Following a Proven Path to Success

Hello Lenders,
My name is Andrew Weber and I recently served as a Zidisha Client Relationship Manager in Kenya. There I paid a visit to James at his business in a town on the outskirts of Nairobi. For years James watched as a friend consistently maintained a healthy profit operating a clothing store. James was already doing ok with his existing businesses selling charcoal and operating a motorbike taxi, but he wanted a little something extra to help support his wife and 3 children aged 12, 8 and 5. So he has decided to follow the proven copycat path to business success and has opened his own clothing store now.

James used his Zidisha loan to enable this new business to get off the ground. He now has store fully stocked with clothing for men, women, and children. He has only been open for about a month but the early returns are strong. He is on pace to make about $140 on each large been of clothes he sells. If the business continues to do well he hopes to move his family into a large home. James’ plan to emulate his friend’s success appears to be perfectly on course right now. 

Emerging trends in microfinance

Financial inclusion continues to be one of the key challenges in the microfinance sector today that would play an integral role in shaping its performance in the future. At the Mexico G20 summit last summer, 17 countries led by the Presidents of Chile, Indonesia, and Mexico publicly committed to advance financial inclusion. Although the term microfinance has been associated with the working methodologies of Muhammad Yunus of Grameen Bank and with organizations such as Opportunity International, Accion and ASA, its employment as a tool to fight against poverty has always been debated, since its usage still lacks a necessary component to creating successful entrepreneurship values.

The concentration of MFIs have been growing in the regions of Africa, Latin America and Asia over the years, and this trend is attributable to the increasing below-poverty line population in those regions alongside the proliferation of the urban poor. Primary sources of funds for early MFIs were generated from savings of clientele and venture capitalist funding. However, the scenario has been changing rapidly. Nowadays, Central Banks across the globe have been taking initiatives to allocate financial services to the poorest of the poor; this in turn, has enabled hundreds of MFIs around the globe to become profitable in the long run. Commercial banks have begun to acknowledge the profits they can achieve from the low end of the retail market and mobile phone operators continue to discover innovative methods of allowing the poor to access mobile-based banking services.

Over the past year, there have been various trends that have emerged in the microfinance sector as businesses and individuals continue to realize the benefits of microfinance. Some innovative trends that have been adopted by microfinance institutions as they try to make their solutions more sustainable are listed below-

•   Specialized Microfinance Institutions: Microfinance institutions are focusing on customer specific demands, which vary across a wide range of customers and according to the location. Last year saw an increasing progress in translating the needs of the poor into improved context-specific product offerings and policy approaches. A set of providers across the globe accelerated experimentation with innovative products that better match people’s savings needs and behaviors. For example, Jipange KuSave in Kenya tested the provision of interest-free loans with a third of the amount held back as savings. Opportunity Bank in Malawi has a commitment savings product for farmers that allow them to lock away their post-harvest payouts and distribute it over the year to smooth cash flows.

•   Diversification of Microfinance Institutions: Microfinance institutions believe in offering broad range of products and services under an umbrella of microfinance that previously started with small loans, now offers money transfer, insurance and savings services as well.

•    New channels: Branchless banking and franchisee-based services have become extremely effective and prevalent these days to approach potential clients who live in rural areas. One of the top developments in Kenya’s branchless banking industry was the launching of M-Shwari in Kenya, which provided access to savings and loans to M-Pesa customers. Through a partnership between Vodafone, Safaricom and the Commercial Bank of Africa, M-Pesa customers can now apply to CBA for a mini-loan and sign up for an interest bearing savings account, directly from their phones. Since its launch in November, M-Shwari now has 1million users.

•   Turnkey Solutions: Most of the microfinance institutions have started offering services to their clients that differ from traditional services like savings, insurance and loans. Some MFIs offer services such as supply chain management or assisting with marketing infrastructure to grow micro-businesses.

Look Good to Feel Good

Here is a great update from Traci in Kenya!

Traci and Judy

December 19, 2012

Hello, my name is Traci Yoshiyama, Zidisha’s Kenya Client Relationship Manager. I am currently visiting Zidisha borrowers in and around Nairobi.

Look good to feel good, a universal approach to life amongst women everywhere in the world, Kenya being no different. Salons and boutiques ubiquitously line the streets of every town, big or small. Heaps of secondhand clothing can be found on the busy downtown sidewalks of Nairobi, women picking through the piles to find that special piece to add to their wardrobe. And formal dress is not only set aside for Sunday’s best, but every day men and women, the rich and poor, can be seen sporting the latest fashion trends. With clothes being an easy, affordable, and high-demand commodity, many women, including Zidisha borrower Judy Mburu, decide to venture into the clothing business. 

After leaving her job with EPZ, Judy began her new career as a hawker, selling shoes around the town of Githunguri. Proving to be a success, she soon earned enough money to rent a space constructed out of iron sheets along the side of the main road, neighboring produce stands and similar boutiques (see profile picture). Progressing even further, Judy introduced secondhand clothes, called mitumba, to her stock. For two years her business grew, allowing Judy to put food on the table for her family (two young boys), pay rent, employ a woman to upkeep her home during her long 13-hour workdays, and chip in for a security guard to watch over the shops in the evening. 

Always looking to expand, Judy became a Zidisha member in November, receiving her loan shortly after. Thanks to Judy’s astute business skills and the help of Zidisha, she no longer has an iron sheet shop, but now rents a permanent room. Furthermore, with her Zidisha loan, Judy was able to become an M-PESA agent, dedicating half of her shop to M-PESA matters. A similar approach to strategically placing knick-knacks along checkout counters, Judy’s M-PESA customers will inevitably browse her clothing shop. No longer selling mitumba, due to an increase in import taxes, she now offers new clothes for all ages. Obviously not a one trick pony, Judy also sells popcorn outside her shop, though due to the day’s downpour, her machine could not be set up. Wanting to pay back her loan earlier than expected, Judy would like to use her second loan to buy more clothes and add hair accessories. She would also like to move to a larger space, preferably back to the main road, which draws a lot of foot traffic. 

After only two years, it is hard to imagine that this all started with a portable shoe business. But after meeting Judy and witnessing her conviction to succeed, it all makes perfect sense. Being in Githunguri often, I look forward to greeting Judy at her future shop along the main road. Asante sana Judy, kwa tembelea mzuri! 

View more pictures of my visit with Judy at www.talkingstory.posterous.com/pages/snapshots 

Achieving Literacy Through Technology in Africa

An update from one of our interns on the ground in Kenya:

Hello, my name is Dan Cembrola, one of Zidisha’s Kenya Client Relationship Managers. I am currently visiting Zidisha borrowers in Nakuru and its outskirts.

The town of Salgaa, located 30 kilometers west of Nakuru, would not be described as a technological hub. In fact, many of the homes here do not have access to electricity. Considering this, it is not hard to imagine that many residents of Salgaa are not overly familiar with the use of computers. Boaz aims to change this. 

Boaz opened his current store in July of this year but has been teaching computer literacy classes since 2010. He was previously conducting classes in his home. However, the genesis of Boaz’s passion and appreciation for computers dates back to 2008. Boaz was in the town center of Nakuru four years ago where he saw a young Kenyan student being instructed on how to use a computer by an older Indian gentleman. Boaz remembers thinking, “If this young boy can use a computer, why can’t I?” He promptly enrolled in a two month computer training course. 

Currently, Boaz has 20 students who attend his daily 2 hour classes. The students are taught to use Microsoft Office and various other computer programs. Upon completion of the course, each student receives a certificate verifying that they have a competent computer literacy. This certificate is now mandatory for many government jobs. Boaz says the course he offers would cost students 5,000 Kenyan Schillings in an urban center like Nakuru or Nairobi, but he is offering his course at 2,500 Kenyan Schillings to entice the technology wary citizens of Salgaa. 

With his first Zidisha loan, Boaz plans to buy a printer, scanner, and photocopier. In the longer term, he plans on expanding his current business which currently includes six computers. He envisions starting Salgaa’s first cyber café. He also wants to start working with some of the local schools to incorporate computer science into their curriculum. Boaz is passionate about helping members of his community enhance their level of computer literacy as he believes it is of the utmost importance when trying to secure a job in today’s economy. With the help of his loan from Zidisha, Boaz is spearheading the movement to educate his community. 

Family Portraits in Salgaa

Hello, my name is Dan Cembrola, one of Zidisha’s Kenya Client Relationship Managers. I am currently visiting Zidisha borrowers in Nakuru and its outskirts.

Today I visited Melchzedeck at his business in the town of Salgaa, 30 kilometers west of Nakuru. Three years ago Melchzedeck was working on one of the many flower farms around Salgaa. He grew unsatisfied with his job at the time and its future prospects. Melchzedeck always had an interest in photography, so, in 2009, he retired from the flower farm and purchased a camera for 4,500 Kenyan Schillings. He had decided to go into business for himself.
Three years later, he now owns his own shop selling photographs as well as cell phones, phone cases, phone chargers and other accessories. The shop has a small studio in the back of the shop where Melchzedeck is able to take portraits and family photos. He also operates a kinyozi (barbershop) within his shop in case anyone wants to have a last minute haircut before being photographed. 
In addition to photographing individuals and families who come into his shop, Melchzedeck also travels to weddings, graduations, birthday parties, and various other gatherings to document the memories as he says. He is one of only two photographers in the village of Salgaa so his services are in high demand. 
With his next loan, Melchzedeck plans to buy printing machine. Currently, he has to travel to Nakuru to print out the photographs that he takes. Though traveling to Nakuru takes a little over an hour round trip, it is an unnecessary burden as Melchzedeck wants to be able to photograph his customers and instantly present them the photograph. Melchzedeck is optimistic about the future of his business; he rightly views the growth of the population in Salgaa as an opportunity for more weddings, graduations, and every other celebration to be photographed. 

Technology Sets No Boundaries

Here is a great update from Traci in Kenya! She had the opportunity to meet with Duncan Chege earlier this month. Mr. Chege is a great example of the type of individual who is striving to make a real difference in his community. I hope you enjoy Traci's update! If you have any questions for Traci leave a comment below and I'll relay the message to her.

Hello, my name is Traci Yoshiyama, Zidisha’s Kenya Client Relationship Manager. I am currently visiting Zidisha borrowers in and around Nairobi.

Minds alike, Duncan Chege and Zidisha both envision a world where technology sets no boundaries, where opportunity is no longer stifled due to economic standings, and where geography plays no role in one’s level of success. Although late in the game, the technology industry in Kenya is growing at an overwhelming rate of 20% each year. With rapid growth comes rapid change, and a shortage in skills is a challenge that Kenya is currently facing. 

Seeing the way of the world and a need for technology education, Duncan Chege moved from his rural town of Rongai to Nairobi, the heart beat of Silicon Savannah. In 2009, with only one computer to furnish his shop, it was here that Duncan opened Vision Computers. Within its three years of operation, one computer quickly multiplied to eight, and upon receiving his first Zidisha loan in June, eight grew to ten. With more computers, students are now able to work independently without the fuss of sharing a screen or fighting over who gets to use the mouse. Duncan wishes to pay back his loan quickly, in hopes of being able to take out a larger loan, which would allow him to rent a bigger space. 

Providing internet services is only a fraction of what is offered at Vision Computers, for Duncan’s main objective is community development. Seeing technology as a tool for empowerment, he offers computer-training courses to youths. Many students coming from the surrounding areas, including a nearby slum, Duncan’s rates are much more reasonable than his competitors. In addition to training courses, he has also partnered with a local primary school. In small groups, children come to Vision Computers to receive informal lessons to acquire basic computer skills. As I speak with Duncan, eight children work together on a paint program, directing each other on what to draw and what colors to use. As I peek around the cubicle, I see a lime green house in the making. Children being sponges of knowledge, Duncan expresses the importance of exposing them to technology early on, in hopes of better serving their future. 

Before my visit with Duncan ends, he takes me to his partner school. Not having electricity, running water, and limited space due to other live-in tenants, I see how fortunate they are to have the resources that Duncan is providing. Wanting to spread the word about Zidisha, Duncan introduces me to the director of the school, hoping to extend his services in more ways than one. 

To view more pictures of Duncan and watch a short video of him and his students, visit talkingstory.posterous.com 

Fighting Crime in Bahati

Here is a recent update from Dan in Kenya. He met with Joel Mwangi this past week and was able to see what Joel's Zidisha loan has done for him. Be sure to check out Joel's profile page if you're interested in learning more about him.


Hello, my name is Dan Cembrola, one of Zidisha’s Kenya Client Relationship Managers. I am currently visiting Zidisha borrowers in Nakuru and its outskirts.

I visited Joel at the place of one of his businesses in Bahati. It is evident that Joel is a natural community leader, and a well-respected one at that. His most idealistic long-term goals are eradicating poverty in Bahati. Toward that end, he has used his Zidisha loan to expand his farm and invested in higher quality fertilizer and seeds to ensure that his crops will be healthy and bountiful. Joel strongly advocates the use of high quality seeds and fertilizer to his neighboring farmers. He evidenced his point clearly as he gave me a tour of his village, pointing out which farms were able to afford fertilizer and quality seeds. 

In an effort to advance his community, Joel is selling a portion of his land that he has tilled and prepared for the next growing season to a neighbor. His intent is to give his neighbor an opportunity to begin a small farming business to help support his family. Joel regularly advises members of his community on improving their fertilization and irrigation practices. With the now abundant crops Joel is growing with his loan from Zidisha he has been able to employ laborers in Bahati to assist him and his wife during the harvest season. 

In addition to operating a three and a half acre farm, Joel also serves as chairman of the group of motorbike operators in the region. In the past few years, there has been a rise in the incidence of common thievery in Bahati, many crimes were committed with the aid of motorbike drivers. With the assistance of the local police force and the support of his fellow motorbike drivers, Joel was elected chairman of the group. As chairman, Joel has instituted a policy that mandates that every motorbike driver must have a registered identification card which is displayed to all of their customers. This measure has provided a sense of accountability to the motorbike operators and allows their customers to be confident that each driver is registered and approved by the local government and police department. 

Can Microfinance Revolutionize Car Ownership in Developing Countries?

When most people hear of microfinance for the first time, they often ask whether or not it actually works to benefit those in need. It is an excellent question to ask since it is supposed to benefit those who are vulnerable, poor, or simply need some extra help. As it turns out, microfinance is an amazing way to benefit those who currently have no access to capital and it comes along with many amazing testimonials regarding how a person’s life has changed after being given access to funding they may have never had.

For those who are unaware, microfinance is a basic way to provide loans and financial services to those in developing countries who currently do not have access to them. This type of strategy is one of the best ways to help many citizens become financially stable, which allows them to be able to provide for both themselves and their families during tough economic times. Since statistics have shown that over half of the world survives on less than $2 each day, microfinance is one of the best ways we can employ to help these people.

Microfinance May Impact Car Ownership on a Large Scale

As stated earlier, microfinance provides a large number of amazing benefits that can help both families and the local economy that they live in. One of these benefits that may soon be possible is the potential for those in developing countries to own their own cars. Since most citizens do not have access to car loans, owning a car may never be a possibility for them. However, microfinance has a huge chance of providing these citizens with access to car credit from a microloan. While the loan will not be providing them funding for a car specifically, these loans can help people get their feet off of the ground if they are trying to start a business of their own. Imagine that there is someone who owns a farming business, but has to walk three hours away, in order to pick up their much needed supplies. This means that their total trip will take six hours and by the time they return they will have to continue working. This is not only extremely tiring for the individual but cuts down on their productivity for the day, as six hours of their time will be spent walking. Less time for them to work means less money for them to be able to feed both themselves and their families.

If those same farmers have access to microfinance, they will be able to invest in certain items that can help their business to grow. Eventually, with the help of your loan, they are profitable enough to purchase a car and can now travel to the next town to pick up supplies. With this car, they have more time to work, can make more money, and the local economy improves. Without your loan, this would have never been possible. Success stories like these are what make microfinance such an amazing tool for developing countries to utilize. And there are several additional benefits that come along with your loan.

Microfinance Benefits

• Ease of Accessibility
  
  Most banks out there simply will not provide loans to those who do not have any existing capital or assets. They want to see some sort of income that many people simply do not have a consistent basis. Because of this, many people cannot qualify for loans to help their small businesses or families in these developing countries. Microfinance gives citizens easy access to financing that has the potential to end poverty in many areas.
  
• Creating New Jobs For The Community
  Job creation is essential for the sustainability of any area in order to help improve the lives of many citizens. Microfinance helps in a huge way by providing jobs for those who are looking to start local businesses of their own. Since these people now have funding to help their business costs, they have the ability to work and are running a business that aids in supporting the local economy. It is beneficial for everyone.
  
• Ensures Continual Education
  It is very unfortunate that many children living in developing countries must be pulled out of their schooling because of economic issues. Microfinance ensures that these children can continue their education since their families now have access to funding in order to help enrich the lives of themselves and their community.

Guest post by Eve Jamieson

Building up for a better future

Supporting a wife and three children is not an easy matter when one’s occupation consists of being a small-scale farmer. But RichardMwathi was one step ahead and had decided to diversify his business by starting a barbershop in 2005. This move was made in order to help give his family a better life. Below is a recent update from our Kenya Client Relationship Manager on his whereabouts and the occupations he has been involved in:

Hello, my name is Traci Yoshiyama, Zidisha’s Kenya Client Relationship Manager. I am currently visiting Zidisha borrowers in and around Nairobi.

Knowledge is power. As the leading mantra here in Kenya, it comes as no surprise that the enrollment rate for primary education stands above eighty percent; literacy among youths a whooping ninety-three percent! Parents making meager wages will sacrifice almost anything to ensure their children have an education that they themselves did not get. As my visits to Zidisha borrowers grow, a trend in loan impact reveals itself, for although microfinance was initiated to provide services to uplift small businesses, many see it as a way to empower their children through education.

Richard Mwathi, former owner of a kinyozi (barbershop) in Lanet, Nakuru is the proud father of three teenage boys. With one in Form 4, another in Standard 8, and the eldest enrolled in Egerton University studying natural environment, paying for school fees is no easy feat. Richard’s Zidisha loan was used to pay for tuition, and although he intended to pay back his loan with the revenue acquired through his kinyozi, sales dropped and he decided to close his business.

Seeing better opportunities in Nairobi, Richard is currently living with his sister and nephew in Utawala, while his children continue to attend school in Nakuru. Hoping to accrue enough money to pay back his loan, Richard is working odd jobs at the many construction sites in Utawala. Construction work being on a need only basis and one of the only options for many without additional employment, Richard waits eagerly to be called upon. With elections so close at hand, many construction sites are also at a standstill, lying in wait to see what the new government will bring.

Richard’s struggles are apparent on his face, but his optimism for the future is also unyielding. Making repayments more manageable, Richard has decided to make small weekly installments starting in October. He will continue to stay in Nairobi until the end of the year, seeking opportunities in the growing town of Utawala. My visit with Richard ends on a light-hearted note while we take photos outside and I get a grand tour of a new house his sister is in the process of building. Thank you Richard and family for inviting me to your home, and I wish you all the best in your future endeavors.

To love beauty is to see light

The concept of looking beautiful within an underdeveloped region of the world might seem like a Western concept but such imperialist stereotypes are slowly being eradicated through the works of talented individuals in Kenya such as Mary Matheya. Her career is enshrined within a salon, where she sells beauty products and manages to make her clients depart by looking and feeling beautiful. A college-level educated woman, Ms. Matheya understands the risks of running short of funds and knows that a deep influx of clients would only serve to generate greater demand for her products, even though she might not possess the capital to deliver these products. Yet, she continues to ensure the daily satisfaction of her clients and is doing a successful job at it. Below is a recent account of the activities in her salon through her interview with our Client Relationship Manager in Kenya.

Hello, my name is Traci Yoshiyama, Zidisha’s Kenya Client Relationship Manager. I am currently visiting Zidisha borrowers in and around Nairobi.

Named after a favorite cousin, Tamara Beauty Salon screams of femininity, with its walls covered with posters displaying various hairstyles and catchy phrases such as, “Build your confidence”, “Stand out”, or “You look fabulous”. “Women want to feel beautiful. If you promise them beauty, the cost does not matter.” Zidisha borrower, Mary Matheya, makes this claim many times while in deep concentration braiding a customer’s hair. Fashionably dressed in high-heeled boots and stylish jeans, Mary has hours of braiding ahead of her (four hours to be exact).

Many women share the memory of grooming the hair of their favorite dolls when they were young, but for Mary it all began with grass. Finding joy in braiding, she practiced with blades of grass, later turning to her schoolmates. Realizing her hobby could become her profession, Mary took a training course which specialized in teaching various braiding styles. In 1999, Tamara Beauty Salon was born. Remarking on the significance of doing something you love, Mary shows a palpable sense a pride for choosing her path in life.

Although she has come a long way, Mary has big dreams to expand her business and Zidisha is just the organization to help her accomplish them. Being new to Zidisha, Mary wants to receive a loan in hopes of purchasing more chairs for added comfort for her customers and items to sell, such as nail polish, earrings, and hair dye. Like many borrowers, Mary heard of Zidisha through a friend. Understanding the importance of networking, Mary gets many of her customers through this very method. She comments on the quality service she provides, which results in many recommendations sent her way. Her current customer, Lencer, hearing about Mary through a friend and this being her first visit, can attest to Mary’s service, for after hours of braiding, the satisfaction of Mary’s work is evident on Lencer’s face. She does not leave without saying she will be back and will not come without a friend.

As the afternoon turns to evening, my day with Mary must end. I look forward to her joining the Zidisha community and I hope to be here to see Tamara Beauty Salon prosper. As I am getting ready to leave, Mary extends an offer of her braiding expertise to me. After observing her obvious talent and meticulous nature for perfection, I strongly contemplate a new hairdo. Next time I am in Ongata Rongai, I think I will take Mary up on her offer and let her work her magic to make me beautiful!

To view more pictures of my day with Mary, visit my blog, talkingstory.posterous.com