Musoni to extend mobile agri-finance to Uganda

East Africa-focused microfinance platform Musoni will extend to Uganda by year-end, focusing from the start on rural regions and agricultural finance, according to CEO Bart van Eyk.

Already present in Kenya, Musoni allows customers in rural areas and cities to make mobile payments and to access loans and other banking services, all via digital money.

It is now putting in place financing for the Uganda operations and is talking to microfinance investors, looking to follow a similar funding model as in Kenya. It is also partnering with rural and farmer networks who say that there is a huge demand for mobile microfinance services in Uganda.

Musoni launched six months ago its first agricultural loan in Kenya and will aim to replicate this and other products in Uganda.

Called the Kilimo Booster – meaning in Swahili “to boost the agricultural activities” - the agri-loan can be used for working capital, asset financing and to cover start-up costs, covering every part of the agricultural value chain from production to processing and marketing.

The Kilimo Booster is available with longer tenors than other Musoni products as well as more flexible repayments, depending on a farmer’s business.

It is targeted at smallholder farmers, many of whom have no other access to financial services, says van Eyk.

Musoni will also open in June its first rural branch office in Kisii in southwestern Kenya. The company’s offices are used purely for marketing purposes and as a working place for its field staff – no physical cash changes hands throughout the entire Musoni process.

Musoni’s platform is fully integrated with M-Pesa and Airtel Money, meaning all transactions can be carried out via mobile money. The company’s loan officers travel throughout Kenya to meet clients in person, digitally registering them and processing application forms via tablet computer using the Musoni App.

This means that “our officers can go really deep into rural areas and work quite independently from the branch infrastructure,” says van Eyk. Musoni’s cashless model also means that it does not have to invest in strong rooms or security, reducing the high cost-intensity that has caused some microfinance providers to struggle.

Musoni has so far disbursed around 50,000 loans with a value of over €15 million. The average loan size is €250, but can be as small as €50.

The company has also since the middle of last year started inviting other small microfinance institutions, savings and credit cooperatives and asset financiers to use its IT platform and currently has seven live clients, including a recent sign-up from Zimbabwe and significant interest from other Southern and Western African institutions.

Its relationship with these institutions is helping Musoni to fill in what van Eyk calls the “missing piece in the puzzle” of micro-financing in rural Africa – accurate credit scoring. By pooling customer data, they can together improve their client profiling, he says.

Musoni has also launched a number of initiatives such as hiring external statisticians to analyse customer data in its system and using mobile phone records to help it build a broader picture of client credit-worthiness.

That said, Musoni already enjoys low default rates. In Kenya, “we have a PAR1 of around 4% and write-offs of below 1%, which internationally is very respectable, but for Africa is outstanding,” van Eyk says.

Musoni will be presenting at the Fin4Ag conference in Nairobi on Monday July 14 during the event’s Plug and Play Day. It will explain how its financing model works and provide a demonstration of the platform and mobile App. To register for Fin4Ag, visit http://www.fin4ag.org/en/registration.html