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Bonus Challenge: Evaluate the possibility of securing a funding partner – e.g. Vodafone foundation; Technology or other sponsors – to enable Five Talents to implement this solution.
Source: TAMFI (Tanzanian organisation of Microfinance) 2010 http://yosefo.org/news__resources Vodacom has about 70% of users, Tigo 20%, Airtel 10% http://www.intermedia.org/2013/03/28/mobile-money-is-on-an-upward-trajectory-in-tanzania/ Tai Mobile Money consultancy http://www.mobilemoneyconsultancy.com/#!projects/galleryPage - SEDA, Tujijenge also have mobile money through M-PESA a/t Cameron Goldie-Scot
Q – Do Vodacom support their agents with moving the money?
Q – are many of MBF’s TZ clients in the ‘no formal education’ category?
Grameen used to be 16% Costs as % of portfolio - now its 10% MasterCard Foundation http://www.mastercardfdn.org/pdfs/VSLA_Website_Brief.pdf
Pro’s Proven effectiveness (Banking on Change: 13 countries) Operationally self-sustaining (i.e. does not require institutional management beyond first 6 months of operation) Doesn’t rely on an external technological solution £13-£40 pp startup costs Mobile option? [ TBC with Hugh Allen ] Opportunity to partner with Care – who use VSLAs Cons Cash retained in box is largest in seasonal, remote economies. Some risk therefore remains Mama Bahati Foundation are not currently set up to use this legally – Phyllis has detail on the associated legislative framework
Five Talents / Mama Bahati FoundationMobile Money ChallengeApril 2013
2Contents11 Introduction and overview of the challenges2 Progress so far by Five Talents / MBF34Recommendations and next steps5Challenge 1: MFI market researchChallenge 3: Consider alternatives6Challenge 2: Assess Musoni
Introduction - About UsWu WeiScott LennardKim CroucherDoug Pearman
Iringa Location>Placeholder for link to Google Earth here<
Background to Mama Bahati Foundation, TanzaniaWho are The Mama Bahati Foundation?- History: inspired by the case of a subsistence fruit vendor with 7 children- Model: MFI, Credit-led group lending to women (lending out at 2.5%pm)- Scale: small – 3000 borrowers, 17 staff + management board- Funding: reliant solely on Five Talents UK, £335k invested over 6 years- Operating environs: Iringa, Tanzania (rural and urban, <20% of people haveaccess to mainstream banking, loan portfolio size is ~$300k)- Strategy 2013-15: Intention to expand to 6500 clients by 2015, including more indisadvantaged groups. No intention to become a non-bank financial institution(Microfinance Company); intending to incorporate M-PESA.- Interest in Mobile Money: Reduce security risks from cash handling; reducefraud; release staff time for training; reduce costs; improve record keeping- Spark: MBF accountant murdered (August 2011) while transporting £6000 in ruralsavings and loan repayments back to safe in Iringa
Challenges Posed by Five Talents to our teamChallenges:1.What have other Tanzanian MFIs done/learned from Mobile Money?1.Is Musoni a viable option?2.Are there better alternatives to Musoni for MBF?Five Talents Mission[To] fight poverty, create jobs and transform lives by empowering the active poor indeveloping countries……using innovative savings and microcredit programmes,business training and holistic development.
7Contents11 Introduction and overview of the challenges2 Progress so far by Five Talents / MBF34Recommendations and next steps5Challenge 1: MFI market researchChallenge 3: Consider alternatives6Challenge 2: Assess Musoni
Progress so far by 5T / MBFImmediate actions:-‘Netting off’ loan repayments against savings monies to reduce cash transported-Rural group members accompanying MBF officers back to main road-Engaged with other 5T partners globally (13 country offices) to ensure they areaware and following security protocolsWho are Musoni?-History: launched in May 2010 in Kenya, combine mobile money with aManagement Information System (MIS) for Microfinance
9Contents11 Introduction and overview of the challenges2 Progress so far by Five Talents / MBF34Recommendations and next steps5Challenge 1: MFI market researchChallenge 3: Consider alternatives6Challenge 2: Assess Musoni
Current use of mobile money in Tanzanian MFIsMarket Size in TanzaniaUse of mobile money by MFIs in TanzaniaNote – Licensed banks excluded, e.g. National Microfinance Bank (using M-PESA) and BRAC are larger, but serve differentclient groups with larger loansMFI MM System used NotesFinca M-PESA(assumed) 20,000 repayments each month are cashless – recently recvd banking licencePride No evidence Mobile money feasibility study carried out with Tai Mobile SolutionsYOSEFO M-PESA Use since April 2012 for disbursement of loansOpportunity International No evidence Also using ATM-on-truck delivery service. Have a director of mobile money.Care M-PESA Use of VSLAs in Tanzania in combination with mobile money. 39 VSLAsusing M-PESA as of Dec 2010Source – TAMFI 2010Source – TAMFI 2010Source – Corporate websites / blogsMama Bahati - <0.5% Mama Bahati - <1%
Client benefits and lessons learnedBenefits of using Mobile Money•Lower cost of transferring money over a distance (one alternative: buses which take 10%)•More secure to transfer money•Meeting times can be focused on financial literacy training (and Musoni even do social impactassessments and invite health experts to sessions) – no requirement for unnecessary administrationMobile Money MFI Lessons learned“Drive to expand customer basemust come from the phone company– not the financial institution”“Agents’ remunerationmust be sufficient-the business casemust stack up for them”“If people aren’t made to attendgroup meetings to make repayments,they may cease happening”“If payments don’t go through smoothlyfirst time…people will be put off”
12Contents11 Introduction and overview of the challenges2 Progress so far by Five Talents / MBF34Recommendations and next steps5Challenge 1: MFI market researchChallenge 3: Consider alternatives6Challenge 2: Assess Musoni
Make repaymentWould Musoni help MBF receive repayments securely?ManagementInformationSystemMama BahatifoundationMusoniM-PESACustomer / M-PESAServer Reviewrepayment dataAnswer: YES
Would the Musoni technology function in Iringa?>95% signal coverage
Urban Areas Rural Areas TotalNumber of Locations 40 29 ~70% with access toAgents93% 53% ~75% of ClientsWould the Musoni technology function in Iringa?Answer: YESOutcomes:• Three-quarters of MBF clients would be able to use the Musoni system• The remaining number of clients (about 800) would have to use existing system until M-PESA agents can be set up in their area• Would have to work with Musoni and Vodacom to bring in new M-PESA agents• Mobile Vodacom coverage in whole area is very strong
Would the Musoni technology work for customers near Iringa?By IncomeSource: InterMedia FITS study of households in Tanzania, April-May 2012, N=2,980By LocationBy EducationOutcomes:• Substantial impact of education level• Substantial impact of income• Moderate impact of rural / urban locationAnswer: YES, if primary educated and above
Would Musoni lead MBF to financial sustainability?Current Operating Cost ComparisonCompeting approachesProviderOperatingcost (GBP pa)#customersLoanPortfolio sizeOperating costs percustomer per yearOperating costs as %of portfolioMBF Tanzania £117,296 2,478 £138,231 £47.33 84.9%Musoni Kenya £284,116 6,831 £606,107 £47.59 46.9%Sources: MixMarket 2011; Op Costs from MBF financial statements (2012); Musoni financial report (2011)Answer: NoProviderOperatingcost (GBP pa)#customersLoanPortfolio sizeOperating costs percustomer per yearOperating costs as %of portfolioVillage Savingsand LoanAssociationsNear-zero operating costs; setup costs per client in Africa range from £13 - £40.Sources: MasterCard Foundation (~2009)
Would Musoni be affordable for MBF customers / Five Talents?Estimated Capital costs of implementing Musoni solution:Costs to MBF customers of implementing Musoni solution:Cost Item Cost Year 1 (GBP) Cost Years 1-5 (GBP) NotesLicense Fee £21,000 £38,000 Discounted offer priceField OfficerTablet Devices£0 (paper-only) £2,00010 x Huawei tablet devices for team (@£200 per unit)Broadband NetworkUpgrade£1,000 £5,000 estimatedM-PESA loandisbursement charges£100 £2,200Assumptions:500 MBF customers (all registered) usingM-PESA Y1; 1,500 Y2, 3,000 Y31 x £50 loan per customer per yearTOTAL £22,100 £47,200Equivalent to £9,440 p.a. ~10% of 5 Talents annual ~£80k stipendAnswer: Yes – see sustainable funding group!Source: M-PESA tariff; Vodacom websiteCost Item Cost Year 1 (GBP) Cost Years 1-5 (GBP) AssumptionsM-PESA Charges percustomer£2 £1052 x £1.50 loan repayments per year1 x £75 loan withdrawal per yearM-PESA Charges (allcustomers)£966 £21,247500 MBF customers (all registered) usingM-PESA Y1; 1,500 Y2, 3,000 Y3Sources: Musoni proposal; Musoni CEO (Cameron Goldie-Scot); M-PESA Tariff, Vodacom website
20Contents11 Introduction and overview of the challenges2 Progress so far by Five Talents / MBF34Recommendations and next steps5Challenge 1: MFI market researchChallenge 3: Consider alternatives6Challenge 2: Assess Musoni
Alternative – Voluntary Savings and Loan Association (VSLA)
24Contents11 Introduction and overview of the challenges2 Progress so far by Five Talents / MBF34Recommendations and next steps5Challenge 1: MFI market researchChallenge 3: Consider alternatives6Challenge 2: Assess Musoni
Option ComparisonShort term Considerations Long-term considerationsResolvesCashrisks?ImmediatelyImplementable?Fit with MBFStrategy2013 – 2015Inclusivefor RuralClients?Affordablein Y1-2?Financiallysustainable inlong termFit with FiveTalents CoreCompetencies?MusoniReduced– somerisk onagentsYes Yes Yes YesDoes notresolve highMBF costsYesVSLAsReduced– somerisk onboxholderQuestionable No Yes Yes Yes YesBankingVansDependson vanYes Unknown Yes No Unknown UnknownBitcoinReduced–requirestop-upQuestionable QuestionableQuestionableQuestionableQuestionable QuestionableMusoni offers a good short and long term option only if MBF reduce cost per customerVSLAs offer a realistic long-term solution.
Response to ChallengesChallenges:1.What have other Tanzanian MFIs done/learned from Mobile Money?1.Is Musoni a viable option?2.Are there better alternatives to Musoni for MBF?Mobile money is growing in use overall in Tanzanian MFIs. To avoid putting off existingcustomers, any mobile solution must be fully tested and reliable on Day 1.Yes, but:•No guarantee of reduced costs to serve•Option relies on rural agent coverage improving.•MBF are a guinea pig here – must ensure it is reliable on Day 1•Impact of organisational change on current activitiesVSLAs merit consideration as a parallel, low-cost option
Recommendations for Five TalentsRecommendations:•Five Talents to decide if the priority is to offset the risk, or also to encourage MBFto become more sustainable•If just to offset the risk – sign up with Musoni tomorrow.•If also to make MBF more sustainable:• Conduct detailed financial forecast of operational cost and scaling impactof implementing Musoni• Engage with foundations to see if they can fund the implementation or ifthey have a mobile money programme MBF can be part of• Engage with competitor Tanzanian MFIs to validate benefits and risks ofimplementing mobile money in Tanzania• If realistic to scale and become self-sustaining through Musoni, providecapital investment for Musoni partnership with MBF
Thinking more broadly…Mission Drift?- Five Talents mission is to empower the active poor, particularly those withoutaccess to financial services- MBF now have 3130 clients. 45% live in Iringa/urban areas where many MFIsoperate- 5T have invested £335k into MBF over the past 6 years (£75k in 2012)- For their target clients, this is an investment of >£40 per person per year- Five Talents may wish to reconsider if the partnership with MBF is the mostefficient way for to reach poor, rural people in TanzaniaPossible Alternatives- Fund Musoni, but in exchange, agree with MBF that 5T will be reducing annualinvestment from £75k p.a. to £0 p.a. over the next 5 years, and that MBF will needto scale up and reduce costs using the Musoni solution- Invest in the VSLA program leveraging the existing Anglican church network- Invest in larger MFIs (e.g. Opportunity International) to reach poorer, rural clients
• Malcolm Harper• Cameron Goldie-Scot (Musoni)• Maude Massu and Sybil Chidiac (Care)• Phyllis SantaMaria and Gabriel Flores (Microfinance without Borders)29With thanks to:
Cover Photo•“Article from The Guardian UK: Talking Telephone Numbers”, Louder then Swahili, 2008,http://pernille.typepad.com/louderthanswahili/2008/11/article-from-the-guardian-uk-talking-telephone-numbers.html, accessed 3/2013Map Data•Financial Sector Deepening Trust of Tanzania, “FSDT Financial Access Map Tanzania”, 2012, http://www.financialaccessmaptz.com/#, accesed 3/2013•“Interactive Coverage Map, Vodacom, Tanzania”, Steetmap.co.uk, 2013,http://gsma.streetmap.co.uk/custom/barts/gsma/TemplateNTTDocomo.srf?cu=NTTDocomo&id=553, accessed 4/2013•Mas I. & John A., “Where’s The Cash? The Geography of Cash Points in Tanzania”, CGAP Blog, 2013, http://www.cgap.org/blog/geography-cash-points-tanzania,accessed 3/2013Financial and Market Data•“Country Survey: Tanzania”, MFTransparency, 2012, http://www.mftransparency.org/wp-content/uploads/2012/05/MFT-RPT-106-EN-Country-Survey-Tanzania.pdf,accessed 3/2013•Kannenberger M., “Mobile Money is on an Upward Trajectory in Tanzania”, InterMedia, 2013,http://www.intermedia.org/2013/03/28/mobile-money-is-on-an-upward-trajectory-in-tanzania/, accessed 4/2013•“Mama Bahati Foundation - MFI Report”, Mix Market, http://www.mixmarket.org/mfi/mbf/report, accessed 3/2013•Millinga A., “The State of Microfinance In Tanzania”, 2012, http://www.tamfi.co.tz/index.php/resources/view/the_state_of_microfinance_in_tanzania, accessed3/2013•“[Microfinance Client list]”, Tai Mobile Solutions, http://www.mobilemoneyconsultancy.com/#!Clients|ServicesPage-bmmaq7o0, accessed 3/2013•“News Resources”, YOSEFO.org, http://yosefo.org/news__resources, accessed 3/2013•Mas I. & John A., “Mobile Money Agents in Tanzania: How Busy, How Exclusive?”, CGAP Blog, 2013,http://www.cgap.org/blog/mobile-money-agents-tanzania-how-busy-how-exclusive, accessed 3/2013•“Backgrounder on VSLAs”, The MasterCard Foundation, http://www.mastercardfdn.org/pdfs/VSLA_Website_Brief.pdf, accessed 4/2013•“[Vodacom M-PESA transaction charge list]”, vodacom.co.tz, http://www.vodacom.co.tz/mpesa/consumers/send_and_receive, accessed 4/2013Internal Documents•Mama Bahati Foundation Strategy 2013 – 2015•Mama Bahati Foundation Financial Statements (2012)•Musoni Proposal to MBF (2013)30References