Vacancy Announcement for Director of Technical Operations – Kilimo Trust

Kilimo Trust (KT) is a non-profit and non-political regional organization contributing to efforts designed to make the East African Common Market work for the reduction of poverty and elimination of hunger in the region.  This is being done through regional solutions to local problems in ways that contribute to developing strong regional agricultural value chains that enhance security of incomes, food, and nutrition in the region. The mission of KT is to “catalyze the growth and competitiveness of strategic agricultural sectors for the benefit of a large number of people in East Africa”.

KT’s work responds to EAC policies and strategies. It has chosen as its core business, the job of   supporting the transformation of food and nutrition security in the EAC Region away from high risk subsistence farming into lower risk trade-based systems. As is the case in developed countries, in a trade based food security system all consumers including those who are in farming obtain the most of the food they consume by purchasing food that is increasingly processed, stored and distributed to meet different needs and preferences. Why is this important? Because, the very low levels of specialization in the production of food commodities by smallholders within EAC, dominated by subsistence farming encourage the production of food commodities in unsuitable agro-ecological zones, leading to perpetuation of hunger and poverty.

KT-Vacancy-2015-1-Director-Technical-Operations-(DTO)

The Regional Rural and Agricultural Finance Thematic Conference

The Regional Rural and Agricultural Finance Thematic Conference is unique in the series as it will provide a platform upon which participants will reflect on more than a decade of Knowledge Management practice in the rural finance field. Among the rural finance experiences to be revisited are  value-chains and value chain financing; micro- leasing, crop and livestock insurance, warehouse receipting, micro-finance for micro-irrigation as well as business development services, credit referencing, and mobile technology, e.t.c., as applied to agribusiness, agro-processing and small holder agriculture.

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Savings Groups Fuel Digital Design for Smallholders in Rwanda

It’s no secret that savings groups are the lifeblood of the informal financial economy, especially for smallholder households in developing economies such as Rwanda. Savings groups are seen as a social and financial safety net for those who weather seasonal hardships related to the variability of their harvest or unforeseen emergencies.

After seven weeks on the ground in Rwanda taking a human-centered design approach and interviewing over 75 farmers, banking officials, traders, co-ops, and savings groups, it is apparent that a deeper understanding of these groups provides key insights to drive the design of new digital financial services and products. The following is a glimpse into our early insights and their implications for designing mobile financial solutions.

1. Savings groups have the ambition to grow, but often lack the systems or knowledge to translate their financial goals into reality.

Many savings groups who gain momentum in size, both in membership and finances, see a parallel rise in their collective aspirations. Savings groups on the cusp have ambitious goals – they seek larger loans, more profitable investments, and community revitalization. However, they often lack the knowledge, leadership, and formal tools to take actionable steps towards these ambitions. This is complicated by the cumbersome nature of manual management and the lack of reinvestment into the collective.

A mobile-based financial channel for savings groups can equip them with a more usable management platform and translate their implicit rules, disciplines and processes into better mechanisms for understanding their own potential – such as better tracking of payments and contributions and assessment of member creditworthiness.

2. Informality brings with it distinct limitations as savings groups grow.

The ceiling for comfortable growth within a savings group revolves primarily around the pain points of a manual process. This includes bottlenecks around accounting, logistical challenges, human error and the insecurity of a cash-based system. Community implications of scale are just as crucial. Increased size makes it more difficult to maintain trust, transparency and an engaged sense of collective responsibility.

Many of these scaling issues can be addressed by facilitating internal group transactions and communications via a mobile-based platform. For example, using mobile money to make contributions rather than doing so manually improves safety by reducing the amount of cash transacted at any single aggregation point and decreases the error rate by precisely tracking contribution details.

3. Savings groups understand that financial emergencies are not just for moments of crisis, and they have the needed agility and familiarity with members to respond quickly.

Unforeseen agricultural expenses often disrupt a farmer’s budget, especially at times in between harvests. However, the need for urgent access to capital isn’t always due to hard times. Opportunities surface, such as a competitive price to purchase a cow at the market. Additionally, celebrations – such as unplanned expenses for a holiday feast or a wedding – also require rapid access to capital. Savings groups, as community-based organizations, understand the ebbs and flows of their neighbors’ lives. Their intimacy and relative speed often make them better equipped than banks to act as a safety net for their community. However, there is a limit to savings groups’ effectiveness in serving at times of urgent need. Still, as Clement and Vestine from a Musanze savings group put it, “[they] are good because you are not alone, you feel like you are part of a family and if a calamity comes your way you will be covered.”

A mobile wallet feature associated with a group account could enable tracking of individual credit histories and payment behavior for both group and individual members. This would enable the bank to provide more favorable credit terms to disciplined savers and thereby reduce their risk exposure, creating opportunities for greater access to credit over time.

Bosco, a 33-year old farmer in Huye, told us, “If a goat is available at a lower price than usual in the market, then that’s an ‘emergency opportunity’ for me. I’ll even borrow money from anywhere to buy it. I’ll do whatever it takes to seal the deal.”

4. In the “community trust economy,” there’s a need to continuously empower leadership when seeking to streamline their operations.

Leadership in savings groups is voluntary and comes with the opportunity to build reputation and trust in the village. These leaders are a crucial force for the health and success of savings groups, and rely on two primary factors: (1) the president’s ability to translate her/his leadership into collective empowerment through group decision making and (2) the strength of the accountant – the quieter but often more important link in a savings group’s prosperity – who must manage the savings group’s funds accurately, reliably and transparently. While the president may have nominal control, it’s the accountant that often carries the organization’s trust. Savings group leaders seek tools and systems that ease their accounting and management burdens, but not at the expense of empowering their members and substituting for their capable leadership.

A multi-party authentication mechanism built around a mobile savings group solution could grant equal access and control to a number of individuals in a group (such as the entire leadership committee) – and minimize the possibility of any personnel taking fraudulent advantage of their positional powers. The group can be enabled with sufficient digital ‘checks and balances’ to ensure that the group trust and integrity stays secured as they scale and evolve towards more formalized working practices, while also ensuring that real-world group dynamics and cohesion are preserved.

Emma is proud of being the SLA accountant because it means that people trust her. Although her reputation depends on managing the money properly, she feels it is “too demanding to keep everyone up to date on where the money is, how much is lent and who has already been paid.”

When applying human-centered design to financial inclusion, it’s often revealing to look to informal solutions to better understand gaps and opportunities in formal systems. While these insights about the mechanics, agility, trust, and intimacy of savings groups suggest compelling opportunities for mobile innovation, we recognize that past experiments to bring technology into these contexts have often fallen short. Designing mobile solutions given the real technical limitations (i.e., feature phones and USSD menus), the requirement for extensive demand generation and training, and ensuring commercial viability is not easy. But given the size of the opportunity and the fact that these key pain points continue to exist, the need to experiment remains.

The authors of this post – Sebastian Barrera, Montana Cherney, Ashish Kumar, and Melanie Kahl – are all part of The Design Impact Group (DIG) at Dalberg.

source: http://www.cgap.org/blog/savings-groups-fuel-digital-design-smallholders-rwanda

IFAD’s new financing framework means more investment in poor rural communities

Rome, 6 May 2015 – The Executive Board of the International Fund for Agricultural Development (IFAD) recently approved the Sovereign Borrowing Framework, a unique and innovative financial policy tool created to meet the increased need for investing in the Fund’s agricultural development projects.

“This framework provides the means to leverage additional funding for our work in remote areas where few others venture,” said Kanayo F. Nwanze, President of IFAD. “As we look to how we will finance the post-2015 agenda, IFAD believes that financing tools like this one are essential to transforming rural areas into vibrant places where women and men can thrive.”

Meeting the ambition of the new Sustainable Development Goals that will be adopted in September will require a substantial range of domestic and international investments from both the public and private sectors. Development institutions need to broaden their financing instruments in order to attract additional finance and support their partners in making the best use of these resources.

The framework focuses on the parameters within which IFAD may
borrow from sovereign states and state-supported institutions. IFAD’s goal is to support rural people so they can improve their food and nutrition security, increase their incomes and strengthen their resilience by investing in agricultural development projects that bring about rural transformation. In order to reach more rural people and increase its impact, IFAD will continue to expand its funding base by leveraging additional resources. As a first step in this direction late last year, the Fund signed a framework agreement with Germany’s KfW Development Bank for up to EUR 400 million and a first loan of EUR 100 million.

source: http://ifad.org/media/press/2015/29.htm

Radio and text messages keep farmers in the loop in Rwenzori

An innovative partner project in rural Uganda is using dialogue via radio and SMS messages to help farmers solve problems.

A goat with a swollen stomach, yellow-brown streaking on a banana plant’s stem or today’s retail price for cassava flour. These are some of the queries from farmers across the Rwenzori region of Western Uganda, coming through to KRC102.FM’s “Toll-Free Line”.

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How ‘informal’ agriculture markets generate and distribute power!

If you have become accustomed to think of power in terms of electricity or political power, evidence from the people’s market indicate you should think again. ‘Informal’ agriculture markets have remarkable ways of dealing with power. The market has become smart at distributing power among value chain actors such that no single agricultural value chain actor holds power forever.

Read more…

African Ministers Unite in Calling for Strong Universal Climate Agreement and Sufficient Finance to Unlock Africa’s Potential

Private and public sectors join in quest for market and finance opportunities at 7th Africa Carbon Forum

Ministers from governments across Africa have renewed their call for a strong, new universal climate change agreement and increased flows of funds, including through market and finance opportunities, sufficient to fulfill Africa’s development aspirations.

With countries set to approve a new climate change agreement under the UN in Paris in December, African Ministers stressed the region’s readiness and requirement for accelerated private and public financing of low-carbon development. Africa, with its vulnerable populations and vast potential, has perhaps the most to lose from climate change and the most to gain from an effective climate change greement.

“I agree with Ministers that the last 10 years in the implementation of the Clean Development Mechanism is a very valuable asset and that market mechanisms can play a significant role in raising the level of ambition, and supporting climate action”, said Hakima El Haite, Minister in Charge of Environment of Morocco.

Click here to read the full article

5 ways universal financial access can help people build a better life

A transaction account used to only mean an account at a bank. Nowadays, a transaction account could be a bank account, a mobile wallet, payment card, or a similar electronic instrument.

A lot has happened in the five years since the G20 meeting where the international community recognized financial inclusion as a main pillar of the global development agenda. Since then, more than 50 countries have made formal commitments or set targets for financial inclusion.

But much work remains. Worldwide, 2.5 billion adults still lack access to basic financial services. Closing this gap is vital to ending extreme poverty and boosting shared prosperity. World Bank Group President Jim Kim set the year 2020 as a target date to achieve Universal Financial Access (UFA). The UFA2020 goal calls for adults everywhere to have access to a transaction account to store money, send and receive payments.

Having a transaction account opens the door to other formal financial services, such as savings, payments, credit and insurance.  Access and use of appropriate financial services can help people better manage risks, step out of poverty and build a better life.

To make this happen, the Bank Group is focusing on the 25 countries where 76% of the world’s unbanked population resides, including India and China. Our approach centers on introducing transaction accounts, expanding access points, and driving scale and viability through high-volume government programs, such as social transfers, into those transaction accounts. We are also working with countries to strengthen key building blocks: political and stakeholder commitment, enabling legal and regulatory environment, and bolstering payment systems and ICT infrastructure.

If universal financial access is reached, and if it opens the door to wider appropriate financial services, how could that change people’s lives?

Click here to read more.

3 Key Risks in Going Digital – and How Microfinance Institutions Can Address Them.

By Kaylene Alvarez and Lisa Kienzle

The speed and convenience that make digital services attractive to clients can bring a host of new risks for financial institutions that serve the poor.

For customers, digital services offered via third-party agents eliminate the need to carry cash long distances, and give them more visibility into their accounts through their mobile phones. For financial institutions, going digital means more transactions at a much faster rate with much less direct contact with clients. This can create risks in three key areas:

  1. Centralized decision-making
  2. Reactive vs. proactive risk management
  3. Vendor and distribution partners

Centralized decision-making is risky

Digital information flows quickly, requiring decisions to be made in near real time. For this to happen, staff at the branches must either have authorization to identify and mitigate risk at that level, or have sufficient escalation protocols to support quick decision making. However, risk management is often centralized at the head office, and corrective actions are only taken after issues have been raised, formally reported, and addressed centrally.

Financial institutions could create delegation authorities for decisions to allow faster responses to certain situations, such as day-to-day issues like resolving account balances and opening accounts, or more critical, systemic issues like persistent network outages. As a part of our engagement through the Accelerator program, Grameen Foundation worked with Pride MDI to create a clear set of procedures, owners and decision makers to address problems as they arise. In the new model, the escalation matrix delegates authority to lower level managers who can take immediate action for certain events, and with authority appropriate for their position. These managers then report to the head office after they have taken corrective measures instead of reporting an issue and awaiting guidance.

Reactive risk management finds problems too late

Too often, organizations manage risk retroactively. When transactions happen via a mobile phone versus at the branch, multiple issues can arise before they can be raised at a formal credit committee or risk management committee meeting. This includes an unplanned system outage, challenges reconciling between the mobile network operator’s platform and the institution’s core banking system, or agents lacking cash or e-value to service customers.

 As such, the tools used to monitor risk must be suited to the new channel to proactively manage risk identification and prioritization. In our Accelerator program engagement, we shifted Pride MDI’s current approach from managing a long list of Key Performance Indicators (KPIs), to understanding what shortlist of critical Key Risk Indicators (KRIs) could be monitored on a daily, weekly and monthly basis. This shift in the type and the frequency of the monitoring is helping the organization manage risk proactively instead of managing performance retroactively.

GrameenKRIphoto

Figure 1 (above) shows how an organization could shift the way it monitors customer service, narrowing from five KPIs to two KRIs. Focusing on fewer metrics in real time that can be predictive of a legitimate risk to the business – or at least a changing trend – is much more effective than monitoring several metrics that merely count historical performance issues.

 New vendors and distribution partners introduce new opportunities for risk in the system

Digital services require new technical vendors to work within existing systems, such as core banking systems, and those of mobile banking providers and other technical vendors. Having this many inflection points creates multiple opportunities for risk. Developing detailed process flows for each process, interaction, decision and consequence can help a microfinance institution avert a crisis resulting from integration challenges.

However, the risks that arise from new vendors are not only related to technology. For instance, using an external vendor for digital services transfers business performance to a third-party. Financial institutions must now rely on mobile network operator‘s agents for client interaction and customer service. These distribution partners become the liaison between the institution and the client, although they are not employees of the institution. Yet, if a problem arises (for example, the system goes down) it is still the institution that is responsible in the eyes of the client.

Financial institutions can prepare for this shift by developing back-up plans, process duplication and overrides that allow different vendors to interact with one another temporarily in the case of an outage of one partner. To provide sufficient customer service, the institution can work with the mobile network operator to ensure that customer service issues raised with agents are sent to both the operator’s headquarters, as well as to the financial institution. This ensures that the institution knows about the challenges and can engage directly with the customer. In these ways, institutions can approximate direct contact to preemptively understand client concerns before risks grow from localized to systemic problems.

Although many of the risks in building a new distribution channel are operational, risk management for digital services requires a holistic approach involving every division. It is, therefore, critical to have integrated teams, including staff experienced in credit, operations, HR, treasury, marketing and IT. For example, in our Accelerator program, we trained a partner task force within Pride MDI that jointly conducted a baseline assessment to help identify the current risk approach and identify areas in which risk management needed to be strengthened. Now, managers across the organization in this engagement take part in proactively identifying and managing risk.

Source: http://nextbillion.net/blogpost.aspx?blogid=5364

How indigenous commerce compels financial institutions and other actors to embrace new and smart ways of partnering

The expanding indigenous commerce phenomenon is rapidly compelling financial institutions to fully understand their potential clients. Part of the reason is that potential clients now have multiple identities (real and online) as well as social and economic identities. In some way, mobile technology and social media are exacerbating this trend. A credit history no longer says much about a client’s potential to repay loans. It only points to what has happened before but can’t tell you about new social responsibilities such as school fees and increasing number of dependents. Financial institutions which still rely entirely on credit histories for their lending decisions are driving while looking in the rear view mirror.  Read more…

Is Financial Inclusion Working in Africa? A Provocative Look into Financial Inclusion through the South African Example

Not so long ago the international development community felt it had found an answer to Africa’s long-standing poverty problem: the microcredit model. Many microcredit programs were launched in the 1990s with the aim of reducing poverty by promoting a local microenterprise development trajectory that would transform Africa ‘from below’. Sadly, this movement was getting underway in Africa just as elsewhere around the world it was becoming clear that microcredit did not work as it is supposed to do, and that almost the entire argument in favour of microcredit was actually built on ‘foundations of sand’.

Most recently, a team of some of the most reputable evaluation specialists in the world reported on a number of studies they had carried out these past few years using the supposedly more accurate Randomised Control Trial (RCT) methodology, and the central finding they came to was that there is essentially no impact from microcredit. The conclusion was sobering indeed, noting “The studies do not find clear evidence, or even much in the way of suggestive evidence, of reductions in poverty or substantial improvements in living standards. Nor is there robust evidence of improvements in social indicators” (Banerjee, Karlan and Zinman 2014: 17 – italics added).

To read the complete article click this Link: http://aff.mfw4a.org/africa-finance-forum-blog/time/2015/04/07/blogpost/is-financial-inclusion-worki…