NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, May 22, 2012

Grameen Foundation, KfW and CARE’s Access Africa Fund announced they have each purchased a 25 percent stake in Musoni Kenya, the first microfinance institution to provide financial services to the poor entirely via mobile phones. Based in Nairobi, Kenya, it provides microloans largely to people who are underserved by the formal financial sector. This investment will help Musoni Kenya grow its operations, deepen its penetration in rural areas where financial inclusion is lowest, and pave the way for it to receive a license to accept savings deposits from the Central Bank of Kenya.

According to the new World Bank Global Findex, two-thirds of the world’s poor do not have bank accounts, partly because of the cost, distance and paperwork involved in using traditional banks. In sub-Saharan Africa, where traditional banking is hampered by the lowest density of physical bank branch infrastructure in the world, mobile money is taking root and providing a significant opportunity to increase access to financial services. The Findex also found that in Kenya, the world leader in mobile money, 68 percent of adults use a mobile phone for money transactions. In contrast, a 2009 FinAccess survey showed that less than one half of Kenyans had access to formal financial services.

“Grameen Foundation’s decade-long experience using mobile phones to accelerate poverty reduction in Africa has taught us that convenience and safety are critical to making financial services more accessible and useful to the poor. Musoni Kenya represents a ’next generation’ of microfinance providers riding the technology revolution to provide better service, and we are pleased to support its efforts to expand these services to more rural communities for significant impact,” said Alex Counts, president of Grameen Foundation.

“We are impressed with Musoni Kenya’s expertise in mobile banking,” said Lauren Hendricks, Tanzania-based executive director of CARE’s Access Africa microfinance program and board member of MicroVest, the private investment advisor that manages the Access Africa Fund on CARE’s behalf. “We look forward to continuing to support Musoni Kenya as it reaches future milestones.”

“As one of the world’s leading microfinance financiers, our investment in Musoni is one next step to specifically address the continent’s challenges in overcoming distances. With its vast geographical surface and a much less dense population, it is vital to reach to the rural population in a cheaper way than building branches. The use of the mobile technology provides a way to foster income and employment for people living in rural areas and thus helps to fight poverty,” said Dr. Thomas Duve, director of the Department of Africa Regional Programmes, KfW.

From its inception in 2010, Musoni Kenya has offered its services exclusively via mobile phones, with the goal of serving the poor and underbanked more efficiently and safely. Rather than traveling long distances with bundles of money to weekly meetings, its clients can repay their loans at any time during the week. This reduces the amount of time spent in meetings and allows clients to spend more time at their businesses and with family. Musoni Kenya currently serves 7,300 and plans to increase its client base to 34,000 by 2013. With its new equity partners on board, it will also apply for license to accept savings deposits – another critical financial tool the poor need to improve their lives.

“This investment is a major milestone for Musoni Kenya. We are incredibly excited about working with our new partners and building upon their experience to further develop the Musoni Concept and take microfinance to the next level,” said David James, CEO of Musoni Kenya.

Musoni BV, the holding company and initial investor in Musoni Kenya, will remain an equity partner.

“We are proud of this important milestone and we are looking forward to continuing to work in close partnership to propel further expansion and impact of Musoni’s African operations,” Bart van Eyk, CEO of Musoni BV.

About Grameen FoundationGrameen Foundation, a global nonprofit organization, helps the world’s poorest people – especially women – lift themselves out of poverty by providing appropriate financial services, life-changing information and unique business opportunities. Founded in 1997, Grameen Foundation has offices in Washington, DC; Seattle, WA; Colombia; Ghana; Hong Kong; Indonesia; Kenya; the Philippines; and Uganda. Microfinance pioneer Dr. Muhammad Yunus, founder of Grameen Bank and winner of the 2006 Nobel Peace Prize, is a founding member of its Board of Directors, and now serves as director emeritus. For more information, please visit grameenfoundation.org.

About KfW KfW Bankengruppe is one of the world’s leading and most experienced promotional banks. Established in 1948 as a public law institution, KfW is owned 80% by the Federal Republic of Germany and 20% by the federal states (“Lander”). The Department KfW Development Bank is Germany’s leading development bank and an integral part of KfW Bankengruppe. It carries out Germany’s Financial Cooperation (FC) with developing countries on behalf of the Federal Government. The 580 personnel at headquarters and about 180 specialists in its 70 local offices cooperate with partners all over the world. Its goal is to combat poverty, secure the peace, protect the environment and the climate and make globalisation fair. KfW is a competent and strategic advisor on current development issues.

About CARECARE brings financial services to more people in Africa than any other international non-governmental organization. Through its unique savings-led approach, CARE’s Access Africa program has reached more than 2.5 million people in 26 countries in sub-Saharan Africa. Founded in 1945, CARE is a leading humanitarian organization fighting global poverty. CARE has more than six decades of experience delivering emergency aid during times of crisis. Our emergency responses focus on the needs of the most vulnerable populations, particularly girls and women. Women and girls are at the heart of CARE’s emergency relief efforts because our experience shows that their gains translate into benefits for families and communities. Essential to CARE’s lifesaving humanitarian work is our commitment to help rebuild safer, stronger places that people call home. Our programs to improve health and education, promote social justice and open up economic opportunities make communities more resilient and less vulnerable to the forces that cause emergencies. Last year CARE worked in 84 countries and reached 122 million people around the world. To learn more, visit www.care.org .

About Access Africa FundAccess Africa Fund, LLC is a for-profit Delaware limited liability company, formed in June 2010. The Fund was formed by CARE USA, a U.S. non-profit 501(c)3 organization and is governed by the provisions of a Limited Liability Company Operating Agreement. The Fund commenced its operations in July 2010. It is managed by MicroVest Capital Management, LLC.

The investment objective of the Fund is to provide social impact and capital appreciation by lending local currency to and making strategic equity investments in microfinance institutions located throughout sub-Saharan Africa. The Fund believes that it can improve the lives of the entrepreneurial poor through investments in MFIs, and achieve a positive return on investment to demonstrate to impact investors that the microfinance sector in sub- Saharan Africa can be an attractive social investment.