MBAs Without Borders (MWB)

FBL & Kenyan Business

1. Please describe what FBL does and how it is set up?

FBL was created as an expression of common philosophy and principles of a group of business professionals. The core belief was that poverty alleviation could be sustainably achieved through a commercial venture. The goal was to create a microfinance institution that would become initially operationally sustainable and ultimately financially sustainable.

2. What is FBL doing well?

Corporate Governance
• The members of the Board of Directors are active in the community and have a breadth of experience and contacts that are very useful to FBL.

• There is a strong sense of mission within FBL. Visions and goals are clearly articulated and consistent.

• FBL corporate structure as a limited company gives it far greater flexibility and growth options than those open to the typical not-for-profit structure of many similar MFIs. This structure also ensures that management keep overheads low.

Markets & Clients
• FBL’s clear focus on the those at the bottom of the income scale means that it is in a better position to promote its social aims. This fact also means that it operates in an area with lower competitive pressures.

• The branch manager has a strong relationship with the local authorities in Ongata Rongai, which greatly assists in the recovery of loans from defaulters.

• There is the clear recognition within FBL of the importance of building trust between group members and staff. With this in mind the DEPOT, a specialised team-building, leadership and creativity organisation, will run a targeted team-building program for FBL clients and staff.

Distribution
• The focus on mobile branches allows FBL to test new markets whilst keeping strict control over costs. The spaces that the groups operate in are provide free of charge by the local community.

• In Southlands FBL is the first and only MFI operating in the community.

Human Resources
• The strong women-only team of staff has developed a positive culture of camaraderie between staff members. This fact should also be a great help in the recruitment of more women borrowers.

• Staff have a strong intuitive sense of operations; but, as FBL grows, it will be important to have a written record of operating procedures to ensure efficient training for new staff.

IT
• Staff have made a good start in the use of IT and are well motivated to improve the situation.

Financial Management
• FBL produces annual audited statements. This is in addition to the weekly financial reports sent to members of the board.

3. Where could FBL improve?

Corporate Governance
• The Board of Directors would benefit from enlargement. In particular adding new members who may be able to assist in the sourcing of additional financial assets

Markets & Clients
• FBL’s non-discriminatory practices have led to an unusually high proportion of male lenders. In order to ensure that targets are reached for bringing credit to women careful monitoring of the situation is required. The recruitment of women-only groups would considerably improve the gender balance amongst clients.

Distribution
• Ongata Rongai is a very challenging location to work in. This is due in particular to the very large number of competing MFIs operating locally.

Human Resources
• The Branch Manager is overburdened and would benefit from being able to focus on marketing activities. It is recommend that the Directors appoint an Operations Manager who is thoroughly familiar with the microfinance environment in Kenya. This individual should be better placed to formulate policies more proactively and to provide advice on strategic direction to the Board of Directors. This appointment would improve the likelihood of the successful implementation of this business plan, including the setting of targets and more rigorous monitoring of progress made against them. This appointment should allow the operation and all staff to perform to a much higher level.

• The informal nature of roles will become a hindrance to FBL as the organisation grows. Job descriptions and objectives should be written with a focus on expected outcomes in relation to clearly defined targets. They should also ensure that no over or under laps exist between individuals.

• The further development of current and future staff members’ understanding of microfinance could be greatly enhanced by formal training. Either online training available at no cost from the United Nations Capital Development Fund or more
formal training such as the two week course run by the School of Applied Microfinance (SAM) in Mombassa.

IT
• The IT infrastructure in the office is not optimal. Work would be more efficiently carried out if the computers were networked and internet access was secured.

Financial Management
There is a need for an accurate record-keeping system capable of generating a wide variety of internal information and reports. Such a system is necessary if the Board of Directors is to be kept well-informed and maximum managerial

4. What are some aspects of the local cultural and business that should be understood when foreigners consider doing business in Kenya?

The most challenging aspect of doing business in Kenya is the regulatory and political environment. It is difficult to acquire business and work permits without bribes. Especially if the foreigner is a white North American or European they will be faced with potential for their investment activity to become politicized, if their venture is particularly successful there is the

5. Are there opportunities in this field for local entrepreneur?

Yes there are many opportunities for a foreigner to start a microfinance enterprise if they partner with a Kenyan. However, the field of microfinance is well populated in Kenya and it would therefore make more sense to join an existing venture rather than trying to start over. There are many opportunities to broaden the scope of microfinance product offerings such as the provision of microinsurance and remittance structures.

Caroline Pulver’s Experience

1. Originally, why did you want to participate in this program?

I developed an interest in microfinance whilst studying for my MBA. Having completed my thesis in the commercialization of microfinance I wanted to test my interest in the subject in a more practical way. The four-month consulting project with MWB/FBL was ideal as it allowed me to explore my interest and determine my path after the posting.

2. What were your main challenges, both personally and professionally?

I have to start with the obvious, there is a fairly steep learning curve working in a developing country, which eight years developed world work experience didn’t really prepare me for. The reality of working in a office with regular power and water cuts let along IT support was a challenge. However, it is one that I enjoyed overcoming.

On the personal front it is always difficult to make friends in a new place this is made a little more challenging because of the security situation in Nairobi. That said once discovered there is a thriving expat scene in Nairobi and Kenyans themselves are very friendly and open to meeting new people.

3. What did you feel you were able to offer to FBL?

The prime thing that I was able to offer FBL was a different way of thinking and approaching problems that was born out of my experience working in the UK and USA as well as the technical skills that I acquired during my MBA.

a. How was this different from what you thought you would be offering before you arrived?
I had anticipated that I would be providing technical input but I did not realize how basic the initial situation was in terms of the staff’s technical knowledge and the systems that they were operating with, basically pen, paper and calculator!

4. What would have made this experience even better for you?

I was so thrilled to get the job that I didn’t ask enough questions about the detail of the situation. I don’t think this impacted much on final outcomes but if I had had more detailed information about FBL I would have been able to hit the ground running. However, one of the key issues with FBL was that there was little or no analytical information available before I arrived so it would have been difficult for them to furnish me with any more detailed information. For example I was surprised how small FBL was. I was surprised to find only three staff on the ground and less than 100 clients

5. What advice would you like to offer future MBAs who work abroad for MBAs
Without Borders?

It is very important to ask as many questions about the organization that you are to work for and to research the country and area that you are going to be located in. This is because it will help you to properly prepare for your mission and make sure that your expectations are based on more than a handful of your own assumptions.

Additional Comments:

I thoroughly enjoyed my experience with FBL and MWBs. Whilst I learned a great deal working with FBL and its clients I was also enormously fulfilled by the impact of my work and the reception that it received. I would highly recommend the experience to any MBA to see how the other half lives and works. This experience has positively contributed to both my professional and personally life.

** According to the National MSE Baseline Survey 1999 other MFIs’ women clients make up between 100% and 38% of their total: KWFT 100%, SMEP 65%, K-Rep 49%, Faulu 50%, Jitegemee 40%.