Elias Fanta was born in the city of Assala, Ethiopia. He attended elementary and high school educations in his birthplace Assala. After completing high school, Elias went to the Addis Ababa University for a tertiary education and earned a BA degree in economics.

Elias started his professional career back in 1993 when the Southern Nation, Nationalities and Peoples Government (SNNPG) initiated the first microfinance project in Ethiopia. Elias was given the responsibility of establishing and coordinating the project, which was the first of its kind in Ethiopia. Under his leadership, the project served as a showcase for similar interventions across the country.

Elias had the opportunity to travel to Bangladesh to learn about the microfinance credit and saving operations of the Grameen Bank. Elias was able to see firsthand the power of fighting poverty through such financial services. He learned about the power of group savings and loan programs in securing financial services to poor communities which were excluded from such services by conventional financial institutions.

Elias took the lead in establishing the microfinance project and served as its first coordinator for three years. Through this project, Elias helped poor families, most of them woman-led households, in order to establish saving and credit groups to access financial services in cities across the southern region. Though the road was bumpy along the way, the financial intervention of the project helped many poor entrepreneurs to start new businesses or expand existing ones. Elias assisted clients to gain financial trainings in important topics such as bookkeeping, marketing, business plan preparation, and cash flow management skills. He witnessed many poor clients of the project become able to weather financial difficulties and increase their income significantly. While most of the clients were able to make sufficient income to cover their loans and escape out of poverty, some exceeded expectations. A number of clients were not only able to come out of extreme poverty but also expand and grow their business to a higher level. Elias is proud in helping these micro-businesses in generating sizable profits to their owners and able to create job opportunities for many others.

Such practical lifetime experience helped Elias to land a job in the microfinance sector in the USA. From 2007 to 2009 Elias was employed by the Enterprise Development Group of Arlington, Virginia. Elias worked as a loan manager and technical advisor at the organization and was able to help many poor families, particularly new immigrants to the US, to get micro loans, access saving services, and to expand existing or new businesses. Elias was pleased to see many clients making good income and save money to pay for college or buy house and other properties and live the promise of the American dream.

Elias is excited to join the Nuru team as the Community Economic Development Program Manager and we look forward to his contributions and added experience.

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In CED, we began in Nyametaburo, Nyangiti, Nyamaharaga and Taragwiti locations with KAPESA savings club meetings once every week. In these locations we have 1500 Nuru farmers but we only had 150 clients, showing that we were not impacting a large part of the community. In KAPESA, loans were given without checking or comparing savings of the loan applicant and their guarantors, resulting in members not having money for emergencies, as they were not saving well while they were repaying their loans. The structure of KAPESA made farmers value loans more than savings. The program goal is to help farmers to develop the habit of saving, even when they graduate from group saving to individual, and so through KAPESA we were not meeting our goal.

MwaK was developed in March 2011 and started in new locations; Ngochoni , Moheto, and Ihore. The MwaK model seemed to be working better than KAPESA, as farmers are taught to value savings more than loans through intensive trainings, money management counseling from Field Officers, and stricter regulations on loans that enforce having the habit of savings as a foundation. Loans are given comparing savings as a group and the individual (loan applicant) has to have a quarter of what she/he is applying for in savings. Clients must keep on saving while repaying loans if they wish to qualify for the next round of loans. This helps our program to meet its goal, as farmers are learning how to manage their money and are starting to be able to withstand economic shocks as they arise so that they are not falling back below the extreme poverty line again. Over the past year we have grown to 1300 clients out of 2045 Nuru farmers, which means we are impacting a larger part of the community and Nuru farmers feel they can more easily participate in the CED interventions.

But we were still operating KAPESA in the older areas which means we had a program with two sub-programs, KAPESA and MwaK. Because of the differences between the two models, when doing metric assessment, it required us to have a different set of metrics for each and this brought confusion. Also, only a few CED staff understood how KAPESA operated, while the rest did not and would never know it, as it was not a program we were scaling and therefore not training on. This meant that if a KAPESA Field Manager or Field Officer decided to leave Nuru we would not have the ability to easily train a new staff member on that model. So we have decided to change KAPESA to MwaK.

In order to transition to MwaK, we will first explain the model and all the changes to all CED Field Officers so they can explain it to their group representatives and farmers. This will help to avoid confusion and misrepresentations. Then we will explain the changes to the group representatives so that they will know how to explain it well to their groups. Next we will have meetings with all farmers in the 4 KAPESA locations to explain why we are changing it and how we will change it. To start the transition, we will have 6 trainings in the first 3 months to make sure all members have received the first series of money management training. This will help program train farmers on all requirements needed to be in MwaK savings groups, how to save, how to compare shares during loans, to be responsible as a group, and explain the roles and responsibilities of guarantors for loans taken in their group. This change will help have many farmers save, ensure all members have received foundational money management trainings, have one set of program metrics to measure program impact, and all CED staff will have same information to support each other and help uplift the community.

CED has scaled to Mabera and Kehancha divisions. Currently in Mabera we are in two locations; Ngochoni and Moheto. Come July 2012, we are scaling to two new locations Ngisiru and Komosoko. In Kehancha we are in two locations; Nguku and Tisinye and in July 2012 we will scale to two more locations; Nyamotambe and Nyamaranya. We are excited to continue implementing the CED model in Kenya and see communities come out of extreme poverty.

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Over the past three months since our last disbursal, we finalized our preliminary financial sustainability model for the nine year cycle of the model. We have since been having long conversations about how to ensure we are making our desired impact and reaching our financial sustainability goals. We have also been taking a serious look at the programs history and dealing with some of our more difficult loan clients, a lot of whom we had bent the rules for. We realized that sticking to the rules was a major factor in making the change we wanted to see stick. When we received 242 applications this round, we already knew our discussions with our clients about the importance of savings and what it required to qualify for a loan had hit home with some clients. We have more clients but had fewer applicants than we did back in October, I believe because we have been clear in our messaging- ‘if your savings isn’t enough to cover 25% of the loan you’re applying for, you won’t qualify’. We encouraged these clients not to apply, but instead to focus on savings until the next round and seek out additional help from their Field Officer(s).

Next came the big test. I had been having these discussions mostly with my Program Leader, Andrew Chacha, and my Field Managers. We had had a few trainings with our Field Officers and really trying to mentor them on the “whys” behind what we were doing as a program. It was up to the Field Officers to determine who would qualify and if we didn’t follow the rules we hadn’t budgeted any financial room to back it up, it was a sink or swim opportunity for the program. And boy did they swim!

No client was given a loan unless their savings matched the requirement and no one was even allowed to guarantee if their shares didn’t match the guarantor requirement. They conducted thorough home visits. They worked for three long days to work trying to figure out who could qualify for what amount and who showed the best savings history, not just balance. And when the community became a bit rowdy because of the strict rules, the Field Officers arranged extra community meetings with the Field Managers in order to address some the issues and explain in depth the reason CED works the way we do. When some clients refused to take a reduced loan amount, trying to pressure the Field Officers, they re-explained the rules, why the reduced amount had been offered and told the clients that they could apply again next round when they had increased their savings. We disbursed 172 loans this round, but we are proud as a team of each qualification decision we made.

And best of all is the ownership the Kenyan team now displays over the program. They understand the value in why we have the rules and the benefit to our program and the community of the rules. Not only that, but they have taken the opportunity to learn it so well that they are able to explain it to their communities, their neighbors. Team morale is high and confidence in the model runs deep. With such a fantastic team and an impact goal they all believe in, a model based on savings instead of credit, based on trainings above services, actually has a chance to flourish.

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This February 2^nd and 3^rd was the first moment of truth. The repayment rate wasn’t going to magically tell us we had reached our desired impact, but it was the first indicator of whether or not we had designed an accessible service that not only offered financial services, but put more emphasis on training money management and how to utilize financial services. On February 2^nd there were only 11 clients with remaining balances, meaning 202 clients finished paying off their loans early. On the afternoon of February 3^rd, we remained with two clients, each having one late payment and giving us an in arrears rate of .32%. As of February 11^th, the two remaining clients cleared their balances giving the CED MwaK loan program a 100% repayment rate for the first round.

We know as we scale 100% is shooting for the moon, but it will continually be our aim. I met with the Kenyan staff last week to analyze and discuss the success of this first round and how we wanted to move forward, below are some of their reasons for our success:

• The amount of the first loan was small and based on savings. If people asked for too much, we were able to go back to them, show them their savings history and offer them a smaller loan. These small loans, matched with client capacity, made it easier for them to payback. The team said that by starting so small, the clients are eager to get to larger tiers and are therefore committed to going through the steps we have set before them. Because we are strict with the rules we have set forth, they know they have to adhere to them otherwise they won’t be able to reach the larger loan amounts.

• We explained the program well, including; services, regulations, requirements, roles and responsibilities, from the very beginning. We also maintained consistent messaging throughout the communities we were working in and those sharing the message, from Program Leader to Field Officer, were able to give an explanation if asked.  Another part of this is the role of guarantor(s) and group. From the beginning we emphasized that loans would be given not only based off personal savings, but group savings. We also took extra pains to clarify the role and responsibility of a guarantor, should the client fall through on payments. The Kenyan team said that this emphasis encouraged the group to work together more closely and for guarantors to take an active role with their respective loan client in encouraging him/her to pay and checking in with them on the status of their loan.

• Client supervision was consistent. In the past, a lot of the responsibility to check in with clients was placed on the group representative, or Field Officers would check in with a client a few days after a problem arose. Because all clients attend a training meeting once a month for MwaK and we have pushed dealing with clients promptly and on a one on one basis, this first round of MwaK the clients received a lot of hands on attention and follow-up throughout the savings, loan application, and loan repayment periods.  The client was given an updated balance after every payment directly from their Field Officer. The team believes that knowing exactly how much they owed, encouraged them to come up with as much as possible to pay off the loan, not just enough to make the next payment or enough to guess at what they should bring next meeting.

• The CED team also made MwaK a competition between areas. We were always sharing attendance scores, average savings per month, etc. between our Field Officers at the meetings; encouraging them to have the highest monthly savings or the highest attendance. The team believes this competition encouraged them to continually strive to do better, not just meet a requirement or follow the status quo. We are brainstorming how we can keep this up and incorporate this friendly competitive attitude into the model as we scale.

• Finally, one of the biggest revelations we had as a team about the MwaK loan program is about the timeframe. The way we set it up, the loan application season is only available for two weeks every 3.5 months. Once a loan cycle is completed we automatically issue applications, give two weeks for them to be filled out and returned, process them for two weeks and then disburse the next round of loans. If you miss the window, you have to wait until the next cycle to apply. In our old model, the loan worked on a continuous basis. You could apply anytime and be approved if you met the qualifications. If it took you a month to turn in your next application after you finished the loan, then it made no impact on whether or not you could receive a loan. Because the MwaK clients want to progress through the program, they are eager to reach the next tier. To do so, they have to make sure they pay off on time and two weeks is a rather small window. They know that if they are even a week late, we are already considering other loans to be disbursed and that theirs will fall to the bottom of the pile. It will be interesting to observe through future rounds if the mere timing of when loans are offered, really is a contributing factor to our repayment rate and clients commitment to advancing in the savings and credit program.

We have made a commitment to continue to analyze, compare, look back and look forward after every MwaK round of loans. We know that part of our continued success is dependent on us sticking to the model and the rules and requirements we have set up. We look forward to even future bumps in the road as we know they will only help us refine the model and get that much closer to making the lasting impact we desire. I look forward to telling you about the Mwak Loan Round 2 Review Process and sharing our discoveries, bumps, and successes with you.

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• We launched Msingi wa KAPESA (Mwak, our basic group savings program) with an accessible minimum deposit, and savings and loan trainings to accompany the services offered as a client grows.
• We scaled to three new locations and added 500 clients with our MwaK program during the launch.
• We incorporated Mifos Business Intelligence Suite reporting into our operations and utilized it  in order to better analyze and communicate program data.
• The Kenyan team did research and brainstormed the first draft of our MwaK Loan program.
• The MwaK Loan Program was polished and implemented in October with new measures to better ensure direct impact and to bring us back to our “special sauce”, money management trainings.
• 213 first loans were given out through the MwaK Loan program.
• We promoted MwaK when the Agriculture Program did Base Education in November have had spectacular responses that we will be able to evaluate in the new year. For example, Nuru’s Agriculture Program added 13 new farming groups in their location Nyamosense and two weeks later all 13 groups registered at their first MwaK meeting.
•  We had 100% repayment for the MwaK loan program thus far and look forward to reporting a strong repayment rate for the next round of this program in our first 2012 quarterly report.

I hope those highlights are as encouraging to you as they are to our team on the ground in Kenya and me. And, I hope they remind you that we are not done yet. The CED program has two scaling initiatives planned for 2012, both to four new locations, just for a start. We know 2012 will be an even bigger year for the CED program and look forward to sharing the journey and progress with you in 2012. See you in the New Year!

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The response for first-time participation was double what we had projected. But if the sheer magnitude wasn’t enough to shock us, the way the community responded was more than enough. We focus a lot of time during our trainings on savings; and when we finally introduce loans, it is always in the context of how much one needs, how much one can afford to take, and how one must take it for the right reason. In the past, whenever we have offered loans, the majority of clients have always asked for the largest amount available. We knew what we were teaching and we would consistently explain why to the community, but when loans are offered, it has been a mad dash to what some still perceive as free cash. This time was different. In October, we had loan applicants who had enough in their savings account to double the size of the loan they were requesting, but they requested less. When asked the reason for taking the amount requested, they said it was because they didn’t need more money than that at the moment. We had numerous loan applicants apply for exactly 25% of what they had. (One of our new regulations is that you have to have 25% of the requested loan amount in your savings account and that you have to have three guarantors who collectively have the remaining 75% in their savings accounts.) We had great response from the guarantors and demonstrated understanding of what it means to guarantee multiple people (having enough to cover their portion of both loans). And out of 268 applicants, we were able to approve 224 loans for people whose first-time loan applications and financial training came through Nuru.

The loan disbursement was a breeze. Our Kenyan team worked with precision and set up various stations where the clients could sign the contract with guarantors, receive the money, and pay their processing fee. Receipts were written and back at the office, and our office clerk was hard at work receiving the contracts and putting them into Mifos so we can track the payments and the loan history as these clients progress. All in all, the unexpected response showed us the impact of the Msingi wa KAPESA program and the potential it has to be a game changer in the fight to end extreme poverty.

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This season, I’ve learned that innovation can simply translate down to simplification. My staff and I have been discussing the CED model and how we might improve it. We discussed our goal and made sure that we not only understood what our goal was, but why it was important. Then we reevaluated how we were meeting our goal in light of the specific whys. It revealed that with the launch of the MwaK Loan Program, we would have some redundancy in our program. The MwaK Loan Program better met our goals and helped us to reach our target market, not just a general audience. In light of that, we slimmed down our model and made it into a tighter, scalable and hopefully more sustainable model.

Diagram of Nuru's streamlined Community Economic Development programs

Now we have only two programs, MwaK and JDF, rather than the four we previously had. The first has both a savings and loan component, but it is group based in order to bolster accountability during the training stages. Then, our JDF program also has a savings and loan component, but focused more on preparing and ensuring the client is stable enough and practicing the money management skills taught in order to move onto larger financial institutions. It’s simple, but effective. The meeting schedule is scaled back so we don’t overwhelm farmers. The savings is flexible to accommodate the inconsistent income of those in poverty. And the loan tiers are highly structured, in order to provide support and training on money management, instead of holding expectations that more money will automatically be a solution.

Innovation can bring a lot of positive change and creative solutions, but sometimes the best solution isn’t about adding onto something, but rather scaling back and going with simplicity.

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Most importantly, there are significant discrepancies concerning the definition of poverty and/or extreme poverty. There is a definition for both poverty concepts by the World Bank, but even this precise economic definition is confusing. It dictates that individuals living on less than USD 1.25 a day, adjusted to PPP, are in extreme poverty. But the majority of the extreme poor are farmers, meaning that their income is based on seasonal harvests. If they spend all that money in the first few months of the new season, then they might be living on nothing until the next crop comes in. Working under this assumption brings about a completely different approach to poverty and poverty reduction than based off the idea of a daily income, however low it might be. Without specifications concerning target clients too many generalizations can be made in the field that can lead to mission creep and inefficient programs due to an indefinable goal.

So let’s get specific. Nuru has a loan niche. We are not an MFI, but we do offer training, savings and loans to those in extreme poverty. Our definitions are as follows:

• We work specifically to fight extreme poverty. The extreme poor consist of people living on less than USD 1.25 (adjusted for PPP) a day, acknowledging that most of these individuals are farmers receiving windfall income seasonally.
• We work in remote, rural areas, so our focus is specifically on these farmers. This means are programs have a definable target population and we are able to then tailor our programs to meet the specific needs of this population.
• We focus on training first. Our training is given by local leaders that have come to work with Nuru and are able to deliver the training in the local language and relate the new concepts to ideas and stories the community is familiar with. Our training envelops both savings and loan topics.
• We focus on savings second. We believe that if you can’t manage the money you already have, than you will most likely struggle to manage more. Our goal is to provide the knowledge and resources so that individuals can raise themselves to the point where they can whether economic shocks without liquidating productive assets.  If they understand the value of saving before acknowledging the potential of a loan, than they will be able to provide for their family consistently and prepare for their future as a foundation, before utilizing loans to diversify their income.
• We charge interest on our loans. Our interest rates are below market rate because we understand we are working with the extreme poor and we don’t want to take advantage of this. However, we are firmly against handouts and don’t believe in free money. We aim to prepare our clients for semi-formal and formal financial institutions as they continue to move themselves out of poverty and interest is a part of that world.
• And most importantly, we are unwilling to raise our loan maximum on the basis of making profits. We are dedicated to helping the extreme poor and focusing our efforts there. If we offer larger loans in order to make more profit, than we are taking resources away from those who need the most attention as they start accessing financial services.

Nuru is different. We are able to define our unwavering goal, our target population, our loan cap and why our programs are on the way to making impact on eradicating extreme poverty.

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Life before the debt crisis in Kuria – and before Nuru – was all about sustenance: scraping together enough bags of maize to feed your family for one more season.  As if this wasn’t already hard enough: the debt crisis and East African famine have worsened the situation for Nuru’s one acre farmers.

Because the U.S. Dollar is the international reserve currency, when the dollar drops so do other currencies. The Kenyan shilling hit a new low this month. In response the deepening debt crisis in the U.S. and Europe, Kenya has cut its growth forecast for horticulture earnings, further threatening a weakening currency. That means food price hikes, not to mention the ever-increasing gas prices that raise transportation costs of every commodity that finds its way through the back roads to rural Kenya. A few months ago in Kuria, a bunch of three onions used to cost 20 shillings (approximately 25 cents USD). Currently in Kuria, a single onion costs up to 30 Kenyan shillings (approximately 37.5 cents USD). Maize prices are increasing because of the drought; typically this would excited our one acre farmers since they would be able to get more for their crops, but because the drought is here in Kuria, Nuru’s one acre farmers don’t have as many (if any) bags of maize to sell as they did last season. Instead, they must keep their bags of maize to feed their families.

The Community Economic Development program at Nuru focuses on self-sufficiency and money management. There is a lesson to learn here for the people of Kuria – which is a lesson that should be the foundation of larger economies: we don’t give loans without building a deep understanding of when you should use a loan and when you should depend on savings. Our Msingi wa KAPESA program teaches that even if your income is tight, there is always room to put away a few shillings every month in preparation for an unpredictable future. The age old financial mantra of “you shouldn’t spend more than you have” is growing roots in rural Kenya. We can’t prevent a drought, but we can prepare for what we can’t prevent. While there may not be accessible welfare programs for the farmers to worry about losing, they are learning practical skills to help them prepare for hardships. Their life experience has taught them that when you can’t depend on your government, you have to depend on yourself. Even for the extreme poor, when there is a way to prepare, there is hope.

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We recently held an International Summit at Nuru International so that all teams could collaborate and work through the DIF (Design Iteration Format). This tool helped us simplify each of Nuru’s five program models into scalable, sustainable units using common language. The mission of the CED program has been the same since the beginning, but it was time to “take out our ruler” and see if our program’s mission measured up to the organization’s goal of scalability and sustainability. Through this process we were able to better define our big idea and mission and prune away some of the questions hanging at the edges of our model, such as “Would we be willing to raise the cap? Was it necessary to put so much emphasis on training?” etc.

So what is the “big idea” of CED that we are so passionate about? We want to help “the rural extreme poor access Nuru CED training and basic financial services as a pathway to semi-formal and formal financial markets.” By doing this we will “enable rural households in extreme poverty to cope with economic shock and build on income opportunities.” But how does that translate into actions?

We are reaching a gap population. According to the NGO community, there are a lot of “gap” populations. The CED program’s definition of the gap population we reach is “rural extreme poor who are without access to any financial services or the knowledge and resources to use them to their benefit; individuals who live off of sustenance farming and are disastrously affected by economic shocks.” Reaching the extreme poor means we are not targeting business men or microenterprise; we are targeting the one acre farmer who hasn’t learned how to save or prepare for the future against unstable weather conditions that affect crops, “stupid” illnesses like diarrhea and malaria that are a common cause of death here and even against illiteracy in the next generation by preparing ahead of time to pay for school fees.  We are willing to spend time developing programs that make an impact instead of focusing on portfolio development because our mission is our top priority; because we see people, not profits.

This also means we value having a skill set in order to make the most of an opportunity. We’ve designed our programs to focus heavily on training, and then the programs advance from habit forming practices to initial use of basic financial services. Our programs work in tiers that slowly transition members to more intensive savings and loan services as they apply money management skills in their daily lives. We start with Msingi wa KAPESA which is six months of savings training and minimal savings requirements focused on forming the habit of regular saving. Members can continue on and are offered small capital loans that provide a chance to learn how to pay back a loan without stretching income too far. If they choose to advance further, they can access our KAPESA Core program which increases both the amount and frequency members save and offers three month of more intensive savings and loans training. After the three months, they are able to access slightly larger loans focused on stimulating income generating activities; these include small businesses, as well as activities like renting a plough ox in order to diversify and further stabilize income. Finally, members can participate in our JDF program which expects members to continue saving outside of a group while accessing the highest capital loans Nuru offers. After further learning how to diversify income opportunities and use loans effectively, we hope that the JDF program will be able to transition members to semi-formal and formal financial markets where they can continue raising their families out of poverty with the money management skills to help prevent them from slipping back into extreme poverty.

We can’t do everything, nor do we want to. Our mission is to help the extreme poor raise themselves from a place where economic shocks put them at risk of death. We go deeply with what we do, rather than going than wide and losing our focus. We prefer to utilize the services and projects already being offered around the world, rather than offer the same programs and neglect the gap population that many have deemed too risky and unable to save. We aren’t just claiming to do something different: we are. Other missions are also necessary; for us, we have chosen to extend opportunities and resources to reach those in extreme rural poverty.

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