“A startling new statistic from the World Health Organization,” the BBC announcer sounded from my taxi’s radio. “There are only two registered medical professionals for every 1,000 Kenyans…” As I drove through the bustling, overcrowded streets of downtown Mombasa, I took a deep breath and was reminded once again – my work here is not going to be easy.
The BBC announcer continued to explain that this data is even more sobering for poor, uninsured Kenyans who rely on government-funded hospitals. A recent economic survey showed that only 19 public health officials and 18 doctors are available per 100,000 Kenyans. Public doctors are often overwhelmed with patients and it’s not uncommon for Kenyans to pass away waiting to receive essential care. Insured patients have the option to go to a private facility and have a much better chance of receiving quality care. Few Kenyans in this region can afford traditional health insurance plans and families suffer devastating setbacks if one member falls seriously ill.
Maisha bora kwa jamii yako – “Better life for your community“
In the coming weeks, Yehu will introduce a new loan product to provide affordable health insurance to rural borrowers. Yehu partnered with CIC Insurance to create the Afya Imara or “strong health” loan. For around $140 a year, Yehu members can purchase a combined in-patient and out-patient family insurance policy, with no HIV-AIDS exclusion. To ensure this product is accessible to all borrowers, Yehu aims to offer Afya Imara loans for as low as 2% below the market rate.
The Afya Imara loan is one of many responsive loans Yehu offers to address the unique concerns of their community. Their value statement explains, Yehu Microfinance endeavors offer responsive, competitive products that meet the needs of our rural clients. To accomplish this, Yehu has developed a diverse portfolio of loan products, including:
The Sikukuu loan, for example, offers support specifically for Mombasa’s Islamic population. Many Muslim borrowers reduce their business hours or close stores entirely during the holy month of Ramadan. Sikukuu enables them to cover costs of food and housing until they can return full-time to their businesses. Yehu experienced its best performing month ever in August, largely due to the popularity of its Sikukuu loan. Similarly, Yehu provides the Elimu loan to ensure borrowers have enough money to keep their children in school, while the Mabati loan provides roofing material and supplies for their homes.
Maji ni Uhai – “Water is Life”
Responsive lending has also led to important accomplishments in water distribution. Securing clean drinking water is an enormous challenge in coastal Kenya. To overcome this obstacle, Yehu has developed a water loan product to provide clients with an uninterrupted, sustainable supply of clean water for domestic and commercial use. Although it’s fairly new, the Maji ni Uhai or “Water is Life” loan is one Yehu’s best-selling products. Borrowers can chose from three types of loans:
To learn more, I visited Zainab, the first water loan recipient in Yehu’s Kisauni branch. Before Zainab took out her loan, water would only come twice a week to her village’s communal pumps. Villagers pay 3 KES (about 3 cents) per 20 liters, when available. However, the supply is very unreliable and people are usually forced to borrow from neighbors or pay high premiums at the store.
Zainab serves as her group’s Center Chief and has a long, flourishing history with Yehu. For her sixth loan, she purchased a 3,000-liter tank for 20,100 KES. In addition to supplying water for her home, Yehu’s tank also enables Zainab to sell water during times of need. To prepare for her application, she researched nearby pumps to determine ideal loan size. Too small – she loses out on an opportunity to serve the most customers. Too large – water could stagnate and breed bacteria. Cost of piping and other infrastructure must also be included in her loan estimate and application.
After the application is approved, Yehu purchases the water tanks directly and delivers to borrowers. These tanks can store one to two days’ supply of water and Zainab charges 10 KES per 20L – more expensive than pumps, but far more affordable than buying at a store when supplies are low. Only 10 months later, Zainab repaid her loan and now enjoys strong profits.
As I was leaving, I asked Zainab if she planned to take out another loan with Yehu. She nodded her head enthusiastically, “Of course.”
The longer I spend in Mombasa, the more I realize that microfinance alone is not enough to create real change in a community. Borrowers will only thrive if they first have a solid foundation in health care, housing and education. Part of what prevents Yehu clients from reaching the next rung on the economic ladder is that they are so vulnerable. Malaria is a constant menace here – it kills 1 million people each year, mostly among children living in Africa. Droughts and ever escalating food prices threaten to unravel even the strongest businesses. Responsive loans play an enormous role in shielding clients from these risks and providing stability in their communities. As Yehu has demonstrated, offering business loans is not enough – MFIs must also learn to listen to clients and effectively respond to their needs.
See original post on Kiva Stories From the Field blog:
News of hurricanes, earthquakes, and wildfires bringing you down? Tired of hearing about how the world economy is in the toilet and the U.S. outlook is grimmer than ever? Want to explore a corner of the world where risk profiles are actually improving? Welcome to Yehu Microfinance Trust in Mombasa, Kenya.
Starting today, Yehu will now proudly display a three star Field Partner risk rating on Kiva. In their communication with Yehu, Kiva highlighted its main justifications for the change:
Reasons for the upgrade include continued maintenance of portfolio quality, strong growth, excellent management team hires, and strong competitive positioning.
I sat down with Esther Mutuma, the newly appointed COO of Yehu, to discuss her thoughts on the upgrade:
It’s really exciting. The most obvious outcome is people will take the time to look at us now because of the rating. We appreciate the model Kiva uses. Having lived in the U.K., I know the first thing I did before purchasing an item was check the rating. I know the mindset people in the U.S. have. Ratings are everything.
As Casey explained, the cost for an MFI to participate in Kiva isn’t cheap. It takes time, energy, and resources to collect borrower stories and pictures from the field. Morale can plummet when loan officers put forth all of this effort and their loans repeatedly go unfunded on Kiva. By displaying a strong Field Partner rating, Yehu can increase its visibility and instill confidence in the lender community. In the future, Yehu hopes that no loan will expire due to its Field Partner rating.
So how does Kiva decide to upgrade a Field Partner? We’ve seen from the recent S&P downgrade of U.S. debt that rating the inherent “risk” of a country or institution can be a controversial business. Kiva has developed its own methodology for evaluating the creditworthiness of each Field Partner. This risk model is based on Kiva's accumulated experience with Field Partners and it evaluates a number of different dimensions, including:
Each of these categories is evaluated during an on-site visit by a Kiva analyst and scored on a scale of 1 to 5. An overall Field Partner risk rating is then calculated, with five stars indicating lower risk of institutional default and one star indicating higher risk of institutional default.
Rural borrowers account for a significant portion of Yehu’s customer base. As Esther explained, this equates to a higher than average cost operation ratio as loan officers often spend an enormous amount of time and money connecting with borrowers in remote villages. While operating cost is an essential component of the risk model, incorporating a variety of other factors such as management and growth potential, Kiva has enabled Yehu to distinguish itself beyond the balance sheet. Kiva's risk model isn't perfect, but judging from Yehu's experience it's getting a lot of things right.
See original post here on the Kiva Fellows Blog.