Today I am excited to share with you an ambitious new microfinance organization that brings a fresh perspective to extending finance to the base of the pyramid by building client relationships on the foundation of training and education.
Combining microfinance and business training or business development services (BDS) is relatively new concept that has been gaining momentum in the microfinance institution (MFI) community in recent years. While other organizations, including some of the banner MFIs, have introduced BDS into their work portfolios, Lumana Credit is an organization that ingrains this philosophy in the core of their business practices.
Lumana Credit is operating in two villages along the southern coast of Ghana. They have just under 200 loan recipients from 26 active co-ops accessing capital from a $35,000 fund. What is compelling about Lumana Credit's business model is that this MFI is not just granting loans, it is building stronger rural communities by "empowering underserved populations with the necessary tools for successful entrepreneurship." Below is an interview with Samantha Rayner, the founder of Lumana Credit.
Kevin Keepper, NextBillion.net: One of the strengths of your operational model is your commitment to fostering strong relationships with the community. Can you briefly describe how you engage clients in a new village?
Samantha Rayner: Sure. Once we have an invitation from the community leaders, we begin our work by broadcasting our business training on the radio and attending community events; we truly become a part of the community. From there we host client orientation to inform the community of who we are and what we are all about. During orientation we don't really discuss the loans that we are going to provide; instead we really focus on the business training and getting community involvement.
After the orientation we host an open interview every Wednesday where individuals can attend and take our basic needs assessment. This assessment enables us to get basic info, learn about how they plan to use their loan, and begin to map out the community relationships to help facilitate the formation of strong loan cooperatives.
NextBillion.net: A critical component of your programming, and something I personally think is laudable, is the business training and educational component. Could you please describe this for us?
Samantha Rayner: After the initial screening, individuals will form cooperatives (seven to 10 individuals) and come back to us for a 10-day business training program - a prerequisite to accessing a loan. During this training, we walk the group through the basics of accounting and finances as well as answer fundamental questions about loans and business plans. For many of them this loan will be the biggest amount of money they have accessed at one time, so we try to help them understand the possible ramifications and anticipate how to properly manage the loan. Also, because some of the people we work with are illiterate, we produce tailored approaches for the group.
NextBillion.net: Who leads the training, and what are the sustainability implications?
To lead the training, we recruit community leaders (headmistress of the school, pastor, etc.) to fulfill the role of entrepreneurship coach. We currently have eight part-time coaches. Two advantages to this model are that the community leaders understand the practicalities of the businesses and they are themselves available beyond the life of the training program. Over the course of a loan repayment for example, because these people are very accessible community leaders, they can act as mentors. We find our borrowers will go talk to them about personal and financial issues rather than going to loan officers.
NextBillion.net: Another component of your operational strategy is your tenacity to build collaborative partnerships. Could you please describe one such partnership?
Samantha Rayner: We seek out partnerships with social enterprises that have proven products that are relevant to our constituency. This year we are partnering with Literacy Bridge. They are a Seattle-based company that has created the "Talking Book" - an audio computer that was originally designed to teach adults to read. It is incredibly durable and they are committed to driving the cost down to $10 a unit in 2011. We are partnering with them to download farming lessons for our co-ops. We will also record our business training session and make it available for the farming co-op to purchase if they wish to have it for reference after the 10-day program. For those that cannot read or write and take notes, it is difficult to absorb the information so this additive is invaluable.
NextBillion.net: Okay, that was more interesting than I expected... I'm curious, what is another partnership you are working on?
Samantha Rayner: Because so much of the success of our business training depends on the active engagement of our community, the surveys that we conduct to refine our model are critical. We are continually asking questions and trying to improve our program. As we look to scale our program, however, it is likely that it will become too costly to collect good social metrics. This is why we are excited about the Google-funded project called "open-data-kit" that we will bring with us this spring to collect survey data in the field. It works like this: all the survey responses are uploaded onto a server where we can analyze trends or provide reports to the chief or other organizations in the area. A cheap Nokia phone can even send a survey in an audio form and our clients can simply respond with a text.
NextBillion.net: You have begun with very conservative growth, is it in your plans to scale your project?
Samantha Rayner: While we do have plans to expand to seven new regions in Ghana in the next five years and build our portfolio to 50,000 clients, we are currently more focused on scaling our impact than our client portfolio. To achieve impact, we are focused on delivering strong collaborations. We see the need for creating a more holistic program that includes agriculture, education, community development and health. While there are a lot of MFIs looking at developing health programs in house, for example, we realize that we are not the experts in health. However, we believe that we can significantly improve our impact through strategic collaborations.
NextBillion.net: How would you direct those individuals interested in engaging with your organization?
Samantha Rayner: We have fellowships available for those who are interested in getting directly involved in our operations. Also, for those who are excited about our work, we are currently rolling out a fundraising program and would love any support you or your friends are able to give through donations. Lastly, feel free to keep up with Lumana by becoming a fan of our Facebook page or following us on Twitter.