When I was leading UOB, we developed and launched the mHose, an interoperable mobile banking solution, in cooperation with mVISA, which is VISA, Inc's solution for delivering financial services in the emerging markets. I am grateful for the opportunity to have been involved in the project and pray for God's continuing grace in expanding the outreach towards the small holders in Rwanda through this product.
Below is the full article posted on CGAP's webpage.
UOB Takes a Human-Centered Approach to Rwanda’s Smallholders
As Rwanda’s first and largest microfinance bank, Urwego Opportunity Bank (UOB) is constantly searching for ways to better serve those who lack affordable and reliable access to formal financial services. That is why we are partnering with CGAP, Triple Jump Advisory Services, and Dalberg’s Design Impact Group to use a human-centered approach to designing financial products that better meet the needs of smallholder farmers - one of Rwanda’s most underserved client segments.
Nearly 75% of Rwandans are engaged in smallholder farming, including a disproportionately high percentage of those neglected by the formal financial sector. Some of the barriers to access are well-known: long distances, lacking infrastructure, low population density, etc. And like many financial institutions, UOB has turned to digital branchless banking solutions to overcome the obstacles to serving smallholder families.
By connecting our products to our innovative mobile banking service, mHose –which runs on the mVISA platform - UOB now has a promising channel for delivering financial services to smallholders. As a fully integrated branchless banking service, mHose allows customers to access their bank accounts using a network of agents, in addition to performing a number of other tasks (including P2P money transfers, purchasing airtime, paying electricity bills, and receiving and repaying their UOB loans). Given the versatility of mHose, mobile offerings give us the ability to serve a larger number of customers in more remote areas with a diverse range of digital products and services - all at a much lower cost than was previously possible.
Still, even with this promising channel for delivering financial services, driving adoption of digital products among smallholders has been challenging. Despite our best efforts, facilitating the delivery of financial services via mobile has only addressed the supply side of the equation. The missing piece of the puzzle remains how to drive demand for these services; and that has led us to explore the potential of human-centered design.
All of this isn’t to say that UOB has ignored the unmet demand for financial services among smallholders: In 2013, we launched our agricultural lending product, which represented our first entry into the smallholder market and signaled our commitment to serving all Rwandans. During the first year, our agricultural lending product provided 33,000 loans to smallholder farmers, who in turn used the funding to purchase fertilizers and selected seeds. These inputs allowed our clients to increase yields across of a range of crops, including maize, rice and Irish potatoes. Building on this success, UOB also introduced a cow loan to allow customers to benefit from the steady income stream offered by the growing market in milk consumption. More than half of the loan recipients were women, and 40% were youth under the age of 35, representing two of UOB’s core market segments.
While there is little doubt that our agricultural lending products have benefited both UOB and our clients, so far our reach remains limited to farmers who are members of agricultural cooperatives, and therefore already tightly connected to value chains. As we look to expand our outreach, the key challenge will be designing new products that meet the demand of all smallholders, while also taking advantage of mHose and other digital channels. Moving down the pyramid to serve non-commercial farmers and those only loosely connected to value chains will mean rethinking how we approach product design.
While serving smallholder farmers represents a relatively new endeavor for UOB (and most FSPs for that matter), our desire to expand our reach into this market reflects our commitment to serving all Rwandans. In the end, using human-centered design doesn’t necessarily guarantee that we will emerge with a successful new product. But to the extent that it can help us to gain insights into the features and services that smallholders value most, it’s certainly worth a shot.
Nick Meakin is the Director of Project Management at Urwego Opportunity Bank in Rwanda.
Jeffrey is a Christian financial entrepreneur. He has been in the industry for more than 35 years, including 17 years as CEO for three banks in the U.S. and Rwanda. Recently, he was CEO for Urwego Opportunity Bank in Rwanda for more than five years until May 1, 2014. In October 2015, he founded SfK Ministries and serves as its CEO. His experiences are diverse from branch banking to project finance, from community banking to corporate banking.
Kristin is a registered nurse. She has been in various departments of nursing for 30 years.
They are happily married and have two daughters, Amanda and Joyce. They live in Rwanda and Thailand.
The Needs in Rwanda
60.3 percent of the population lives on less than $1 a day
87.8 percent live on less than $2 a day.
The life expectancy is 44 years old
5 percent of the population have access to electricity and 3 percent have internet access
In the genocide of 1994, over 800,000 people were killed in 100 days.
A small country of about 9 million people, Rwanda is located between the Democratic Republic of Congo, Tanzania, Uganda and Burundi. Rwanda experienced Africa’s worst genocide in the 1990s, in which the two main ethnic tribes (Tutsis and Hutus) came head to head; over 800,000 people were killed and two million fled to neighboring countries.
Rwanda is now rebuilding its economy, with coffee and tea production among its main sources of foreign exchange. Although economic growth has exceeded 5% since 2001, Rwanda is still highly dependent on foreign aid, and nearly two thirds of the population lives below the poverty line. Only 5% of Rwanda’s population has access to electricity and 3% has internet access.
The microfinance sector in Rwanda is still young, but has grown considerably in a short amount of time. There are over 200 MFIs in Rwanda, many of which emerged after the genocide in 1994. Since 2004, the nation has seen the rapid growth of unregistered and unregulated MFIs. Even with this boom of MFIs in Rwanda, both the informal (moneylenders) and formal microfinance sectors are still weak and have only reached about 30% of the estimated demand for microfinance services.
In the past two years, several MFIs ran out of funds and were forced to shut down. The current irregularities in the microfinance industry have forced the government and National Bank of Rwanda to create more stringent norms and standards to strengthen the sector.