Without access to finance, rural communities are confined to an endemic cycle of poverty and no means of escape. Farmers are often stuck in subsistence farming, without the capital to move into the commercial space or find alternative sources of income. At Musoni, we believe that technology has the potential to transform the financial sector in the developing world, and nowhere more so than in improving the quality and availability of financial services available to small holder farmers. We’re thrilled therefore to be spotlighted in CTA’s recent publication Innovate for Agriculture, which looks at the ways in which Musoni, and a limited selection of other innovative companies, increase the productivity and sustainability of rural agriculture.
You can read the full interview with Musoni’s CEO, Cameron Goldie-Scot below, and download the full booklet by clicking on the link at the bottom of the page.
CTA Interview with Musoni’s CEO, Cameron Goldie-Scot
As a consultant for various microfinance organisations in East Africa, Cameron saw first hand the potential for technology to transform the sector. “There was a group meeting in Tanzania that I went to and the group meeting itself took four and a half hours. A group meeting should only take about half an hour. That’s when it dawned on me that even a few improvements could completely transform the efficiency of microfinance in this organisation. I think it was probably my light bulb moment.”
“We got very, very frustrated at the lack of available and affordable technology out there, so eventually settled upon building it ourselves.”
Frustrated by the level of inefficiency, Cameron and a few colleagues did what every entrepreneur does when faced with such a glaring challenge — they started their own microfinance organisation, Musoni Kenya. “This was a Kenyan microfinance organisation and it was the first 100% mobile money only organisation in the world. Every loan repayment, every loan disbursement, and savings deposit was carried out over M-PESA.”
The Musoni Kenya team soon found out that the client and loan management system they were looking for to build the infrastructure for their vision did not yet exist. “We wanted it to be modern and to enable us to do things like integrate with mobile money, to add new functionality like tablet devices for loan officers, to do data collection in remote, rural areas or link in to an SMS module to improve communication with clients. We got very, very frustrated at the lack of available and affordable technology out there, so eventually settled upon building it ourselves.”
As Musoni Kenya reached 20,000 clients, other MFIs began to approach the team wanting to use their ground-breaking technology. “We didn’t plan on becoming a separate software company,” Cameron reflects. “When other MFIs began approaching us, we got this little idea in the back of our minds and it grew and grew until we spun-off into a separate company with the goal of revolutionising the technology space in rural financial services.”
The Musoni system is a cloud-based microfinance system that allows microfinance organisations to do all of their regular operations including client & group management, loans and savings, reporting and accounting, and also integrate with new, pioneering technologies.
“We’ve integrated with multiple mobile money transfer services to enable clients or farmers to repay and receive their funds over their mobile phones. We also have our own integrated SMS module that allows for two- way communications between farmers and MFI organisations,” Cameron describes. Musoni has even developed an app for field officers to register clients, collect information, and send loan applications directly from their tablet.
“We’re trying to take advantage of new technology to drive financial inclusion into these rural areas.”
What’s the driving force behind all of these new technological developments? “We’re trying to take advantage of new technology to drive financial inclusion into rural areas,” Cameron shares. “I think that’s what makes us unique. We’re always looking forward — looking to see what the next new technology is and how we can introduce it into microfinance organisations.”
Having pioneered this new field of mobile microfinance, Musoni is in high demand across the continent. Musoni currently services 250,000 clients over 245 microfinance organisations in Myanmar, Kenya, Tanzania, Uganda and Zimbabwe with 70% of these clients in rural areas. The company has so far processed more than 2.5 million mobile money payments, 1.5 million SMS messages and more than 50,000 loan applications through the tablet app alone.
“Traditionally, a loan disbursement can take a couple of weeks. When you’re using mobile money, the payment can get sent out in one or two hours.”
Feedback from the organisations using the system has been fantastic, with one describing it as “the best all-inclusive microfinance platform they had ever seen.” “We got an email from one CEO expressing his thanks and appreciation for the system,” Cameron shares, describing an interaction he had with an organisation who had recently joined the platform. “He was so excited about how easy it was, explaining how this was going to be transformative for his operations. It’s those little things that really give you the drive to carry on.”
Beyond operational efficiency, Cameron and his team have found that the Musoni system has huge security benefits for the microfinance officers working in the field. “At one of the organisations we now work with the senior accountant was tragically murdered during a robbery in the head office. He was murdered while he was taking the day’s repayments and transferring them from the safe into a cash deposit box to take to the bank,” Cameron recalls. “This organisation then started using the Musoni system to reduce the risk to their personnel. They no longer have cash being handled by members of the organisation or stored in their head office. It’s incredibly satisfying to know that we can improve the safety of people operating in these areas.”
All of this speaks to the impact Musoni is having on microfinance organisations themselves — what about the rural clients they are actually trying to serve? The improvement in speed of the transactions is tremendous. “Traditionally, a loan can take a couple of weeks to be processed by a branch,” Cameron explains. “By contrast, when you’re using mobile money, the payment can get sent out one or two hours after the loan application is received. Moreover, Musoni has found that the time flexibility of mobile access has been pivotal for rural populations, who no longer need to disrupt their day to do their finances.
So what’s the bottom line? Musoni improves organisational efficiency, personnel safety, and clients’ ease and satisfaction with the microfinance system. “We get phone calls from clients saying, ‘thank you very much. We weren’t expecting to get the funds this quickly. is has never happened before’.” If that is not a hallmark of success, I’m not sure what is…”
“We have only been operating for about 18 months now, and we charge very low license fees,” Cameron shares. “It’s very, very cheap to use our software and, because of that, we need large numbers of organisations in order to become sustainable.”
“We have deliberately structured our pricing so that it is linked to the number of clients the organisation works with so that there is very low barrier to entry.”
Musoni has structured its pricing so that it has a very diverse client base. “We work with some organisations that have 25,000 clients and are looking for a more efficient way to manage their operations. At the same time, we also work with complete startups,” Cameron adds. “We’ve deliberately structured our pricing so that it’s linked to the number of clients the organisation works with so that there is a very low barrier to entry.”
With such a breadth of clientele, Musoni is set to reach profitability by the end of the year. “It’s just a case of bringing more MFIs on board, bringing more financial organisations on board, expanding into new markets and, hopefully, working with some larger international organisations as well,” Cameron describes. “We’re on the right track.”
“We are very keen to expand,” Cameron says. “We are looking at expanding both in our existing countries, but also into new markets or new regions,” particularly focusing on West and Southern Africa. Beyond its geographic expansion, Musoni has plans to increase the business’ product offerings. “We are now working on integrating credit scoring into the lending decisions. We are also working on a client-facing app to enable clients to check their balances and carry out account transfers, much as we would use a mobile banking app in the UK.”
“We would like to place more power or more control directly into the hands, literally into the fingertips, of the clients themselves.”
From Cameron’s perspective, the client-facing app has the greatest potential. “At the moment, financial services are always delivered to people through a field officer or through a bank branch. Therefore, there’s always that middleman standing there that plays a very valuable role at the moment but also has the potential to reduce the amount of transparency and direct input from the client. Now that smartphones are getting cheaper and cheaper and the internet is getting cheaper and cheaper across Africa, we would like to place more power or more control directly into the hands, literally into the fingertips, of the clients themselves.” That’s the next frontier.
On the horizon
“I think we’re barely scratching the surface of financial inclusion in rural communities at the moment,” Cameron reflects. “60% of Kenya — which is pretty reliable for sub- Saharan Africa — still doesn’t have access to financial services. e majority of people who are financially included are still served by large banks operating in the middle of urban areas. Rural communities have still not seen many of the benefits that have happened over the last few years.”
“Now that smartphones are getting cheaper and cheaper and the internet is getting cheaper and cheaper across Africa, we would like to place more power or more control directly into the hands, literally into the fingertips, of the clients themselves”
So what’s the hold up? Organisations are turning to technology. Although they are not moving as quickly through the technology journey as Musoni would hope, they are changing; it is just a slow process. Beyond integrating technology, there are still huge challenges to moving into rural areas. “It is coming up with a lending product that is more applicable to farmers with variable crop cycles and variable income streams,” Cameron explains. “It takes more work than coming up with a more generic product in the middle of an urban area. Technology will help and that’s what we’re trying to do but I think organisations also need to push out into these rural areas, which, to be fair, a lot of them are doing. It is just a slow process.”
So what’s the bottom line? “I think there is actually a huge amount of potential in bringing financial services and many, many more products and apps to farmers and rural communities through smartphones and low-cost internet. It’s still out of the price range for most of these communities at the moment and I think, as that changes over the next few years, it’s going to be transformative.”
Musoni has ensured that microfinance products are built with the user in mind. “We have not only tried to set up the technology to make it easy to expand into rural areas. We have also ensured our products have been very, well-suited to people working in agricultural areas,” Cameron shares. Indeed, Musoni has won awards for the client-facing nature of its product design process, which includes going into rural communities and speaking with farmers, community leaders and the MFIs working there.
Cameron’s advice for young, aspiring agro- entrepreneurs working on user-driven product development is “To get out into the field.” He explains, “To really learn and to really gain the experience that’s necessary to then drive the change required, you need to spend a decent amount of time actually living and working in the communities where you’re trying to have an impact.”
“You need to spend a decent amount of time actually living and working in the communities where you’re trying to have an impact.”
To be a sustainable entrepreneur, Cameron adds that self-care is absolutely essential. “Learn to separate your personal or emotional state from the day-to-day roller coaster that is running a small business. Some days you will have done everything you possibly can but, for whatever reason, whatever you’re trying to do doesn’t quite work out.”
How does he keep a healthy mental state? “I try and read a lot,” he adds. “I spend a huge amount of time reading the typical social entrepreneur books and business advice books and things like that. They are great but they are still very much focused on your business. I try and spend a lot of time just reading completely unrelated books, random novels. It’s one of the few times that it actually forces you to think about something outside the business, which I think is a very important thing to do for your general mental health.”