Training the Clients at ANK
On November 27-29 ANK held a training seminar for approximately 25 of its borrowers in the Kayole section of Nairobi. Kayole is on the outskirts, about 30 minutes from the city center.
The borrowers were mostly women, and they showed up a little apprehensive as to what they would be doing at the training. None of them have gone through any kind of formal training before and most have them never went to college; some had finished high school.
I was very happy to see that ANK was doing this kind of training. I have long wondered about this gap in microfinance: what good is it to loan people money who have little experience handling it? Most clients just seem to fall into a business and they learn as they go – wouldn’t a little training help them avoid costly mistakes?
I think, I hope, that this training helped the borrowers think through some issues that they had not considered before.
For example, almost no one kept any financial records. Everyone had an idea of what they earn, what they spend, etc… but no one could say for sure, and any kind of monthly or weekly analysis was out of the question.
For this reason, ANK brought in a CPA/business consultant to walk the borrowers through record-keeping processes, strategic planning, marketing ideas and other problems/issues that they may face. This was incredibly helpful for the borrowers, as they have never heard this information before, and without formal training, most of the ideas really never crossed their minds. Many of them told me that they live and plan day-to-day; this is a function of their environment, but also hurts their businesses, as they are frequently out of one product or another, and clients must look elsewhere.
After the training, clients seemed like they would prepare themselves; they would plan ahead, check on prices earlier, keep better track of their inventory and try to save a higher percentage of their profits.
I found one expense particularly interesting: cell phone use. In Kenya, cell phone credit is bought as needed. Phones are cheap and thus penetrate fairly well down-market, reaching even the working poor. Credit can then be bought for as little as 60 cents at a time (a call costs about 5 cents/minute).
I asked the borrowers if they kept track of their cell phone costs on a day to day basis. No one did. Most of them estimated that they spend about $2 every day on calls. I then asked them how much this adds up to per month, per year and then asked them what they could save over 5 years. They were shocked. I have a feeling that most of them have never planned that far ahead and never considered how a small cost like that could add up.
Kenyans are a chatty bunch. Friendly, convivial, and easygoing, cell phones seem like a natural fit for them. Many people even have 2 phones or 2 SIM cards, in order to talk to their friends who may be with a different subscriber, thus making it cheaper per call, per minute. Young Kenyans are as attached to their phones as any young American.
There have been many studies written about cell phone use in developing countries coinciding with a rise in GDP, or studies about how the working poor can use cell phones to find better markets for their products, or how consumers can find better prices through cell phone use. (A famous example of these studies is from the London School of Economics, examining cell phone use by the fishermen of the southwest Indian state of Kerela).
While these studies and their statistics may be true, cell phones, in the case of these particular borrowers, seemed more like a drain that the borrowers were underestimating or simply not acknowledging. After I posed my questions to the group we had a tea break and many of the borrowers pledged to me that they will from now on keep track of their cell phone costs and that they couldn’t believe how much it was really costing them.
Other than that, ANK brought in the KRA (the Kenyan IRS) to talk to the borrowers about taxes and other fees they must pay for their business. Stories abounded of borrowers having their businesses shut down because they were not registered, or they were not paying their taxes correctly and even of conmen posing as tax collectors coming to the business owners, flashing a fake credential and intimidating them into handing over some cash (and then walking off with it, obviously).
After the three days, the borrowers were excited about their prospects. They felt that they would now earn more simply by being more efficient and keeping better records. Some were excited, as they thought of new ways to expand their business without incurring too much more overhead.
Most of all, there was a feeling of optimism after the training. The borrowers felt that they could look ahead to better days. The post-election violence is becoming more of a memory every day, and by taking charge of their own business and running it more efficiently, the need for a loan might, one day, disappear altogether.