How Faulu Kenya learns from its clients and clients learn from each other
By Tara Capsuto, KF13, Kenya
Nestled in the hills of Kikuyu farmland, 500 of Faulu Kenya’s dairy farming, matatu driving, and kiosk-owning clients gathered for a half day of telling their microfinance institution (MFI) what they really think. Faulu Kenya’s mission statement is, “To listen and empower Kenyans by providing relevant financial solutions.” Faulu, whose name means “success” in Swahili, is one of Kenya’s largest microfinance organizations, serving over 230,000 clients. How do they make sense of the cacophony of 230,000 voices? I got to see it in action at one of Faulu’s “open forums” held annually at each of their 29 major branches.
Faulu invites 3 clients from each loan group (10 to 25 clients) to ask questions, provide feedback, get updates on new products and services, and receive additional training on anything from group governance to how register for Faulu’s new payments system through M-Pesa (a mobile phone-based money transfer service), which was the topic at the meeting I visited in Kiambu, a city just north of Nairobi. In a mix of Swahili, Kikuyu and English, information flowed in 3 directions throughout the course of the day:
1. Faulu –> Clients
Faulu’s staff shared important updates with clients, like modifications to loan products and how to register for mobile payments with M-Pesa. Hundreds of clients pulled out their mobile phones and registered to receive and repay their loans. In 2009, Faulu became the first deposit-taking microfinance institution (MFI) in Kenya, allowing its clients to open savings accounts that link to their loans.
2. Clients –> Faulu
Clients provided direct feedback to Faulu on the products and policies and gave input on what skills they want to learn and what crops they want to plant. (Faulu provides linkages to technical trainings for clients, based on their specific demands). Clients also inquired about the loan insurance policy, and asked pointed questions about interest rates and repayment terms. Some questions Faulu’s staff was able to respond to in real time, others like “Can you lower interest rates?” would be discussed amongst management following the 29 open forums held across the country.
3. Clients <–> Clients
The most intriguing aspect of information sharing was amongst clients. In addition to informal exchanges during breaks and over lunch, a group of clients from Faulu’s most successful groups had a round table discussion during which they shared their secrets for success with the broader group. One group leader suggested, “Our group makes payments before they are due,” another advised, “We have a very strong constitution that we follow to the letter.” With the guidance of a loan officer, each of Faulu’s groups drafts a constitution outlining group members’ roles and responsibilities. One group leader explained, “We very carefully calibrate the loan amount to the member’s expected income. If she has 5 cows that produce 100 liters of milk per day, and she receives 30KES per liter (about $.37), we make sure her loan amount corresponds to how much money she can probably repay based on the price of milk.” (Faulu’s solidarity group members do an initial assessment of each member’s loan request amount and secure each others loans).
I spoke with several clients and asked them about their insights from the day.
Treasurer of her group, Naomi had just applied for her second loan with Faulu to buy more livestock. “I will go back and tell my group that we can be rewarded for paying on time and having good attendance,” she commented. [Top-performing groups received file boxes for keeping group documents] “I also like this idea of being very organized and having a strong constitution.”
Chairman of his group, Peter was pleased with the advice he received from other clients. “I’ve only been a member at Faulu for one year. I spoke with people who have 5-10 years of experience doing this. They told me to be sure I use my loan for what I said I would use it for. Also, they advised to grow the size of my group so if someone defaults there are more people to help pay back.”
Alice, Elizabeth, and Joseph have been in a loan group together for 3 years. They all registered for M-Pesa accounts and were looking forward to showing the rest of their group how to register.
When asked why it’s important for Faulu to hold forums like these branch manager Lilian Kasanga replied simply, “Because we want to be relevant! We cannot provide relevant financial solutions unless we can really hear what clients want and need. We’ve had ideas for new products and modifications to existing products come out of these forums.”
Head of Business Development, Mary Munyiri added, “It’s important for clients to be able to express themselves and say whether we are serving them well and in what ways we may not be. The group members who are invited are representative leaders, their role is to express the issues for the entirety of their respective groups.”
While open forums can be an important component of soliciting client feedback, this format is probably not a stand-alone solution to gauging client needs. Faulu also conducts extensive focus groups and client satisfaction surveys. Within its toolkit of client feedback, open forums are an invaluable opportunity for Faulu to hear directly from clients, and it’s true: how can you provide relevant financial solutions unless you know what clients consider relevant?
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Tara Capsuto is working with 4 of Kiva’s field partners in Nairobi, currently wrapping up a short but action-packed 3 weeks at Faulu Kenya.