This was a definitive year for the Community Economic Development (CED) Program. The model has progressed tremendously, we are collecting data on our program metrics in order to determine impact and put together a financial model that shows sustainability of the program. The Kenyan staff is increasingly taking ownership of the program, conducting needs analysis and evaluation, and designing targeted solutions for the last few loose ends. I am so proud of the work that has been done by Andrew Chacha (Program Leader), Moses Mabucha (Field Manager), James Magige (Field Manager) and our whole team of Field Officers. Without intensive dedication, many hours bent in discussion and their desire to see real change in there community 2011 would not have been nearly so successful or even possible. So here’s a little holiday recollection of CED’s big moments this year:

• 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!

Posted from Suba Kuria, Nyanza, Kenya.

In September, with the help of our Kenyan staff, we developed the loan service to our Msingi wa KAPESA (basic group savings) program. We have learned a lot of lessons over the past three years and have now been able to design a stalwart program. However, because of what we have learned, the rules and regulations regarding the loan program are a lot stricter than they have been in the past. At first, we feared that the first round of loan clients would be few and that our Field Officers might struggle to explain the reasoning behind our new rules. We knew the Msingi wa KAPESA program had attracted more participation than our other programs had in the past, but we assumed between the new rules and newness of the program itself, we should only expect at 10% increase in participation over our historical numbers.  Instead, we were blown out of the water.

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.

Posted from Nyanza, Kenya.

At Nuru International, we follow the Design Thinking school of thought and are dedicated to innovation, iteration and the openness to question our model. But it’s hard. It means a constant vigilance over your desired impact and continually reevaluating what you are doing in order to ensure you are meeting your goals in the best way possible. Sometimes it means looking for ways to improve efficiency and other times it has more to do with market strategy and selling points to the community. But either way it is a balancing act between being willing to scrap everything and trying not to “throw out the baby with the bath water.”

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.

Posted from Nyanza, Kenya.

When mentioning micro loans in the development field, it is assumed you are talking about all small loans given to those in poverty. Although the majority of microfinance institutions (MFIs) prescribes to similar dogmas and offers comparable loan programs to clients, there is a lot of variety and specificity in the field. Organizations like Village Enterprise Fund offer intensive training programs to help develop the skills needed in order to be successful as an entrepreneur before any monetary assistance is given (grants). Other organizations like the Grameen Foundation, offer minimal training and focus primarily on giving loans. A large portion of MFIs work with their clients in groups, like those utilizing the ASCA model. These organizations focus on utilizing the power of social consciousness and peer pressure to encourage high loan repayment and reinforce messaging. Other organizations, like Kiva, allow lenders to access clients on an individual basis through client profiles, creating a personal connection from donors in the state to those creating business and moving out of poverty around the world. There are MFIs that give zero interest loans and other MFIs that charge interest rates above market rate for access to credit, like Compartamos in Mexico, in order to be more profitable. These differences create a diverse field with a multitude of programs, each with their own goals and therefore different impact implications.

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.

Posted from Nyanza, Kenya.

I have two living grandparents, my family lives in New Hampshire, and I am a United States citizen; we are all freaking out about the U.S. debt crisis. It is a real and scary part of our lives right now. The U.S. government has provided its citizens with some level of financial security through social security, welfare and federal student loan programs. In light of the current situation, many people are worried that security might be fleeting. But imagine if you never had security and then things began to get worse? What if you weren’t ever able to depend on your government because its abundant corruption was making your life harder instead of giving you support? The U.S. debt crisis isn’t just the crisis of one country; it’s affecting the international financial markets, countries from Albania to Zambia, and one acre farmers in Kuria, Kenya.

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.