Mobilizing Knowledge: A Peer Learning Exchange Experience on HMF with KWFT in Nairobi, Kenya

On my flight from Johannesburg (South Africa) to Nairobi (Kenya), I reflected on the few benchmarking and exchange programmes I have attended. The common themes that resonate with me based on my past experiences, relate to “sharing”, “innovation”, “financial inclusion” and “peer learning.”

Peer learning exchange programmes are becoming increasingly relevant in leadership and professional development arenas in a knowledge- based world. It is this knowledge sharing approach and practice that Habitat’s Terwillger Center for Innovation and Shelter values as a way to make information explicit, so it can be applied with intention and shared with others. The Center firmly supports interaction among peers within the financial services industry, thereby eliciting fruitful and deep learning exchanges between peers on each other’s common challenges, experiences and practices. Naturally, sharing of ideas, experiences and best practices amongst fellow peers in the financial industry can be elusive. It is noteworthy that the Center enables a non-tenuous knowledge sharing platform allowing for cross-pollination of ideas between peers who are part of the same community of practice. The Habitat’s Terwilliger Center team recently hosted a Peer Learning Exchange in Nairobi between a leading Micro-Finance institution, namely the Kenyan Women Microfinance Bank (KWFT) based in Nairobi Kenya, and Centenary Commercial Bank, Pride and Opportunity Bank based in Uganda. Kenya, a close neighbor to Uganda, represents the epicenter and business hub across East Africa.

Though the financial institutions based in Uganda and Kenya differ geographically, economically, and culturally, they have something in common: all of them have been exposed to the same package of technical advisory services to develop housing microfinance as part of the project “Building Assets, Unlocking Access” in Africa, under the partnership between the Mastercard Foundation  and Habitat for Humanity. This project is carried out by Habitat for Humanity’s Terwilliger Center for Innovation in Shelter, to provide technical assistance to six leading financial institutions in Uganda and Kenya to develop housing microfinance products and non-financial support services for people living on less than US$5 per day. The aim is to enable these people to secure adequate and affordable housing and improve their living conditions.

In its fifth year of implementation over 40,000* housing microfinance loans have been advanced to low-income households, supporting financial inclusion across Kenya and Uganda. Furthermore, over $30 million of capital has been mobilized for the advancement of incremental housing microfinance across the two countries. KWFT’s commanding performance with the HMF Nyumba[1] Smart Loan, culminated into the Peer Learning Exchange programme between the two countries, with an objective of sharing their experiences in developing, rolling out and scaling the incremental HMF loan product.

The Peer Learning Exchange programme workshop brought together an eclectic mix of leadership and management teams sharing intrinsic knowledge that has shaped the HMF loan product across the two countries. I was afforded the opportunity of opening the first day for the exchange programme, and reaffirmed the Center’s commitment towards partnerships, financial inclusion, social impact and developing innovative solutions in housing “where everyone has a decent place to live.” In fact, Mr Mwangi, the Managing Director of KWFT, affirmed his support and is “happy with the exchanging of ideas” shaping HMF in Africa.

Leading on from this, Mr. Mwangi elaborated that central to KWFT’s success as the leading microfinance institution in Kenya, is a “strong mission on social impact and women in particular, ingrained in its shareholders’ agreements, values and mission statement.” The delegation from Uganda found this to be an example of best practice and thought provoking. A senior manager from Centenary Bank commented that this is a “great learning for us at the bank, on the importance of social impact, especially within the bank’s strategy.” Mr. Mwangi particularized that they have incorporated a triple-bottom line consisting of People, Planet and Profit in their business operations. One of the pillars and keys to its successful microfinance strategy, and possibly the most important, is KWFT’s top-down buy-in to its overall social impact approach. The visiting delegation promptly responded that this is indeed an important strategy in practice, which they intend implementing.

There are forty five financial institutions and banks in Kenya, of which thirteen are Microfinance institutions. Significantly, KWFT is the only microfinance institution adopting a niche strategy, focusing primarily on women-led households in rural Kenya. The discourse on housing points to the “unequal power relations” between the “domestic and public spheres” for women, encouraging KWFT to equally recognize the importance of financial inclusion for women-led households by developing products and services that meet their needs and expectations. In comparison, the Ugandan institutions have adopted an open market strategy focusing on Urban and Peri-Urban low-income clients. KFWT felt that they will benefit by visiting Uganda and understanding the Urban/Peri-Urban housing microfinance strategy.

Though the financial institutions in attendance have developed various products for low-income households, KWFT positioned that they lacked the expertise to concertize a viable housing microfinance product solution for low-income households. Through the provision of technical advisory services, and a dedicated Habitat’s Terwilliger Center team, KWFT was able to develop a housing product that met the needs of women-led rural households. A Senior Executive at KWFT affirmed that “Habitat was a partner in it for a solution and not a product.” Through this strategic partnership with Habitat’s Terwilliger Center for Innovation in Shelter, KWFT and the Ugandan financial institutions, were able to achieve key milestones, namely: market research, feasibility study, HMF product development, project implementation plan, a pilot roll-out, staff training, delinquency management and branding.

Evidence emanating from the market research in Kenya signaled a demand for housing: “Housing backlog of 1.85M units in Kenya2.” The market research enabled KWFT to conceptualize, develop and launch the successful Nyumba Smart Loan housing microfinance product.

The impact of the Nyumba Smart Loan is evident when we visited the KWFT loan branches and clients that took-up the HMF loan. It is glaringly obvious that staff members are passionate about customer service, meeting the needs of clients and the financial inclusion of women, an infusion of its triple-bottom line approach. KWFT’s mixture of 247 physical branches, digital platforms and third party agents has enabled it to embrace ‘financial inclusion’, reaching over 700 000 low-income households. The Ugandan delegation realized the importance of a multi-channel approach in servicing and reaching low-income households. In propelling its customer centricity and reach, KWFT is piloting an end-to-end digital platform that will advance the origination and disbursement of all loans. It is apparent that Centenary Bank is also following this best practice, launching an end-to-end digital platform in 2018.

While technology is a key differentiator, product mix is an important consideration for financial inclusion of low-income groups. Consequently, KWFT has partnered with a variety of market suppliers in the housing value chain, positioning products that support these clients (solar, water harvesting tanks, bio-gas, BURN-clean stoves). Delegates from Uganda acknowledged that partnerships are central to developing viable housing marketing systems and solutions, which support financial inclusion of low-income households. The Habitat’s Terwilliger Center for Innovation and Shelter is critically looking at developing the market perspective in housing to better achieve impact in a sustainable manner for low-income households in Kenya and Uganda.

In closing, delegates thanked KWFT and the Habitat’s Terwilliger Center for their support, and expressed, “we have so much to learn regionally from one another.” Delegates felt that a regional exchange programme is beneficial as there is a “shared spirit of challenges, opportunities and innovative housing solutions.”

The next steps considered will be an exchange visit by KWFT to Uganda.

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