Scaling in a Saturated Market: The Kenyan Experience

Seventeen young, scared faces sit around the board room for the full-day training of new marketers. I had been present the day that this new crop of SMEP employees was being interviewed. They had assembled en masse at our head office; many of them looking like the suit they were wearing had been hastily purchased at one of the local secondhand markets in anticipation of their first job interview. In fact, they were what I refer to as “babies” the young-ish, newly graduated staffers whose faces more often look up at me when I am conducting trainings at the SMEP branch offices all over Kenya.

I don’t call them babies to disparage them, but actually to highlight the new crop of SMEP employees that is fresh-faced and wide-eyed, ready to take on challenges and work for the first MFI in Kenya.

The 17 new marketers take a while to warm up during the training – they seem scared to speak, and I think back to employee trainings I have been in the United States, where each one of us struggles to prove ourselves by opening our mouths and commenting on every nugget of information offered by the trainer. These new recruits are the latest line of offense on SMEP’s push to capture more market share in a country where microfinance is overwhelmingly popular.

Whenever I’ve visited a SMEP market, I’ve been astounded at the amount and sheer number of financial service providers that line the streets of even the smallest town. Banks, microfinance institutions, brokers and other financial service providers glut the market and to use a popular Kenyan phrase – consumers of loans here are “spoilt of choice.” The Association of Microfinance Institutions of Kenya has a membership of 41 institutions, with 6 pending membership inclusion in 2010. The membership handles a combined portfolio of $303 million and serves 4 million clients. SMEP is the first institution to begin microfinancing in Kenya, but it has only 65,000 clients, preferring to grow slowly and organically until today, where it is not focusing on doubling clientele and rapidly increasing the loan portfolio in 2010.

Although numbers on Kenya differ, statistics say that Africa as a whole has 230 million unbanked households. And with the advent of technologically forward services such as Safaricom’s (local mobile phone provider) M-PESA (M stands for mobile, Pesa means money) mobile phone customers can send and receive money and make payments via mobile phone, including loan payments and savings for SMEP clients. In fact, since the advent of M-PESA the service has garnered 8.5 million individual unique clients and 15% of the Kenyan GDP has passed though M-PESA since its inception. SMEP is the first microfinance in Kenya to begin using M-PESA for loan payments by customers.

According the Kenyan Business Daily in an article from June, 2009, 7 out of 10 people in Kenya are unbanked. Maybe this untapped potential explains the overpopulation (seemingly) of financial institutions clamoring to serve those that have not become a part of the formal financial sector here in Kenya.

Now SMEP plans on fighting back and re-launching itself into those same markets by training the new crop of marketers – whole sole job it is to find and bring on new clients to SMEP and help them form groups (which are required for most of the people that get a loan through SMEP). The groups are formed because SMEP lends to people based on characters, when a group member gets a loan, the other group members guarantee the loan and vouch for the character of the client by signing on the loan form that they agree that that person should get a loan.

Back to the babies – they were trained at SMEP HQ by the marketing manager Anthony Mwamburi, guest starring myself, Brian Meme the Credit Manager, and Fridah Njeru, the Kiva Coordinator. Anthony, the first Marketing Manager SMEP has ever had, takes them through the basics of the finance and marketing curriculum, for most of them a refresher of what they did in university courses. They finally begin to open up, I get a glimpse of promise and gratitude in their eyes at this first opportunity to prove themselves and make some money. They present various aspects of marketing in front of the room, and I can barely hear most of them, their voices are so faint.

After the training I work with the marketing team with the local marketers – we go to a national –level church event of the founder of SMEP, to the branch where we train them on presence, diction, and elevator speeches when they are meeting prospective clients. The batch that we spend extra time with goes from timid, to more self assured. They learn about the organization and we soon learn that they are excelling in the field. I meet two of the new trainees in Mombasa while in the field training, and they tell me about their time at the branch and the challenges they are facing. The babies are growing up. They are becoming more confident.

This is the army that SMEP has chosen to work its front lines – these young faces will reach out in their respective markets to those untapped, unbanked people and business owners to spread the word about the oldest microfinance in Kenya. They have a formidable job ahead of them in a market where each financial institution is beginning to spend more and more money on marketing. Let’s hope the babies are up for the challenge.

Avani Parekh-Bhatt is a Kiva Fellow with SMEP in Nairobi, Kenya. She is working to get the institution from pilot to active stage as a full-fledged Kiva partner.