Confidential v1

BOMA M-Chama Product Evaluation

BFA

BOMA STAFF Deputy Country

Director

M&E Officer

Training Officer

Marsabit Regional

Team

BENEFICIARIES 4 Groups visited

2 IDIs

AGENTS/BANKS 2 Agents

KCB Marsabit Manager

Equity Marsabit Manager

Methodology

BACKGROUND

BOMA Model

Enrollment

•3 women form a business group after initial assessment and enrollment

•Grant of 200$ given to the business group

•Business skills training

VSLA

•At 5 months, the business group is assessed and confirmed if they meet the set criteria

•They join other business groups within the area to form VSLA Group

•Second grant of $100 given to the business group

•Half day training on VSLA

Graduation

•2 years after the initial recruitment

•Each group member should have saved at least Ksh 8,000 ($80)

•Should be independent and continuing with businesses

Issues to explore during Field Work

Hypothesis to Explore Question(s) Probed

Women have no phone Did the women have phone prior to BOMA Intervening? Do they know how to use a phone if they have?

Women are illiterate; Do they understand English?Do they understand technology?Do they know numeracy?

Women in the groups do not have financial experience

Where do they keep their money?Where do they borrow their money? Which solutions would make them use digital finance?

It might be conceptually difficult for women to interact with 3-4 accounts

Do the respondents know what a bank account is?Where do they think the money is when they deposit through M-pesa?

The area is remote and one has to travel far

How far is the agent from the respondents?How far are their business suppliers?

There is e –float issues among the agents therefore difficult to cash-in/cash-out

Are there cashflow issues within the area?How often do they have e-float issues?

The mobile phone network is often down and unreachable

How good is the mobile phone network?

Socio-Demographic Information

• All (51) of them had no

formal schooling

• Only 3/51 have done adult

education( learnt basic

numeracy and reading)

• Wide range of ages in the

groups

• They all earn money through

the businesses they formed

with the BOMA grant;

Majority have shops in the

Manyatta’s

Group DynamicsHeavily depend on the

teacher/Mentor a lot:

Teacher is the one who is

helping them keep records

and do M-chama transactions.

Most know the number

of months they have

saved; Some not sure of

the amount

Start borrowing money

after 4-6 months of

savings.

Phone Usage

Insights

Phone Usage

• 4/51 had a phone before

BOMA gave them one

• Used to borrow other

people’s phone to call their

relatives

• Very happy with their new

phone; call their children

• Uses it mostly for voice, M-

pesa and Radio

• Never text due to illiteracy

• Save numbers with symbols

to associate with people.

E.g. mentor has a bike

symbol or a lady symbol

Record Keeping

• Currently, group savings

information is recorded in a group

savings record book

• Trainer is the one who writes in the

record book

• Trainer is the only one who knows

what is written in the record book

• Group members know the months

they have saved by memory

• Business groups are also required to

record their sales in the business

record book

• Their children usually do it for

them

• The book is difficult to fill in

especially for slow moving goods

Mobile Money

Insights

Experience with mobile money

• Not many of them had used mobile money before BOMA.

• A few used M-pesa to send/receive money to/from their relatives

• The PIN number is the year of birth-can lead to Fraud

• None have used M-pesa to pay for goods/buy airtime

• Never keeps a balance on M-pesa

“I pay for all my goods in cash. It is

very difficult to use M-pesa and the suppliers do not like it as well”

“We do not like leaving

money on M-pesa. We

believe it can go back to the

sender, therefore we have to withdraw all the money”

“BOMA registered the lines for us. I

love M-pesa since I can send money to

my children when they are in fora

(herding goats) and my relatives can also send me money”

Relationship with the MM Agent

• Very few Agents: Kargi- 1 agent, Korr-5 agents; Loglogo-2 agents

• Give all documents to the agents for assistance in transacting

• There is no float sometimes

• Some have to walk for 20-30 minutes to reach the agent

“I give everything to the agent,; my

phone, my ID card and the Safaricom

card which has my number. I tell him

that I want to deposit and he does it

for me.”

“I have to confirm the transaction

the agent has done. I give my

children to do that for me since

they know how to read. So far he has not cheated me”

• BOMA could leverage the relationship with the agents

Have agents register the lines and offer the phone to the beneficiaries

Reduce the amount of work, BOMA invests on delivery and registration

M-Chama

Insights

M-Chama Product: How does it work?

• Each member has their own

personal account and there

is a group account

• The product is USSD based

though there is a

smartphone version

• Ideally members should

first send money to their

personal account then send

it to the group account.

This is a 9 step process

M-Chama Product: Process

Process for Member

1. Dial *522#

2. Enter the KCB PIN ( 5 digit

number)

3. Main Menu ( 10 options)

4. Select 3 for Chama

5. Select if transacting as a

member or an official

6. If a member, select 1

7. Select if transferring funds or

requesting for a loan

8. Requesting for a loan

9. Enter the amount and send

the request

Process for Official

1. Dial *522#

2. Enter the KCB PIN ( 5 digit number)

3. Main Menu ( 10 options)

4. Select 3 for Chama

5. Select if transacting as a member or an official

6. If an official, select 2

7. 6 options appear( Approve loan, add members, approve membership, remove members, Mini statement and Balance Inquiry)

8. Approve loan

9. Still have to calculate the Interest manually

M-Chama Product: How does it work?

• Currently using Lipa na M-pesa

to send money to the group

account;

1. Go to M-pesa

2. Lipa-na-Mpesa

3. Paybill

4. Enter bank code

5. Enter account number

6. Amount

7. M-pesa Pin

• The teacher/mentor is

currently doing everything for

them

• Only 4/51 of the group

members interviewed knew

how to send money by

themselves to the group

account

Challenges of the M-chama Product

• Difficult to use the USSD menu

• Long process

• Need to remember 2 PINs ( M-

pesa Pin and M-chama PIN)

• None have ever used their

personal account

• Need to remember the group

account number

• Groups go to the agent together

to do the deposits (this might

create float issues)

Challenges of the M-chama Product

• Women do not trust keeping

money on the phone as a lot of

people know their PIN

• Costly to use the product:

Cost Ksh 27 to do the

transaction

Safaricom subscribers pay

Ksh 2 to be able to use the

USSD code

Balance enquiry is charged

at Kshs. 33

M-PESA transfer from KCB

account to M-PESA is Kshs.

55

• Currently only use the M-chama

product to request for loans and

approval.

Financial Experience

Insights

View of Banks

• Most do not know which bank the money is going to

• Most understand a bank is a place where you keep money and also receive money

• Think the money they save on M-chama is in Marsabit“ It crosses the border and it arrived in Marsabit. Our money is in Marsabit town.”

• Very few Equity agents. Other banks agents are non-existent.

Financial Experience

• Cash is still King!

• Save money in the house both for

business and personal uses

• Give credit to customers

• Borrow money from family and

friends

“Before, we were the ones

asking for credit at the

shops but now with our

businesses we are the ones

who are being asked. It is a good feeling”

Summary of findings• Most women do not have phones. • Majority seem to know how many months they have saved and

roughly how much the group has saved• M-chama is only being used currently as method of requesting

and approving loans which could equally be done in the group meeting – does not add value

• Difficult to do reconciliation with bank statements especially if the group is using one person to send all the money

• Very few are able to do any M-chama transactions without the help of the teacher

• Hesitant to keep money on the phone as many people know their PIN number

• Have to remember both the M-pesa PIN and the M-chama PIN• Use a lot of symbols to help with understanding money and

phone numbers

Recommendations: mobile financial products:

• Mobile financial products can add value to

women’s lives but they need to be extremely

simple

• We do not recommend a Savings Group financial

product as it’s too complex and doesn’t add

value; a simple payment product would suffice

for handling the group financial process (Lipa na

M-pesa for example)

• We do not consider that the better accounting

records created by Savings Group provide

additional value to the women

• We recommend mobile savings accounts for

personal savings (M-shwari, KCB-M-pesa) as they

are on the SIM menu and don’t require a separate

PIN

Recommendations: training and usage

• They should be advised to keep their financial

transactions (especially savings balances and PIN

numbers) private and not give them to MM agents or

to trainers

• Children play a key role in the women’s life and

often interpret or confirm their financial

transactions since the children are more literate.

Encourage the involvement of children in learning

• The teacher should guide them on how to do the

transaction and should not do it for them.

Encourage the group members to support each

other to use the phones for mobile transactions

• BOMA to encourage use of digital products

Send money to individual user account ( 5$) for

training on how to use m-pesa by either

checking balance; buying airtime

Negotiate with suppliers to encourage M-pesa

transactions between the businesses & suppliers

Recommendations: agents

• Have MM agents assist with the registration of SIM

and M-pesa and distribution of the phones, rather

than BOMA staff

• To help agents manage float/cash advise them in

advance of major payout or deposit periods

Summary of recommendations

IMPLICATIONS

Issues Women Trainers/Mentors Agents BOMA Financial Service

Provider

Women have no phone Women did have phones and/or are provided by BOMA

Women are illiterate;

Don’t know English and Swahili

Tech-illiteracy

Semi-numerate

Should be

coached to keep

financial info

private

Should be

coached not to

do all the

transactions for

the women

Should be made

responsible for SIM

and MPESA

registration; should

not get customers’

PINs

Should advise

women to keep

PIN and balances

private; can

leverage children

in learning and

support

Major challenge;

complex financial

products not

appropriate, simple

payment products

probably best

Women in the groups do not

have financial experience

Encourage use of

MPESA during

early phase of

graduation

program

Products must be

extremely simple

It might be conceptually

difficult for women to interact

with 3-4 accounts

Encourage usage

through different

activities

Products must be

extremely simple

The area is remote and one has

to travel far

Transfer more

responsibilities to

agent

There is e –float issues among

the agents

Give agents advance

notice of withdrawl

periods

The mobile phone network is

often down and unreachable

Did not turn out to be a major issue

User Journey

TOUCH

POINTS &

SCORECARD

Graduation

BOMA exits from the

group

Individual savings of at

least Ksh 8,000

Using bank account

6 MONTHSPROJECT

STAGE

CHALLENGES• All the transactions still in cash

Financial

Products

Personal: M-pesa+ M-banking savings +

borrowing

Business group: cash + group account

VSLA savings: group account

RECOMMENDATION

12 MONTHS 24 MONTHSENROLLMENT

USER EXPERIENCE

VSLA GROUP

Mentor services at

business level

Teacher at every group

meeting

• All transactions still in cash

Personal: M-pesa+ M-banking

savings

Business group: cash + group

account

VSLA savings: group account

Assessment of

business group

VSLA training

$100 grant given to the

business group

Phone given

• Using phone for the first time

• Learning how to use M-pesa

Personal: M-pesa

Business group: cash

VSLA group: group account

Business Training for

the group

$200 grant offered to

the group

Team of 3 form

group

• Never used M-

pesa before

• Never used a

phone before

• Low financial

Literacy

Personal: M-PESA

Business group: Cash

IDEAL PRODUCT: SIMPLIFIED GROUP ACCOUNT

MEMBER:Dial *522#Enter loan amount :____PIN ( should be a 4 digit)

OFFICIAL:Dial *822#Menu ( has 6 options)ApprovePIN

Receives a message: loan amount+ Interest

Can’t withdraw w/3authorisations:- Lipa na M-pesa, m-banking, e-chamaM-chama:- too complex, requires additional bank accountIf its not SIM based then it requires a new PIN

Automatically sends to 3 officials

Money is deposited into member M-pesa

Way Forward: Use Variety of Instruments

M-PESA:• SIM based• Easier to learn• Widely acceptable• Should be first

product to use• Useful for

sending/receiving money, buying airtime

Lipa-na-M-pesa to a till number• SIM based• Do not need to memorize

another PIN• 1% charge per

transaction (cheaper than M-chama)

• SMS alert on who has paid

M-chama• Has facility to

have 3 signatories

• KCB is willing to change the product based on our feedback

Equitel/airtel products not usable at this time due to poor/no airtel network in the areaMost of the bank products similar to M-chama

Record Keeping: What is the value?

WOMEN BOMA

BUSINESS RECORD

KEEPING

• No value to women as they

have to depend on the

children to write it

• The women understand

how much money they have

made and the accounting

through memory.

• From previous research BFA

has done; small businesses

are not keeping any/good

records even though they

have some education

Is it valuable to BOMA?

• Other businesses mix

business and family money

• BOMA is only able to get

good records if the input of

the record is good

VSLA RECORD KEEPING • Simple paper based record

keeping can work. Have

symbols and color to show

contribution and loans

• No value to women and

stressful as they do not

know how to read and write

• Trainer can capture the

details