Reflections on Microfinance Interviews

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By Nikhil Srivastava, Kenya Ambassador Volunteer

One of my objectives in spending a summer in Nairobi was to immerse myself as much as possible in the culture and people of the region. This goal drove my decision to work as a country ambassador for Zidisha, a job that required me to meet one-on-one with low-income borrowers trying to start businesses across Kenya. The job description was definitely outside of my comfort zone; as my friends and family can attest, I’m not the natural choice for someone to host a stranger for hours, let alone one from a completely different culture. In retrospect, though, I couldn’t have chosen an activity with a better combination of personal education, growth, and fulfillment.

Conducting interviews that stretched for hours over leisurely lunches, walks, and house visits was at first challenging and occasionally awkward when I hadn’t yet built a reserve of insightful questions. In this regard, I was helped immeasurably by the fact that Kenyans as a group are incredibly warm and welcoming, and everyone I met made it easy and inevitable to interact as friends instead of clients. Once I established a good interview and note-taking rhythm, I stopped focusing on my high-value questions and instead let my natural curiosity about their lives and backgrounds take over. All people, and Kenyans especially, love to talk about their families and childhoods, and my natural interest in local culture and generational dynamics made for especially deep conversations.

Like a true New Yorker, my biggest frustration in the first few weeks of work was my average pace: one borrower visit per day, enforced by the madness of Nairobi traffic and the generally relaxed schedules of business and personal life. I tried to optimize by scheduling nearby back-to-back visits , but due to life on “Kenyan time” these double-headers inevitably ended up being more trouble than they were worth. So I took my foot off the gas and leaned back into the Kenyan pace, allowing me more time with each borrower. Another frustration, one I was not able to reconcile so easily, was the troubling and continuous presence of low-level corruption in various business functions: obtaining licenses, securing distribution, ensuring security. I didn’t see any direct evidence of this – except for a mysteriously-resolved police stop of my speeding matatu – but through conversations and insinuations it was clear that bribes and favoritism were just an accepted part of doing business in Nairobi.

Despite these setbacks, my work this summer had all the characteristics of a truly rewarding and enjoyable job: regular and solvable challenges, a never-ending learning curve, and the personal satisfaction of helping someone new each day. I’m also grateful to have developed a bottom-up perspective on development in the third world by directly examining the pain points and inefficiencies – in infrastructure, transportation, credit, security, stability – in entrepreneurs’ careers, both successful and struggling. (I hope to build a framework around these observations by teaching myself some basic development economics.) I also really enjoyed learning about the benefits and drawbacks and challenges of microfinance, which falls squarely at the intersection of finance and technology – an area I’ve spent most of my professional career, albeit in a very different economic stratum. Finally, I loved the constant excitement of meeting new people and sharing their stories, hospitality, and gratitude.

My most valuable function in meeting Zidisha borrowers was to give them a chance to communicate their capabilities and dreams to a larger audience. I met some truly remarkable people, whose stories were often hidden by technological or language barriers or simply from modesty. I met people who had suffered incredible financial and emotional hardships but maintained optimistic outlooks for their future. I met people who were incredibly determined to achieve success, to lift themselves and their families out of financial insecurity. And I met true leaders and visionaries who saw their life work in the context of the social and economic uplift of their communities.

This summer, I crossed paths with some of the hardest-working, warmest, and most inspiring people I’ve ever met, and the experience of spending my time and attention to help them succeed is something I’ll never forget.

This post was originally published in the Nikhil Nairobi blog.

The Social Network

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By Nikhil Srivastava, Kenya Ambassador Volunteer

Today I met with Grace Dawo, a single mother and entrepreneur who makes and sells homemade peanut butter. Grace has maintained a 100% repayment rate through two Zidisha loans even as she has struggled through health problems, and now – fully recovered – she is seeking a third loan to expand her business and promote her peanut butter in local supermarkets.

Grace graciously invited me to her house in Buru-Buru Phase 2, a quiet and secluded suburb due east of Nairobi’s downtown. Grace has lived here for four years, and she appreciates the tight-knit community in which her two daughters, Cynthia and Rosemarie, can walk home unaccompanied from work or school.

Cynthia is a student at Kenyatta University who works part-time as a saleswoman for the Athi River Mining company. She is also a Zidisha borrower who has a side business in handbags: she travels by overnight bus to Uganda to purchase her inventory and sells the bags to university students and employees.

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Rosemarie is six years old and has recently placed into Harambee Primary School, a high-quality government school just a few blocks from the house.

IMG_2410Grace’s largest financial expense is school fees, which she pays not only for her own three children (her son lives in the Umoja neighborhood of Nairobi) but for David and Mary, the two children of her husband’s second wife. Grace’s husband Martin passed away in 2011.  Since then, peanut butter sales are what have made it possible for Grace to support the children’s education.

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Grace roasts and grinds peanuts to produce natural peanut butter, which she jars and distributes to a small but loyal network of customers. Unlike the peanut butter available in Nairobi stores, which is difficult to spread and contains preservatives and flavorings, Grace’s product is smooth and spreadable, and its only ingredients are peanuts and sea salt. Her customers love its natural flavor and versatility, and they use it on bread, with vegetables, and with rice.

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On any given day, Grace can usually be found zipping between buildings in downtown Nairobi, delivering jars of peanut butter and picking up supplies for her business. After having lunch with Grace, I joined in her afternoon circuit – through three different downtown buildings, multiple clients and offices, and many conversations and deliveries. Grace is unstoppably social, always laughing on the phone or striking up conversations with friends and customers alike. She takes voice orders and relies on word-of-mouth advertising, and her network is dense – we ran into two separate groups of colleagues and customers on the streets of downtown Nairobi (not the easiest place to find someone you’re trying to meet).

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Grace’s social network runs deep within the Zidisha community as well. She has invited friends and family to join the community, and both her daughter and cousin have used Zidisha to fund successful businesses. Grace finds the Zidisha process encouraging: unlike local banks, Zidisha allows borrowers to choose their own weekly repayment plans and even adjust repayment amounts up or down, as long as at least one repayment is made each week.

This flexibility was crucial in the early days of Grace’s second loan, when a pinched nerve in her neck brought on debilitating headaches and prevented her from carrying even light deliveries, bringing her business to a halt. The treatment of physical therapy, painkillers, and bedrest required Grace to reduce her weekly loan repayments, but she made a point of always paying just a small amount on time.

Through her difficult times, Grace’s children were sources of financial and emotional support. Grace’s husband passed away four years ago, leaving her alone to raise not only her own three children, but also the two children of her husband’s other wife who is also deceased. (As a member of the Luo tribe from Kisumu, Grace had a traditional polygamous family.) Even though Grace’s children are all in school or university, they work part-time to reduce the cost of their education. Still, when she was confined to a neck brace and unable to deliver her goods, Grace worried about upcoming expenses of school fees, textbooks, and clothing for her family.

Luckily, Grace has made a full recovery in the last few months. She seems to be at full strength; she refused to let me to carry her delivery bag and even insisted we skip the elevator and walk up three flights of stairs. In fact, business has been so strong recently that Grace has already compensated for the diminished repayments and is looking to close out her current loan next week.

Grace buys peanuts at Gikomba market, where 1 kilogram of nuts costs roughly 150 Kenyan Shillings (about US $1.50). This amount of nuts can produce 1.2 jars of peanut butter, each of which sells for between 300 and 400 KSH (US $3 – $4). Because Grace used her previous Zidisha loans to buy her own roasting and grinding machines, her other variable costs are small: empty jars, labels, and salt. And she works directly out of her home to save on rent. When Grace has the capital for ingredients she makes good money, and consistently; what she needs is more capital to grow her volume and distribution.

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Grace is planning to apply for a third Zidisha loan to expand her business. With the money she raises, she will obtain a certification from the Kenya Bureau of Standards, a barcode that will allow her peanut butter jars to be sold in supermarkets, and an expanded stock of ingredients. Grace plans to gradually grow her distribution channels, starting with local markets before approaching larger chains.

When I asked Grace what the most important factor was in building a successful business, she responded: consistency. Too many entrepreneurs, especially those who sell a variety of items in shops or delivered to customers, take up temporary ventures or ill-conceived side projects that prevent them from building a consistent brand. Grace wants to be known for her peanut butter, and to earn the recognition and trust of their customers for a superior product.

Grace also hosted me for lunch and together we shared a delicious meal of ugali (cornmeal mash, a staple food in East Africa), beef stew, and cabbage.
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Grace, thank you for letting me join your sales route this afternoon! I wish you the best of luck with your business.