Established in 2010, Musoni became the first completely cashless microfinance institution in the world, by enabling customers to receive and repay their loans via Safaricom’s M-PESA system, rather than in cash. Musoni has grown quickly, with a reach extended across Kenya, through 21 branches. As of July 2017, Musoni had disbursed 207,823 loans to 91,454 clients.
Since 2011, through initial funding from the MasterCard Centre for Inclusive Growth, Musoni has partnered with the Grameen Foundation, a global non-profit organization that leverages innovative, technology-based approaches to empower poor families throughout the world, to enhance its technological capacity and increase their reach to smallholder farmers.
The partnership was expanded in 2016 through support from Feed the Future Partnering for Innovation, a U.S. Agency for International Development (USAID)-funded program that helps the private sector to scale and market agricultural innovations for smallholder farmers. With this expansion, it has focused on enhancing Musoni’s technological capacity and increasing their reach to smallholder farmers.
The partnership between Grameen Foundation and Musoni began with a human-centered design inspired research process, intended to uncover the needs and behaviors of their farmer clients. Through this process, Grameen and Musoni engaged several different groups, including Musoni clients, clients of other microfinance institutions, and those who were not current recipients of any microfinance institution.
The partners then identified three unique segments of smallholder farmers that could benefit from this loan product - ranging from farmers with a small amount of land and no livestock, to farmers with a large amount of wellutilized land and high profit. These groups expressed several common needs: a repayment schedule that fits with farming cycles, rather than one requiring immediate repayment; diversified farm endeavors; and ways to overcome agricultural shocks like disease or pests as quickly as possible.
Musoni uses Safaricom’s M-Pesa platform and real-time gross settlement transfers to conduct its digital lending.
The partners then used this research to design a loan product specifically for smallholder farmers. This was Kilimo Booster (kilimo meaning “agriculture” in Swahili), a loan product with flexible terms and a customizable grace period based on a farmer’s seasonal cash flow.
Adapted from: USAID