Using digital tools to boost financial inclusion in rural areas

Digital

Using digital tools to boost financial inclusion in rural areas

Faster, more efficient and more reliable: transitioning to digital technologies is a game-
changer for microfinance institutions (MFIs) and their clients. The Digital Finance project run by CIDR Pamiga has supported digitalization at eight MFIs in Africa.

“Digital technologies are vital to all financial institutions these days, particularly MFIs as they face extremely high operating costs,” explains Lamine Gueye, Managing Director of Caurie-MF, a Senegalese MFI. CIDR Pamiga, which shares this vision, launched its Digital Finance project in April 2015 with the aim of helping eight MFIs from its network to transition to digital. The goal was to ensure the sustainability of activities run by rural microfinance institutions and broaden their scope.

Quite a challenge. “We started from nothing,” recalls Linda Djaoud, who oversaw the project for CIDR Pamiga. “Aside from existing IT systems, there were no digitals tools in use by any of the MFIs concerned.” The project focused on three areas: issuing tablets to field agents, increasing the use of mobile banking, and setting up a network of third-party agents. 

Building capacity in local teams

 

“We worked together to develop their skill sets, helping to build new capacities among the local teams. This means that they are now autonomous as the project enters its next phases,” explains Linda Djaoud. However, CIDR Pamiga continues to provide the MFIs with remote support.

Every credit agent at Caurie-MF in Senegal has been equipped with a tablet since late 2018. There are a total of 109 in use. “Digital tech really boosts the quality of our work and is a massive time-saver,” says Joseline Mancabou, a Caurie-MF credit agent. Data no longer has to be entered manually at the end of each day. Everything is recorded as it happens. “This means that we produce good quality reports once we’re back in the office because we’ve got time to do it, whereas previously we were always under pressure.” 

Improved transparency for transactions

The additional transparency and reliability is another feature very popular with beneficiaries. Razak Dimon Challa, Digital Project Leader at Renaca, Benin, agrees: “There is a tremendous risk of mistakes or manipulations when operations are recorded manually. Today, if you credit 100 to a client, 100 will automatically be added to their account. They have the reassurance of a receipt that also guarantees the transparency of all operations.”

Leaving individual opinions aside, the figures speak for themselves: with lower costs for the MFIs concerned, they are now able to reach new clients in more remote regions, ensuring financial inclusion to a growing proportion of the population.

And the project is far from over. CIDR Pamiga is keen to continue the adventure with the six most suitable and motivated MFIs, focusing on managing the risks associated with digitalization and on ways to optimize the institutions’ social performance. The impacts of digitalization must deliver benefits to clients, first and foremost.

The project in figures

> Support for eight MFIs in Africa

> +1.5 million clients concerned

> 50% of clients from rural areas

> – 50% cut in fraud losses

> Length of meetings halved = lower opportunity costs for MFI and client

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