance industry, but highlighted the challenges inherent in implementing mobile money into institutions with existing operations and processes. As a result, it was decided to set-up a new MFI that would be cash-free, utilizing mobile money for all loan repayments and disbursements as well as the depositing and withdrawing of savings.
About You
Organization:
Musoni
About You
First Name

Eva

Last Name

Teekens

About Your Organization
Organization Name

Musoni

Organization Country

, NH, Amsterdam

Country where this project is creating social impact
How long has your organization been operating?

1‐5 years

Has the organization received awards or honors? Please tell us about them

In July 2011, Musoni won the award for ‘most innovative use of technology’ at the Global Microfinance Achievement Awards in Geneva. These industry awards recognise the efforts, innovations, and services that ensure maximum business and social returns within the microfinance sector. All finalists were judged by a panel of microfinance thought leaders from around the world to determine which organisation stood out for their achievements and why.

In 2012, Musoni's product design was awarded "excellent" status by the SMART campaign, an organisation focussing on transparency, responsible pricing and fair treatment of clients.

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Innovation
How long have you been in operation?

Operating for 1‐5 years

Which of the following best describes the barrier(s) your innovation addresses? Choose up to two

Access, Quality.

Social Impact
Please describe the goal of your initiative; outline what you are trying to achieve
Which barrier(s) to financial inclusion does your solution seek to address? (select all applicable)

Physical and other accessibility obstacles that prevent communities from reaching financial services, The lack of affordable financial products tailored to the needs of underserved and excluded communities,.

If you selected 'other' above, please specify which other barriers to financial inclusion you solution seeks to address:
For which underserved or excluded communities will your solution create access to valuable, affordable, secure and comprehensive financial services?

More than 500m people in sub-Saharan Africa do not have access to formal financial services. These same 500m do have mobile phones. One of the main reasons for this lack of access is the poor availability of financial services in rural areas. Musoni’s use of mobile technology allows us to leapfrog the traditional barriers of distance and poor infrastructure to bring high quality financial services into previously un-served areas. Our Vision is to substantially improve the quality and availability of financial services to low income, unbanked and under banked individuals, starting with East Africa, through the establishment and support of best-practice MFIs with an emphasis on efficiency, transparency and client focus.

Could your solution work in other geographies or regions? If so, where?

1 billion people in the developing world face the same problems we see in Kenya, while simultaneously, MMT services are increasingly popular. Musoni’s solution works in any region of the world where there is room for financial inclusion to grow and where mobile financial services are emerging. Many developing countries in Asia and South America, not surprisingly, have observed this trend. Annually, Musoni carries out country studies to identify which countries are ready to receive our services. In 2012 Musoni will start operations in Uganda and will have operations in five countries by 2016. Currently, Africa is in the lead with respect to mobile money services and remains the poorest continent in the world.

If your solution is dramatically successful, how will things be different in 10 years?

We see the potential to completely revolutionise the financial sector in the developing world, improving the lives of millions of unbanked in the process. Over the next ten years Musoni alone aims to have established a network of best-practice MFIs across Africa while simultaneously offering its innovative IT platform to other MFIs, increasing its social impact. At the same time, Musoni will have demonstrated the feasibility of combining technology and microfinance and hopes to inspire a movement towards better products and services across the industry.

What will have had to have changed to make this happen?

The availability of funding is absolutely crucial to Musoni’s success. The inability to attract additional funding may mean that we will have to postpone the development of the Musoni system and the future establishment of MFIs, and their corresponding capital requirements. However, and especially after the financial crisis, there has been a growing interest in impact investing, investments made with the intent of doing “good” as well as generating a financial return. Equally important is Musoni’s reliance on the continued development of the mobile money market and the incredible growth of mobile network operators that has been observed in developing countries. The continued demand for financial services across the developing world combined with the right technology will act as catalysts to our growth and expansion ambitions.

What has been the impact of your solution to date?

Since opening its first branch in May 2010, Musoni Kenya has disbursed over 18,000 loans directly through MMT services, providing access to over $6m of credit to micro entrepreneurs. We currently serve 8,000 clients and have repayment rates of over 96%. In the next twelve months, Musoni aims to increase its number of clients to over 30,000. Client feedback has been extremely positive, with people focusing in particular on Musoni’s flexibility, transparency and efficiency. Simultaneously, we have been recognised for our client protection principals and in 2012 Musoni’s product design was awarded "excellent" status by the SMART campaign, an organisation focussing on transparency, responsible pricing and fair treatment of clients.

What is your projected impact over the next five years?

We aim to have an established network of at least 4 partner MFIs in 4 different countries that will share Musoni’s core values and the Musoni Microfinance Concept; improving, in the process, the livelihoods of over 200,000 people. Musoni aims at sharing the learning and best practices from individual partners across its network, bringing benefits for all and ensuring that the Musoni System continues to be market-led and customized to the needs of the customer.

What barriers might hinder the success of your project? How do you plan to overcome them?

Establishing a new MFI in a developing country comes with its own set of challenges. Many practical issues have to be solved during the set-up phase which may take longer than predicted. Additionally, the Musoni System is provided from Amsterdam, whereas Musoni MFIs are based in Africa. The communication challenges associated with this are overcome through the presence of an Implementation Team who report directly back to Holland and through frequent visits to our partner MFIs.

Winning entries present a strong plan for how they will achieve and track growth. Identify your six-month milestone for growing your impact

Excel in social performance; Launch exciting and innovative new products and technologies; Open another MFI in Uganda

Identify three major tasks you will have to complete to reach your six-month milestone
Task 1

Launch a joint Grameen Foundation and Musoni project aimed, amongst other, at setting up a world class SPM system

Task 2

Being 100% cashless we are now working towards becoming completely paperless in all our branches in all our partner MFIs

Task 3

We have implementation team members in the field but we will have to recruit a local team in Uganda who will run our partner MFI

Now think bigger! Identify your 12-month impact milestone

Establish rural branches and appropriate products; Identify a third country for operations; Continue focusing on innovation

Identify three major tasks you will have to complete to reach your 12-month milestone
Task 1

Work on a rural expansion strategy together with our partners and develop appropriate lending product such as agricultural loans

Task 2

Research and produce in-depth country studies with input of our partners

Task 3

Set up a culture of innovation and regularly brainstorm on potential projects safeguarding our position as next generation MF

Sustainability
Tell us about your partnerships

The following parties have strongly supported us either through subsidies or pro bono services:
- OxfamNovib
- BDO
- Allen & Overy
- Rabobank
- Hivos
- A4ID (Advocates for International Development)
- Grameen Foundation
- KfW
- CARE
Through their partnership with us, they have shown their trust and confidence in the Musoni team and our innovative business model.

Are you currently targeting other specific populations, locations, or markets for your innovation? If so, where and why?
What type of operating environment and internal organizational factors make your innovation successful?
Please elaborate on any needs or offers you have mentioned above and/or suggest categories of support that aren't specified within the list

We currently have a number of projects that require interns to assist on short term unpaid assignments; these include market research, financial modelling, press releases etc. We’re very eager for volunteers to assist us on these items. Funding is naturally also an ongoing need due to our growth ambitions.