Justin McAuley is the Global Digital Architect for VisionFund, focusing on key projects in Tanzania. Here he shares his reflections on using technology to sustainably serve rural Tanzanian clients. According to the UN’s Food and Agriculture division, around 80 per cent of Tanzania’s workforce is engaged in agriculture, consequently accessing this market is integral to serving the rural poor.
This blog follows on from a previous post from former CEO of VisionFund Tanzania, Adrian Merryman, exploring the difference between serving rural and urban poor, explaining why VisionFund is focused on reaching rural communities even though it is more expensive, and comes with a set of logistical and operational challenges.
To recap, VisionFund remains driven by its client focussed mission, as opposed to maximising profit, and is focused on targeting those as far down the economic ladder as we can (what you might call the poorest of the entrepreneurially active).
As an organisation, VisionFund needs to operate sustainably (the non-profit nomenclature for being profitable) so that we can satisfy the regulators (where we have deposit taking licenses) and leverage our balance sheet by borrowing from commercial lenders so we can maximise the impact of the donations we are given. To remain sustainable, particularly as we reach out to the most vulnerable, we need to be the most cost efficient and productive in every market in which we operate.
So, how do we balance growth and sustainability with serving rural areas where it can be very difficult to operate on a break-even basis? Maximising the efficiency of operational processes is an important first step, but the only way to dramatically reduce delivery costs while improving customer service is to use innovative technology appropriately.
I turn to my experience at VisionFund Tanzania, where we have introduced a tablet based Client Registration and Loan Application app to eliminate operational inefficiencies, improve customer response time and service, and reduce the opportunities for fraud:
1. Administration overheads were minimised.
- We no longer need to take down all the information by hand and then have a data entry clerk enter the same information into our core banking system. This eliminates the need for data entry clerks and transcription errors.
- We no longer need to pass thick folders full of client information around to obtain the necessary reviews and sign-offs. The application is circulated and signed off electronically, saving enormous amounts of time and effort. The process was sped up by days and even weeks based on the above changes.
2. Given the need to GPS mark client homes and workplaces, we were able to ensure loan officers were properly following the requirements of the loan application process. It’s also made it easier to find and follow up on clients.
3. Potential for fraud has been reduced by the GPS marking and fingerprint recognition technologies as it has become more difficult to create “ghost” clients or for previous defaulters to take a new loan.
4. Loan officers can more easily and effectively track and monitor clients and their loans.
Use of the tablet-based client registration and loan application app is designed to increase the number of clients that can be managed by each loan officer. As pointed out in Adrian’s previous blog, this is one of the two key ratios that drive microfinance organisation profitability.
In Tanzania, 98% of disbursements and repayments for VisionFund clients are processed on a mobile phone. Not only does this mean the loan officer’s work is more efficient and effective, but clients are able to save substantial time and money.
All of these factors make it easier for VisionFund to operate sustainably even in rural areas, but most importantly, it means that we can continue to expand our service to the 70 per cent of the world’s poor that live rurally and have historically been financially excluded.