In Kenya, microfinance is going mobile - Part 2

The FrontlineSMS:Credit team was recently interviewed by Claire Penicaud at the GSMA MMU about the challenges that Micro Financing Institutions (MFI) face when thinking about adopting mobile money. The FrontlineSMS:Credit team described the challenges they see MFIs in Kenya facing and gave the following pieces of advice to MFIs who are ready to integrate mobile money into their systems.


FrontlineSMS:Credit enables organizations that serve the base of the economic pyramid to bring the benefits of mobile money to the financially excluded by building and distributing free, open-source software for mobile money management.

FrontlineSMS:Credit’s PaymentView software is an extension of FrontlineSMS’s free, open-source technology that turns a laptop and a mobile phone or GSM modem into a central SMS communications hub. The tool enables users to send and receive text messages with large groups of people without the need for Internet access. With thePaymentView extension, users can also send, receive, and manage mobile money transactions. By expanding the uses of mobile money in developing markets, FrontlineSMS:Credit helps to fulfill the promise of mobile money to offer even the most underserved communities access to financial services and enable new business models that aid in development.

A lot has happened since we last talked to the FrontlineSMS: Credit team. In a previous blog post, we described their approach towards enabling organizations and businesses to easily use mobile money. Over the past few months, they’ve got the opportunity to test this approach through a project in partnership with a Kenyan financial services association (FSA) [1].

Challenge #1: Providing an easy and convenient way for groups to transfer money to the FSA…

This FSA is composed of 50 groups of around 20 people each. Like many others, it serves a large geographical area and some groups are more than 30km away from the FSA head office. This means that a representative of each group has to travel there every time the group wants to transfer money: which represents a day of travel for the representative of the group and a cost of around USD8 for the group on a monthly basis. The service implemented by FrontlineSMS: Credit allows representatives of groups to transfer money through M-Pesa directly to the FSA. FrontlineSMS estimates that there has been a reduction of up to 50% in the cost of repaying loans and a reduction of up to 85% in the time spent on repayments, depending on how far away a savings group meets from the FSA office. The groups saving the most are those who are far away from the FSA, as almost every group meets within a short walking distance of an M-Pesa agent.

Read the full post on the GSMA website.