Emergency loans in Kenya

Adapted Products series: Services that meet the need of the Poor
Our Poverty-focused Microfinance Community of Practice (PovCoP) will be exploring adapted products over the coming months in a series of posts, group discussions, and interviews. We’ll start with a few case studies and learn what made each project a success. Please help broaden our understanding by sharing your own experiences with the community as well.  For more information on adapting microfinance products globally, take a look at CGAPs recently released Better Insights for Better Products.

Emergency Loans in Kenya
In May 2012, Faulu Kenya released a new product for low-value cash emergencies called Kopa Chapaa.  This 10-day loan is a mobile product offered through a partnership between Faulu Kenya and Airtel Money.  Loans can be up to US $115 and are available to customers of Airtel Money for at least 6 months (2 transactions).

In December 2012, a similar offering was born out of a partnership between the Commercial Bank of Africa (CBA) and Safaricom: a product called MShwari.   This product also offers emergency cash dispersal, this time up to US $1,100 with a 30-day repayment period, along with an additional feature encouraging mobile savings at graduated interest rates.  MShwari has seen quite a bit of success since its release almost 6 months ago, as well as some controversy over the intellectual property rights of Faulu Kenya, both outlined here.

A third provider, Milango Financial Services, also offers emergency loan products in Kenya, this time a suite of 3 products, albeit without the mobile feature.  Milango services a good deal of rural clients in coastal Kenya, as detailed in their profile on Kiva.org.

These 3 emergency loan offerings present a variety of options for customers, meeting a variety of needs in the Kenyan market. Emergency loan products can offer a critical safety net for those living in poverty to recover from unexpected expenses, such as emergency medical bills.  Emergency loans are also a relatively simple service to offer, and often complementary to other microfinance products, as outlined in this article.

Which emergency loan product model would be most helpful to the poor in your region?
What terms make sense to best meet the short-term credit needs of the poor?
What can we learn from the successes of MShwari in Kenya?

Leave your thoughts in the comments section below

Have suggestions for this Adapted Products series?  Send them to Leah Verghese at MeasureLearnChange[@]gmail.com