Investing in Africa is something that LMDF has done rather a lot over the past years, specifically in more than 10 countries on the continent. In all cases, the Investment Committee first approves a country note and a recommended maximum allocation to the country and then approves investment files.
In early 2020, the Fund decided to organise a travel to Kenya to allow all committee members to participate and thus learn first-hand about how MFIs work on the ground. With this visit, the committee went to the headquarters of BIMAS, a Tier 2 MFI based in Embu, city over 100 km North of Nairobi. 90% of their customers come from rural areas. LMDF had recently invested in this MFI, but in the short time since the investment, BIMAS had already made considerable efforts in the digitisation process.
To this end, BIMAS has implemented an application that its clients can use during the financing process. During the visit, the loan officers showed how they enter the data and verify the payments that have been received. This is possible through smartphones or also with very basic phones equipped with a USSD system. For Philippe Dardart, IC member, “it is quite surprising to see all the technological solutions that a country like Kenya can implement, including totally wireless solutions through mobile phones. In some places the country is even more developed than we are in terms of applications“.
During this trip, the Committee also had the opportunity to visit a group of farmers. This sector is one of the most addressed by MFIs, as they can often present particular needs in terms of loan structuring and may have to wait for crops to mature before paying back the capital, along with many other challenges faced in this market. When this happens in remote or difficult-to-access areas, the digitalisation of microfinance services becomes even more important.
Before finishing the trip, committee members, from the financial, development, government and legal sectors gathered together to conduct the regular portfolio review, as well as the analysis and approval of investment files and the strategic analysis obtained from the visit to Kenya. Perhaps this visit provided a very special insight into one of the investments approved at this meeting: M-Kopa. The institution adopts a leading model, allowing people to buy a solar panel, together with various electric equipment. The social impact of such a product has proved to be considerable, given the lack of access to electricity in rural areas of the country.
What is certain is that the trip has given everyone a lot of food for thought and conducting an investment committee on-site provides a very different perspective. It is one thing to hear of digital payments, challenges in harvests and Nairobi’s fearsome traffic jams, but quite another to see them in practice.