Musoni BV came about as a result of the experience gained by members of the Musoni BV team working in the field of mobile banking and microfinance in East Africa.
Working with existing MFIs, the team was successful in rolling out the first partnerships between mobile money transfer services and MFIs in both Kenya (2008) and Tanzania (2009). These early pilot programmes demonstrated the potential in introducing innovative new technologies to the microfinance industry, and were the inspiration behind setting up an MFI that would be completely cash-free, utilizing mobile money for all loan repayments and disbursements as well as the depositing and withdrawing of savings.
In September 2009, after almost a year of preparations, Musoni BV was founded. By May 2010, Musoni Kenya had disbursed its first loan and at the end of 2011 Musoni Kenya had established five branches and successfully disbursed over 10,000 loans. In the year 2011 Musoni Kenya lent more than $2m to micro entrepreneurs. In July 2011 Musoni BV won the award for ‘most innovative use of technology’ granted during the Global Microfinance achievement Awards in Geneva.
Musoni BV is now looking to build upon its experience to develop and roll-out its innovative model to new markets, while continuing to provide high quality support to Musoni Kenya.
Microfinance is the provision of financial services to the unbanked and underbanked. This can include access to credit and savings services as well as more advanced products such as micro-insurance and money transfer services. Microfinance is important for entrepreneurs at the lower end of the market: access to financial services allows them smooth consumption, better cope with shocks, manage risk, invest in their businesses and improve their living conditions.
This simple idea has grown into a significant industry serving millions of people around the world. When managed well, microfinance loans to the poor are frequently repaid more reliably, with default ratios often below 3%, than traditional banking loans to those with larger incomes.
Despite the success of microfinance, the majority of people in the developing world still do not have access to formal financial services. Microfinance faces a number of challenges. MFIs often suffer from weak management, control and operating systems. Costs are too high and a large proportion of MFIs have struggled to reach out into the rural areas, instead focusing on the major towns.
This is where Musoni BV can make a real difference. Our improved efficiency through the use of MMT (mobile money transfers) allows us to make a significant cut in the cost of our loan products while our use of mobile technology enables us to leapfrog the common barrier of weak infrastructure.
The Mobile Phone Landscape
Sub-Saharan Africa is one of the world’s most promising markets for mobile telecoms. The number of mobile phone subscriptions in sub-Saharan Africa has risen from 88.7 million in 2005 to 342.6 million in 2010. Measured as a proportion of the population, subscriptions have risen from a penetration rate of 12.3% in 2005 to 42.1% in 2010. However, this rate lags far behind the global average of 74.8% in 2010, leaving plenty of room for growth.
Mobile financial services are now shaping how people access basic financial services, pay for goods and services, conduct banking and transfer money within National and international boundaries. In Kenya, M-PESA now has over 15m users and almost 40,000 agent outlets around the country.