The GSMA mWomen Working Group meeting in Nairobi in July featured a field visit to meet women clients of Musoni , the world’s first 100% mobile microfinance institution.  Grameen Foundation, an equity investor in Musoni, helped to welcome the Working Group meeting’s 40 industry and development partners to learn about this innovative model for delivery mobile financial services to women.

Musoni provides micro-loans via Safaricom’s M-PESA mobile money service to members of Kenya’s ubiquitous community savings groups.  As explained by our host, Musoni Kenya Acting CEO Stanley Munyao , the loans are guaranteed by the group, which selects members carefully based on creditworthiness.  This approach overcomes a key credit access barrier for low-income women, who often lack the documents or assets for collateral needed for traditional bank loans.

Stanley also described the relatively simple process for women who are new to formal banking services.  Once a group expresses an interest in receiving a Musoni loan, a loan officer visits to explain the service and loan terms and conditions.  Next, over a four week period, individuals must save 20% of the value of the loan they have requested through M-PESA.   Once the savings target is met, the loan is disbursed.  M-PESA is used for both disbursement and repayment of the loans.

Working Group participants travelled the 50 kilometres from our conference room in the central business district of Nairobi to the peri-urban town of Thika.  We joined meetings of local savings groups who had received loans and were excited to share their experiences with Musoni.   One such group included a female M-PESA agent who owned a small kiosk and had applied for a loan of 100,000 Kenyan Shillings, worth approximately US$1100.  She explained why she liked being a Musoni customer:

• Efficiency: the time between her requesting a loan and receiving approval was just 24 hours.  This is incredibly useful for a small business looking to seize an opportunity in a dynamic market.
• Time saved: because the loans are disbursed and re-paid using mobile money, there is no need to visit bank branches or ATMs and hence the time and expense of long journeys are avoided.
• Security: the use of mobile money means that she no longer needs to carry cash around, reducing the risk of theft.

Thanks to Musoni, she now has the necessary working capital to increase her M-PESA float, meaning that she can serve more customers, conduct more transactions and increase her revenues.

We were excited to have had first-hand experience of a service which uses mobile technology in an innovative way, building upon the widespread nature of savings groups and mobile money in Kenya.  In terms of the overall business, the Musoni statistics speak for themselves:

• Low default rate: 3%
• Lean operations: 12,000 customers served by ~65 staff members

This type of service is particularly appealing as a mechanism to reach women who may have been reluctant to try using mobile phones or mobile money services.  Women’s savings groups are part of the social fabric in Kenya, providing a great platform for women to share their experiences with mobile and encourage their peers to try out new tools, helping to overcome the common technical literacy barrier to women’s mobile phone adoption.

Some of our Working Group members have already told us that the visit has inspired them to be more creative in the area of mobile financial services.  Watch this space!