Adding value to microfinance

Adding value to microfinance

elikanah-spm.jpg26 March | 2014

As part of its work as a social investor, Oikocredit has a capacity building unit as part of the social performance department that assists partners and the wider microfinance community in maintaining social practices. Oikocredit has dedicated social performance officers in every region that mentor and support existing and potential partners in both day-to-day operations and longer-term social goals. Elikanah Ng’ang’a is one of Oikocredit’s social performance officers and covers four countries in East Africa. We recently spoke with Elikanah about the role of social performance in his region.

You are responsible for social performance work in Kenya, Rwanda, Tanzania and Uganda. What does your work involve?

 “We see the role of social performance and capacity building in East Africa as something that adds value to what organizations are already doing. In most cases, our partners require additional support to meet their financial, social and at times environmental goals. For example, we have a social performance mentoring programme which supports organizations in being more effective in reaching their social goals. These goals often include reaching more low income earners, providing products and services that enable clients to improve their income and making sure clients are protected from harm. Other types of initiatives include market positioning and new product development to support organizations that wish to venture into new markets or want to develop new products to meet client’s needs.”

 How do you manage capacity building in your region?

 “In East Africa we have developed a capacity building and social performance strategy that has two approaches. The first provides mentoring which covers a number of partners. Each year the country managers select which partners need to be supported through the programmes based on their feedback during monitoring. The second approach is where partners come-up with the needs themselves. When this happens, Oikocredit visits the partners to try and understand those needs and discuss with them the best approach to address them.”

What types of organizations do you generally work with in East Africa?

 “Majority of organizations we work with are third tier MFIs, which basically mean MFIs that are small and not yet mature. We have a number of small savings and credit cooperatives and a few farmer-based organizations. In coming years we plan to increase our financing of agricultural partners. Since quite a number of our partners are young and growing organizations, part of our challenge is to support them to achieve their social and financial goals. From our experience, young and growing organizations require more capacity building support therefore it is important for us not only to provide debt finance as well as also capacity building initiatives.”

 Can you give an example of how capacity building impacted on a partner?

 “A good example of this would be Kenyan MFI partner, Molyn Credit. Like most MFIs in Kenya, it was facing high competition and also wanted to grow its loan portfolio to include smallholder farmers in an effort to meet it social goals. Oikocredit supported Molyn Credit’s move into a rural district in Kenya and the development of a dairy marketing hub in Western Kenya. Oikocredit also supported training for farmers and staff, product development and bringing together contributors to the marketing hub. This has resulted in over 800 smallholder farmers gaining access to finance through Molyn Credit. Farmers now receive good prices for their milk and Molyn Credit has been able to increase its loan portfolio to smallholder farmers by 20%.”

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