Micro-finance in Post-Conflict: Meet OI-Wedco

It has been sometime since I’ve updated for the Kiva Fellows blog. As cliché as it is lots has happened and I’ve promised a more in depth description of the impact of the post-election crisis on micro-finance. So in baseball terminology I offer a double header (or double-dip in the vernacular of the dugout). I wanted to separate the entries. This one is about my field partner. Below is an entry more specific to the violence and its impact on three remarkable women.
I’ve been in Africa for two months and I thought I’d finally share more about my field partner, Opportunity International-Wedco. As a fellow you are caught working for two organizations simultaneously, although the missions typically align there are still interesting challenges when the organizations differ. Thankfully it hasn’t happened too much.

Over the last several weeks I’ve been primarily working from the OI-Wedco headquarters office on the outskirts of Kisumu. My main contact has been Kimberly, an American who has been working here for nearly two years. She is a regular renaissance woman around here. Kim has been managing partner/donor relationships, consultants, hiring/firing, training new staff, among other things. I arrived into an extreme busy and tense time due to a confluence of internal and external issues. The external issues have been from the lingering impact of the post-election crisis (you can read my summary below). The internal issues include primarily HR problems. Staffing qualified positions, especially loan officers can be extremely challenging even though the unemployment rate in Kenya is around 40-50%. Due to limits of education and resources, the pool of qualified candidates is small and elusive. When I first arrived they conducted 50 interviews in a few days, so, they didn’t have much time to sit me down for conversations and training about OI-Wedco etc. Instead, I learned as I went along and jumped into preparing my travels to visit clients and sorted out the repayment sheet for their groups posted to Kiva (which hadn’t been submitted for months). Much of OI-Wedco I learned on my own and from brief casual conversations with the staff. Opportunity International is a large international organization that conducts micro-finance operations in 28 countries. They acquired WEDCO (Women’s Economic Development, something, something…they love acronyms in Africa), which was a small struggling Kenya MFI in 2006 and a few weeks they acquired another MFI based in the central province around Nairobi (which has made things interesting). Opportunity International’s growth philosophy seems to be one that doesn’t try to reinvent the wheel. Instead they find local MFI’s that at the core have strong potential, but need adjustments structure and strategy. OI doesn’t seem to start MFI’s from scratch, but instead “adopts” and integrates them into their network.
At OI-Wedco, constant visitors come in and out. Most are consultants or staff from headquarters in the US, UK or elsewhere. I’ve met dozens as they visit for a week or so and leave. It makes for some interesting conversation and every day different. Ultimately, I’ve been inspired by the social and holistic mission of OI and many of the staff have beautifully expressed to me how they get purpose in working to assist their fellow Kenyans (they could be getting paid better working elsewhere).

The main product OI-Wedco offers is a group loan with a minimum of 15 people (self-help groups or trust groups). When a new group forms they get a collective bank account and apply for legal status from the local government (all together costs the group around $25). For new groups OI-Wedco loan officers offer a 5-7 week training course in various business/finance topics relevant for micro-enterprise. If a client goes clears three loans with a strong payment history they can graduate to an individual loan. That is micro-finance in action. It should provide social mobility that enables people to take incremental steps out of poverty and in this case towards more robust financial services. This group dynamic provides efficiency for OI-Wedco, while providing legitimate collateral and support for the clients. I’ve been amazed at the diversity of backgrounds and incomes for OI-Wedco clients. As you can probably tell if you have explored Kiva, most of the clients listed for funding are individuals. They do, however, have several MFI’s like OI-Wedco that work with on groups (learn more).
I found it interesting that their best clients generally come from rural villages. In order to reach out to many parts of Western Kenya they currently have five branch offices in the towns of Busia, Bungoma, Eldoret, Kisii, and Kisumu (more will expanded soon) and several one room offices in smaller towns. Having the rural areas as the stronger clients does cause problems for costs in transportation and maintaining several branch locations, but the stability, repayment, as well as mission proves its value (plus it is fun riding on the back of an OI motobike). One branch manager told me that he wished all his groups were in rural areas, if so his portfolio would have a tiny PAR (percentage at risk, the primary yardstick of micro-finance stability). He tells me that this is because the rural areas tend to have strong community ties and more responsible/mature members. His main groups with issues are in the urban areas. This he tells me, is because those groups tend to be younger, less experienced, more distractions, and less commonalities tying them to the group.

The timing of the partnership is both interesting and tragic. Kiva and OI-Wedco officially became partners in early December 2007, weeks before the presidential election that sent Kenya into a whirlwind of violence, economic pause, inflation, tension, and the death of 1,500 people. I’ve met with a few clients that received their loan days before the election and used a good portion of the capital to buy stock, which many lost through looting or arson during the turmoil.

After the post-election crisis, Kiva sought to help OI-Wedco in any way. The plan was to post group loans on Kiva that were being rescheduled by OI-Wedco due to the impact of the crisis on client groups. Kiva’s policy is that a new business posted for funding must be within thirty days of the loan disbursement. Because the loans of OI-Wedco groups were only being rescheduled, not re-loaned or “topped up” as the clients like to call it, Kiva made an exception due the extraordinary challenges of the crisis.
Nevertheless, it made things messy and confusing to sort out afterwards, as I’ve been sifting through the repayment data, amounts disbursed, dates disbursed, loan terms, etc. Which made for a maddening time of reconciling the repayments schedule (my eyes are permanently cross-eyed). I discovered some of the reasons for the glitches and have been able to stabilize and I am working on getting a better system going.

Anyway, I thank you for reading this scattered and I’m guessing at some points confusing entry. All in all I am finding my fellowship to be more challenging than I thought it would be, yet more worthwhile than I ever imagined.

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