Microfinance on mobiles: Nuru International in Kenya

Nuru international is a small American microfinance institution (MFI). They provide microloans and savings services in Kenya's Kuria region. 10,000 agricultural workers, from about twenty villages, take advantage of their microfinance services.

In January 2011, Nuru launched a pilot project to make microfinance available by mobile phone. They use the M-PESA service and MIFOS software (link to mifos). MIFOS is an open-source software programme which was developed by the Grameen Foundation. Vivian Lu manages this project in Kenya. She talks to us at Microworld.

What does mobile banking change for the customer?

We operate in the countryside, serving very poor people who work in agriculture. We offer them microcredit and savings services. Even in regions quite far from the city, the mobile phone reception is generally good. And if one of our clients does not have a phone, there is always a relative, friend or neighbour who owns one. In practice, the on-field loan officer is the one who is equipped with a mobile phone.

Does mobile banking mostly affect the loan officer's duties?

Yes, one of the big advantages of M-PESA and MIFOS is that it allows loan officers to spend less time on paperwork since administrative procedures are simplified. Before, when it came to transactions such as loan repayments or savings deposits, loan officers had to manually enter every receipt on their books each day. With M-PESA and MIFOS, the mobile phone messages take over most of this labour.

Have people readily accepted the idea of mobile banking?

The response was positive, as we saw in December and January during our training sessions. Our customers had faith in it right away, undoubtedly because our loan officers are locals and because M-PESA (link to safaricom) is very well-known in Kenya.

Will mobile banking replace face-to-face contact?

We certainly do not intend to replace real human interaction! With mobile phones, loan officers will save time and be more available for their customers in agriculture. This contact is essential.

Translation: Catherine Jan