A New Digital Information System in Senegal Bringing Together Agricultural Actors
With the introduction of digital products in finance, Microfinance Institutions (MFIs) in Senegal allow farmers to invest in their agricultural activities. ICCO Cooperation’s STARS program supported the implementation of a digital savings pilot within three MFIs that boosted the savings habits of more than 80,000 female producers.
Time-Consuming Credit Meetings
Despite the numerous efforts that private sector organizations are making to boost the digital finance sector in Senegal, adoption by MFIs is low. This is remarkable, because digital finance could be an important lever for reducing their operational costs and promoting financial inclusion. For rural women, who are often organized in grassroots solidarity groups, obtaining credit from MFIs is a real time-consuming process. MFIs monthly deploy loan officers to the field to disburse loans, collect client / member savings, and collect loan payments and interest. A credit cycle for a group requires on average seven meetings. This forces women to spend seven entire mornings in this same activity, which often pushes women to resign.
High Operating Expenses for the MFI
For Caurie Microfinance, one of STARS four MFI partners in Senegal, the classic methodology is costly because it requires a lot of consumables, such as papers for reports, pens, ink for printers and photocopiers, electricity, etc.. It is also complex because the processing and collection of financial data is done manually, which increases the duration of meetings. Given the long distances between villages and the headquarters of the MFI, the loan officer generally spends a full day with a group for these savings and loan repayment operations; which is very costly for the institution.
Introduction of Digital Finance
To remove these constraints, STARS supported Caurie Microfinance to set up a digital finance pilot. The first phase consisted of digitizing the collection of savings and group loan repayments. Here’s how that works: all operations are now done with an application called Caurie Mobile: loan officers meet with the women groups on a monthly basis and record all credit operations (reimbursement, disbursement), savings (deposit, withdrawal) and customer membership details (account opening). Even though loan officers still meet with the groups seven times, the duration of these meetings have become much shorter.
Marème Wade, secretary of the national union of market gardeners in Senegal and member of a solidarity group says: “With the Caurie Mobile application, we go from 3 hours to 1 hour of meeting time. That’s a huge time win, which we can use for other activities. Before, women complained about the lengthy meetings and gave up on savings. Now, with the increased speed, women are more motivated to save.”
Reducing Costs and Time
For the MFI, the benefits are also clear. According to Andre Youm, Director of Operations at Caurie Microfinance “Going digital has enabled the reduction of operating costs (paper, ink, etc.) and the reduction of service costs. In addition, there is the strengthening of operational performance, officers are more productive and can hold up to three village meetings in one day.”
The system also had a positive impact on the reliability of the data. According to Andre Youm “The digitalization has enabled the reduction of data entry errors and made it possible to better control our financial operations.”
And while data has become more reliable, women are becoming more confident to save. This improvement in client-MFI relationship is not without consequence, as many women have increased their savings; which allows the MFI to improve its savings portfolio and to have more cash available to disburse loans on time. According to Aminata Dieng, member of a village bank, “I have been able to note since the arrival of Caurie Mobile that the delays in loan disbursements have greatly reduced. We now get our credits on time, which is crucial for us, since our farming activities are determined by the seasons.”
Bank to Wallet Feature
The second phase of the pilot project in progress is the introduction of the Bank to Wallet feature, which allows customers to make transactions at distance (savings, withdrawal, repayments). The feature functions as a deposit and withdrawal service between their Caurie savings account and their Wallet account from their mobile money provider (Orange Money or Free Money, Wave, etc.) on their phone. The feature enables the customer to transfer money in between the accounts whenever they want, giving clients more freedom over their credit payments, savings withdrawals or deposits.
To date, the MFI has already collected over USD 7 million through the applications. According to Khary Cisse, ICCO Cooperation’s STARS Microfinance Advisor: “The Bank to Wallet feature offers customers the possibility of saving at any time without having to travel. This improves their financial autonomy, without having to suffer penalties in case of absence during the reimbursement meetings. It is also an opportunity for women to be able to benefit from larger amounts of credit which will enable them to finance agricultural production, the education of children or even the repair of the house, which are some of the main concerns of these women.”
For Andre Youm, Director of Operations at Caurie Microfinance: “This pilot will impact more than 10,000 women, 40% of whom are youth. At the level of the MFI, the digital system will improve the security of transactions and data and customer satisfaction.”
In total, STARS has supported three MFIs in Senegal to set up savings strategies, allowing them to collect over USD 7 million from 82,000 savings clients in 2019 and 2020.