‘Boot camp’ does not translate in Swahili. I’m trying to describe the next few months of training that our Field Officers will be going through to build on their skill as loan officers. I tell the team that it will be difficult, a nerdy kind of boot camp, and I hear confused murmuring. “Why is she talking about shoes?”
Bookish credit terms like ‘moral hazard’ and ‘asymmetric information’ aren’t going to translate either. But we’re not going to be memorizing terms; we’re focusing on the concepts behind them. When CED Field Officers begin working with Nuru, they go through basic field officer training which focuses on the Nuru model, CED program activities, organization and general management. Loan Officer training is the next level and will get into the stickier topics of agricultural microfinance, like loan analysis and repayment capacity of small farm households. We started with our fixed processes, but what the team needs now is to practice managing uncertainty. We will never be able to predict the outcome of every loan, but we can get close by managing what the team calls kila siku labda, the constant “maybe”.
Our training focuses on practical application, so we spend a lot of time comparing topics to field officer experiences. But they are still difficult sessions, and I am often worried if it’s overkill. How sophisticated does our loan analysis knowledge really need to be? Our training takes place outside, in a circle of plastic chairs in the patchy shade of eucalyptus trees around the unfinished Nuru office. Every 20-30 minutes, we pause to move our chairs out of the sun. Our client pool is still small enough for me to know every loan client personally. The loans we deal with are small, usually US$100-200. Most of our members are subsistence farmers that are more worried about feeding their families than about maintaining business cash flow. We’re as scrappy as it gets.
Many would consider scrappiness as a key characteristic of microfinance – decentralized structure, small loan amounts, use of social guarantees and unregulated operations. Of course, this has changed in the last two decades and now many MFI’s are as polished as commercial banks. But meticulous loan analysis or cutting edge cloud and mobile technology isn’t limited to the big players. They often have greater impact on the organizations with the least infrastructure. Nuru works in rural microfinance. Our members are spread out geographically, our operations are low profit, and we have little infrastructure to work with. There is no electricity and poor internet connectivity. With no central credit bureau, my “credit check” is a phone call or visit to the local chief to see if the member has a history of default on informal loans in the community. In this context, mobile money transfer services such as M-PESA, and open source financial information management software like Mifos are even more important. Similarly, CED Field Officers become more important for effective operations. They are both gatekeeper for the lender and link for the loan client.
Nothing quite replaces roads and electricity. It would be amazing to see lending institutions in Kenya coordinate credit information to establish individual credit scores. But in the meantime, we’re not waiting around. With a workaround infrastructure, the challenge to build a local team that can own operations and guide members through credit management is not just important; it’s what we start with.