Kisumu II: The Implementationing

After my previous week in Kisumu helping RAFODE with some financial modeling, analysis and operational recommendations, they asked me to come back and implement my recommendations. A case of me having to put my money (or in this case, my time) where my mouth is. My work from the outset has been pushed by the VSO volunteer with them, Ricky who is implementing a sorely-needed management information system. Somehow they wanted a British banker in their midst, despite the banking crises of the last few years, and who was I to disabuse of them of the notion that I might be of some assistance.

RAFODE is a microfinance institution (MFI) about 3 years old which specialises in servicing the rural poor, who even in the current global microfinance explosion, do not have access to any financial credit. The RAFODE model is similar to many in the industry, loan officers go into the field and find people to form groups of 10 individuals or more. Once a group is formed, they start saving with the organisation and go through a 7 week training program; consisting of 1 hour per week group meeting in which the loan officer teaches them the basics of a loan and other simple business skills.

At the end of the program, the group decides who in the group is to get the 1^st loan, known in RAFODE as a stagger; in a group of 10, 4 would be in the 1^st stagger, 4 in the next and 2 in the last. Each stagger is be separated by 4-6 weeks between loan disbursment, this encourages the rest of the group to ensure the people who have loans outstanding are prompt payers. Lending at most microfinance institutions is split into cycles. As a new client to an organisation you have no payment record and with the lack of financial services in your area no credit bureau to assess payment history, so in order to build up a payment record an MFI will provide a client with a smaller loan before assessing them for the loan amount they actually wanted.

As part of implementing my recommendation we visited these rural communities. The RAFODE loan officer commented on these locations as being 'rural but not super-rural', I think this was because they could get electricity on occasion. Upon our arrival in the community, we were warned by the loan officer that the clients may start clapping and singing, luckily they did not. I tried to imagine any of my client meetings in the UK where clapping and singing could have occurred; I failed miserably.

As an unreformed cynic, 15 minutes into leaving tarmac road I doubted whether we would see any businesses with potential growth; I was pleasantly surprised. Despite the paucity of resources, we met several good businesses. One in particular was run by a retired teacher who ran a tailoring workshop with 5 employees. The workshop made school clothes for children in the local towns, the clothes were sent to town on a piki-piki. The owner of the business wanted a loan to get some new sewing machines and stock so that he could supply some more schools whose orders he could get.

A key element of implementing the operational recommendations was training the loan officers to collect the financial details of the customers' business so that they could actually assess the customer's ability to repay. The main challenge of this was the client themselves, they may not know all the information needed or, not knowing exactly what the loan officer was looking for, inflate their costs to demonstrate a need for a loan. However, having run a training session in the early part of the week, we followed the loan officers into the field, where they demonstrated the ability to ask questions from various angles to get the right information from the customers and also confirm the information that they were getting.

Once the loan officers started collecting the information, they rapidly took on the implications of assessing their clients' ability to repay. Previously, loan officers main criteria for assessing clients was character, savings and the cohesion of their group, now they could begin assessing their clients ability to repay the facilities requested. Somehow, this seemed like a quantum leap for them and it was privilege to see them take on this knowledge and use it.

From an operational point of view, the new process helped them reduce the time it took to conduct a full assessment of their clients and increase the amount of data captured in the process. On their return to the office, they used the data they collected in their credit committee process, and with a credit committee procedure checklist, we halved the time it took to discuss each credit committee case.

The credit committee procedure checklist was a very simple affair, taking the criteria the loan officers use for assessment and ensuring this was delivered in a uniform manner. The loan officers took it well, which was surprising given the Kenyan love of conversation. Also, having been reminded of some of the credit committee cases from my previous life, where words like: concise, specific and pertinent need not apply, I decided this was an instance where the UK could learn from an Kenyan institution.

It was a very encouraging week, mostly because the people working at RAFODE are so eager to improve what they do and are so receptive to any help provide, even though I felt I have given them only a very little.

Return to Kisumu

I've just returned from another week in Kisumu helping RAFODE implement some of my recommendations from my previous visit. I'll be sharing my working experience at RAFODE soon, but first a little more about Kisumu...

Compared to the traffic and hustle of Nairobi, Kisumu is a welcome change of pace, but it's not without its own issues. Recently, the town council has banned matatus from the town centre. Matatu drivers are obviously displeased and, never the most retiring of characters, have made their anger known: after a series of protests, they began to target the beneficiaries of this ban - tuk-tuks and their drivers on Wednesday. We heard about this just as we ordered dinner at a restaurant in town, and after we quickly changed our order to go, we called our friend Pascal the tuk-tuk driver.

Pascal is a famous man in Kisumu - famous to every foreigner in town anyway. He is honest, fair and usually on time, but he really made his name among the wazungu of Kisumu by helping many of the volunteers get out of the town during the Post-Election Violence of 2008. Since then he is the go-to tuk-tuk man.

The usually affable Pascal arrived at the restaurant quite shaken: he had just dropped off some wazungu in Milimani, an upmarket 'burb of Kisumu, but on his return saw an overturned tuk-tuk, people throwing rocks at other tuk-tuks and down one street two matatus taking up both lanes of the road driving straight at him. He managed his escape from a situation that would have undoubtedly meant the end of his livelihood and no small amount of physical harm by nipping down a side street at the last moment.

He got us home safely and uneventfully on this occasion, and we made sure he let us know that he got himself home safely too. Later in the week, he told us his best friend (another tuk-tuk driver) had been arrested for inciting violence, which, bearing in mind tuk-tuk drivers were the target of the violence, was hardly likely. Unfortunately, it was easier for Pascal's friend to accept the charge than to protest his innocence: he neither had the money for a lawyer nor the ability to afford the time away from his business to investigate and dismiss the charge. Suffice it to say justice for all is actually justice for all those who can pay.

The next day in Kisumu, there was no evidence of any tension between the matatus and the tuk-tuks; I guess there is only so long you can fight before it becomes too bad for business and you have to get back to earning. And matatus are still not allowed to go to the town centre.

But this was not the only civil unrest in Kisumu that week...

Later in the week we were warned not to go into town as there was some tension building due to a pending decision from Parliament. Kisumu is a predominantly Luo area and the Prime Minister Raila Odinga is a Luo (he is also MP for Kibera in Nairobi). Recently, the President nominated a new Attorney General and Chief Justice as part of the implementation of the new constitution.

Unfortunately, he did this without consulting the PM who had been sent by the President to the meeting of the African Union - seemingly for the express purpose of allowing the President to draw up his list of nominees in peace.

Upon his return the PM immediately objected to the nominees and drew up his own list of nominees, throwing these into the ring. What followed was mudslinging on both sides by their respective lieutenants, the tedium of political process and, potentially, a decision last week.

For the Luo community in Kisumu, there would be celebrations if the Luo PM's nominees were accepted and violent protest if the President's nominees were accepted.

As I watched Parliament at a stall-holder's TV set in Kisumu market, I asked what he thought of the situation. He said they didn't take it seriously enough and that Kenya's future was at stake. When I asked him what he thought about the Big Two (the collective name for the PM and President) he looked at me suspiciously but then said that Kibaki was a tribalist and that Odinga was a good man. That the Luo community were potentially going to riot if their man did not get his way struck me as a little tribalist, but what do I know?

In the end the MP's had a little chuckle and deferred their decision to this week, much to the chagrin of the would-be rioters in Kisumu.

The side story to all this is that President Kibaki's allies are some of the Ocampo Six, including Ruto and Kenyatta. Kibaki's nominees are therefore to be in place to help set up local tribunals to try Post Election Violence suspects once Kenya defers the ICC process. This would allow the local tribunals the opportunity to give our hopeful presidential hopefuls an easy ride.

The strategy is somewhat obvious but that does not discount its potential for success in, as we've already mentioned, a rather tame media. International pressure is the main driver for Kenya's continued participation in the ICC process. The flipside to this is that it allows Kenyan politicians the chance to brand the ICC a colonial relic damaging Kenya's independence. And of course Kenya's leaders know that the international community is a fickle beast: the US and UK might keep the pressure up but if they get distracted by, say, another military engagement, apocalyptic financial crisis or the hunt for some mythical terrorist then their priorities will change. Moral outrage for the victims of the Post Election Violence will turn to pragmatism to meet more short-term priorities. On top of that, Kenya's key development partner China is more than disengaged from the ICC process and China's input is rapidly becoming more important than the US or UK.

Kisumu

I've just come back from Kisumu on the edge of Lake Victoria where I was spending a week volunteering at a microfinance organisation called RAFODE. I was working on some financial models using Microfin, from which I generated some strategy options for the next year and gave them some advice on improving operational efficiency, with the help of their current serving VSO volunteer Ricky who had arranged all this.

It was great to do a week's work in an office, it felt productive as there was a tangible output at the end of the week, something I haven't had in some of the other volunteering I have done (and something Ricky doesn't get most of the time either)

I was shown the sights and sounds of Kisumu which I was told wouldn't take long. Kisumu felt more like Mombasa than Nairobi, a much older place and the people have certainly a more pole-pole (slowly, slowly) attitude than you get in Nairobi. As Kisumu is a small town, I managed to go to pretty much every restaurant there as well getting to know one of the tuk-tuk drivers, Pascal, quite well.

There was a rather odd set up at one pair of restaurants, with large outdoor seating areas: a vegetarian restaurant (the Laughing Buddha) where you can get alcohol and an Indian restaurant (Al Noor) where you can't (for religious reasons). So the natural solution for those wanting food from Al Noor and alcohol is: order your food sat at the Indian restaurant's table, order your beer from a Laughing Buddha waiter . The waiter will bring a Laughing Buddha table to place next to the Al Noor table so that you can set your drink on a Laughing Buddha table and eat at the Al Noor table not offending anyone's religious sensibilities. An example of religious tolerance if ever I saw one, also the food was great.

As Kisumu is a centre for malaria research there are seemingly lots of westerners, mostly because they all go to the same restaurants.  The impression you must get if you stay for any length of time is of being in Groundhog Day, especially as we managed to go to the Laughing Buddha 3 times in one week (which apparently is not unusual)

Although as I was sat, drinking a well-earned beer (at least I paid for it), at Kiboko Bay resort overlooking Lake Victoria at sunset I did wonder if it wasn't such a bad Groundhog Day to be revisiting.

Allys came to visit at the weekend and we went to Kakamega Forest which I shall be writing about next!