Case study: Jamii Bora

The story
Jamii Bora is Kenya’s largest microfinance institution and works to help the poor through low-cost loans that enable them to save money and develop small businesses.

The challenge
Jamii Bora wanted to increase the numbers of members. The organisation started in 1999 with 50 members who were former street beggars, and by late 2008 the membership had grown to more than 180,000. It wanted to reach 500,000 people with a primary focus on growth into remote or underserved areas such as slums. At the same time, Jamii Bora also wanted to expand its product offering without neglecting its core microfinance operation.

Devising a strategy
After talking to its users, Jamii Bora came up with a three-pronged strategy.

First, employ new technologies better. The rapid expansion of mobile telephony and wireless communication in particular has enabled greater access in rural areas where existing infrastructure was poor.

Jamii Bora made significant investments in an online electronic financial transaction system, connected to hand-held point of sale units that enabled mobile agents, sometimes on bikes, to access remote areas. The system allows clients in the countryside to make loan repayments, receive disbursements and perform other business electronically via their mobile devices.

By contrast, the second plank of the strategy was very non-technological: use word of mouth to spread the message across the country. Because the hundreds of thousands of current members are living in improved circumstances, they are now able to travel to attend funerals and family events, for example.

By encouraging members to talk about the impact of Jamii Bora in their home villages, the organisation has been able to tap into a form of public relations that is often more powerful than any other form of marketing: building on long-standing personal networks.

Third, the organisation has realised that it needs constantly to develop its product offering. Its research revealed that it was often non-financial or business-related difficulties that affected an individual’s ability to make repayments on loans.

One of its studies, for example, revealed that 93 per cent of all defaults by its members were the result of having to care for a sick family member. This led to the organisation’s decision to offer its members health insurance.

Moreover, it wanted to branch out further to offer life insurance, education and loans for agriculture, housing, water development and infrastructure development.

Finally, Jamii Bora’s policy of hiring and promoting from within has allowed the organisation to expand quickly. Members working in different roles throughout the organisation are examples of the efficacy of the model and are a powerful marketing message. They are motivated to move others out of poverty and are acutely knowledgable of the challenges of the organisation’s new members. This policy also means that the level of training is lower than would be required for new recruits to the organisation.

Key lessons
The decision to hire and promote only from within the organisation has been critical to Jamii Bora’s success, both in terms of its social purpose and in expanding its reach. The strategy gives members ownership of the organisation, an opportunity to participate in the  decision-making process and the knowledge and experience to design the loan products that best meet members’ needs.

The smart use of new technology has allowed Jamii Bora to expand into areas that it previously could not reach at a relatively low cost and as efficiently as possible.
- Financial Times, 8 Dec 2010