Building a strong community, one enterprise at a time

Micro insurance refers to insurance services predominantly targeting low-income earners, who are excluded from the more formal commercial and social insurance schemes, due to affordability barriers. Micro Health Insurance (MHI) improves access to health services and offers financial risk protection through a reduction in out of pocket expenditures.

In Kenya, insurance is often unavailable to those who need it most. More than one-third or 36 percent of Kenyans are exposed to numerous risks such as economic shocks, death, illness and loss of property due to natural disasters and calamities.

Events such as a death, disability, or even sickness in the family can wipe out any savings they might have accumulated, pushing them and their families deeper into financial instability. Therefore it is extremely important to bring them affordable and accessible low cost insurance products to help them through such difficult and trying situations.

Fortunately, technological innovations in digital financial services have made it easier to combine insurance with other financial products in ways that address a range of probable risk for the low income segment, when they need it the most.

Meet John Paul Otieno, Chief Executive Officer of ‎Insurance For All (IFA) Insurance agency, provider of the Afya Poa MHI scheme, an innovative health-financing product that will enable people in the informal sectors to manage health-related risks. It provides a financial platform that organizes their limited resources to ensure that they will always have access to quality healthcare whenever they need it.

Afya Poa is also one of PesaKit’s MHI super partners, providing PesaKit customers with an in & outpatient benefit that helps them through any medical emergencies. We sat down with him as part of our “Partnerships with a Purpose” series, to talk about driving digital inclusion and innovation through digital centers.

Please tell us a little about yourself and your role.

I am a seasoned marketer and strategist with over 20 years experience in the insurance industry. I am one of the co-founders and currently the CEO of Insurance for All (IFA).

Give us a bit of background on Afya Poa and what it does.

Insurance for All (IFA) is a licensed Insurance Agency founded in the year 2014. The firm is focused on providing relevant and affordable insurance products to Kenyan Workers in the low income segment. AfyaPoa is our flagship product. It offers several benefits for the family unit including In & Outpatient cover, hospital cash, funeral and property covers.

What are some of the challenges you face in your daily operations?

I believe the biggest challenge for us has always been how to win the trust of those in our target market and get them to buy our products. This is mainly because we are a new brand, selling a product that they have never consumed before.

Health insurance is the most effective way for people to reduce their out-of-pocket costs and avoid having a major medical emergency plunge them into poverty. However, insurance providers often have difficulty convincing low-income customers to pay insurance premiums now for needs that may or may not arise later.

Things are made worse by the negative perception created by industry players in the past that insurance does not pay out at the time of need.

PesaKit subscribers are more likely to trust us and our products based on PesaKit’s recommendation. This is because of their already existing strong relationship.

Tell us about your partnership with PesaKit and how it has helped

We have partnered with PesaKit to provide AfyaPoa insurance to M-Pesa agents who have subscribed to their services. M-Pesa agents registered with PesaKit can purchase the different kinds of policies that AfyaPoa offers directly from the PesaKit app and pay the respective premiums directly on the app as well. The agent has the option to pick up a premium loan and pay this off over 10 months.

We started this partnership as we felt PesaKit’s unique products to serve M-Pesa agents across Kenya aligned with our own brand of unique micro-health solutions for the underserved communities of the country.

What kind of support do micro-financiers need to better help the community?

The laws in this country require that insurance premiums be paid in full and upfront to the insurance company before the cover commences. This law has created a barrier for those in the low-income segment when it comes to them accessing cover. Most of them simply cannot afford to raise the full premium, upfront as required. There is also a need for public policy interventions to stimulate the insurance sector. Among other initiatives, this can include conducive regulations and government spending to insure vulnerable groups of the society.

It is my hope that micro-financiers will create specific loan products to finance premiums allowing for flexible payments over a period of time. We are working with PesaKit to make this a reality, aligning our mission to create an inclusive world and providing our customers value in the medium and long-term.

It is evident that digital channels have an important role to play for insurance providers looking to create microinsurance products that will address a broader range of issues and add credible value to customer’s lives. Afya Poa is such an example of how providers can approach health insurance for the underserved communities of society.

Businesses can gain infinitely more when they choose to participate in strategic partnerships. No matter how successful your business is, the right partnership can take it to even greater heights. Whatever your business is, it is important to look for the right partnership agreement that benefits both parties. At PesaKit, we strive to build such relationships with like minded businesses that are, at the heart, working tirelessly to build an inclusive nation.

The post Partnerships with a Purpose: PesaKit and AfyaPoa appeared first on PesaKit.

Meet Naomi Kiiru, Project Manager and Operations lead at dijITali, a digital innovator creating new, sustainable jobs to positively impact the economy. dijITali strives to innovate by empowering hundreds of cybercafés across Kenya to provide the youth with sustainable jobs, at the same time giving other youth access to government services, education and job opportunities, and economic participation through e-commerce.

dijITali is also one of PesaKit’s super partners, they are our Brand Ambassadors for M-Pesa Agents in the community. We sat down with her as part of our “Partnerships with a Purpose” series, to talk about driving digital inclusion and innovation through digital centers.

 

Please tell us a little about yourself:

I work as the Project Manager and Operations Lead at dijITali. When you see a cyber café, you see them as a means to attaining a service, which is the internet. We see them as digital translators enabling entrepreneurs’ businesses and dreams every single day. I ensure that cyber cafes in our network are able to seamlessly join our programs, get equal access to our offerings and opportunities and provide them opportunities to actively participate in the network.

Our mission is to empower the youth and create employment through digital inclusion and of course, improving the quality of the service experience..

What are some of the challenges the cyber cafes face in their daily operations?

There lacks a structure which enables them to better manage their finances , ability to identify opportunities near them, limited access to business credit and lack of business management skills, among others. Their sector is not properly defined making it difficult for them to have a voice.

What is the kind of support small businesses in Kenya need?

Resilient financial management, mentoring small business owners on capacity building, training them to recognize opportunities to grow and secure their businesses, upskilling them to capacity building. They must also be trained in bookkeeping, business development, legal issues, human resource management, and marketing. It is also of utmost importance to upskill them in order to enhance revenue streams.

 

Why did you partner with PesaKit and how has it helped?

Not to mention, their importance in bridging the inclusion gap in the nation. Agent networks have always been a core part of the mobile money industry, but during the pandemic they proved critical as there was an increase in the demand for both cash and digital services. It is a well known fact that there are more mobile money agents than ATMs in Kenya thus, we’re all extremely dependent on them for our day-to-day transactions.

We felt Pesakit’s value proposition would be beneficial to the cyber cafes in our dijITali network, as it would give them another way to grow and secure their business especially through the challenges that the pandemic has brought. Our agents have been able to earn an additional income by selling services to their customers, they have been able to apply for the PesaKit loans to grow their business and they also now have the option to secure their business using PesaKit’s micro insurance services.

How easy or difficult was it to register as a Super Agent. Kindly take us through the process.

The process to register as a Super Agent with PesaKit was very easy and smooth. We decided on coming aboard as a Super Agent as it felt like a seamless way to bring more benefits to our network of cyber agents.

There is an option to register our interest in becoming a PesaKit Super Agent on the website, which we did. We followed the next steps with ease and once the PesaKit team had verified all the information provided, we received a Super Agent certificate from PesaKit along with our unique credentials to begin operating.

 

According to you, is enough being done to encourage gender inclusivity in the finance and business sector?

Strides are being taken in the right direction, but, we still have a very long way to go to attain gender inclusion. Sometimes, the importance of focused gender inclusive products is lost under the large umbrella of financial inclusion. Organizations and the government alike need to look at their opportunities, their schemes, their policies etc. under different lenses for different inclusion priorities.

Businesses can gain infinitely more when they choose to participate in strategic partnerships. No matter how successful your business is, the right partnership can take it to even greater heights. Whatever your business is, it is important to look for the right partnership agreement that benefits both parties. At PesaKit, we strive to build such relationships with like minded businesses that are, at the heart, working tirelessly to build an inclusive nation.

The post Working together with MSMEs to build a stronger community appeared first on PesaKit.

In the face of a crisis, resilient organizations remain stoic and steadfast instead of being overpowered by it. The COVID-19 pandemic has had a catastrophic effect on people, businesses and economies around the world. Many companies have realized that having a resilience plan in place helps them to better mitigate, prepare for, respond to, and recover from emergencies.

Micro, small and medium enterprises (MSMEs) are widely recognized for their important contributions to development by stimulating economic growth, creating decent jobs, eradicating poverty and improving livelihoods, especially in developing countries.

Although it is estimated that formal SMEs contribute up to 40 per cent of the national income (GDP) in emerging economies, the International Finance Corporation (IFC) estimates that globally, 74 per cent of MSMEs are informal. In Kenya, there are currently 8 million MSMEs, employing at least 15 million Kenyans. Additionally, 80% of all businesses in Kenya are MSMEs, highlighting the crucial role MSMEs play in Kenya’s economy.

The pandemic has had a devastating impact on MSMEs globally as they are vulnerable to economic shocks linked to reduced access to credit, reduced customer demand among other challenges they currently face. There also exist other factors that exacerbate their vulnerability in the midst of a raging pandemic

Both recovery and business continuity are important elements to ensure that the impact from the crisis on MSMEs is minimized and that resilience is enhanced. It is critical now more than ever to support MSMEs as they often lack the support they need to resist prolonged disruptions.

 

MSMEs happen to be more vulnerable to disruptions than larger firms, as they may have limited access to effective risk management frameworks. Furthermore, MSMEs in emerging markets or developing nations deal with more constraints in the event of a major disruption such as

• an abrupt drop in demand
• working capital issues
• logistics disruptions
• medium-long term disruption of business models in certain sectors, and
• a significant loss of livelihoods and income

MSMEs have been facing unprecedented income losses and uncertainties about their future because of business disruptions due to the outbreak of COVID-19. The Central Bank of Kenya warned a major collapse of these businesses as they do not have the liquidity needed to continue operations and do not have financial reserves to meet expenses during emergencies. According to a BFA Global study, Only 39% of Kenyans have set aside funds to manage emergencies that arise from loss of income.

MSMEs often don’t have a business continuity framework in place like bigger companies. However, understanding the disaster risk and taking precautionary measures could help to mitigate many of the risks and help the MSMEs to bounce back after a disaster strikes.

 

At PesaKit, we continue to support mobile money agents in various ways to assist these MSMEs adapt their operations to the new environment. These methods not only strengthen their odds of surviving the crisis, but will ensure they emerge more resilient in a sustainable and inclusive manner.

We enable mobile money agents to maintain regular and consistent cash flow by diversifying the financial products and digital commerce services at agents’ locations. Additionally, mobile money agents can use the PesaKit platform to access a “Float Exchange”. This allows agents to purchase float remotely from their shops, reducing their need to frequent banks, and build their capacity to meet their customers deposit/cash-in needs. By providing agents with access to credit, we facilitate business growth, increased income, decent job creation and catalyze entrepreneurship.

 

We also launched a safety and misinformation campaign on the best practices to prevent the spread of COVID19 at agent shops using communication materials such as posters, pamphlets, SMS and videos. Through these materials we aim to educate mobile money agents and their customers on best practices to prevent spread of COVID-19 at agent shops ensuring safe and secure DFS locations.

And finally, we introduced a COVID-19 insurance scheme that mitigates the adverse outcomes associated with COVID-19 related health shocks supporting them to rebuild when disaster hits. The scheme offers agents a 12-month hospitalization cash insurance cover that provides them with an income safety net in the event they test positive, are quarantined or admitted to a hospital due to COVID-19.

The MSME pillar in Kenya is recognized as a key driver of growth and the lack of resilience in these businesses is a cause of great concern. Therefore, it is imperative that MSMEs be equipped with the tools and know-how on how to survive a sudden and abnormal disruption of this magnitude and its business models should be retailored to enable adaptation, mitigation and continuity.

PesaKit serves a network of mobile money agents across Kenya (and soon Tanzania), the majority of whom run microbusinesses of their own in addition to their mobile money businesses. We understand the importance of building their financial resilience and their financial health, especially because of the interconnectedness between their household finances and the businesses themselves. Our goal everyday is to empower mobile money agents to be at their most effective. Because, when mobile money agents thrive, we all thrive.

The post Why MSMEs need to be resilient in this new normal appeared first on PesaKit.

Meet Karen Nyambura. She runs a mobile money agent business in Kenya which is her main source of income. Let’s take you through her story and learn about her pain points, her successes and her experiences with PesaKit.

“I run a small shop in Nairobi, selling household items. I began a mobile money business to become more financially secure and independent. Being able to contribute to the family finances is a matter of pride and joy for me. Every shilling counts when it comes to caring for your family and children.”

Mobile money has changed thousands of Kenyan households by providing business and employment opportunities. 2019 was a momentous year for the mobile money industry with over a billion registered accounts and close to USD2 billion in daily transactions, mobile money is evolving like never before. In Kenya, which has led the world in the expansion of these services and where 96 percent of households have a mobile money account, you can find an agent almost anywhere.

In Kenya, where mobile money transaction volume constitutes nearly 50% of GDP, there are 231,292 mobile money agents (Jan 2020, Central Bank of Kenya), and a population of 53.4 million. There is a mobile money agent for approximately every 231 people. These agents are able to reach large volumes of the population via a real human touchpoint, at a scale no other organizations can compete with.

Female agents play a pivotal role but they too have unique challenges to overcome. There is evidence that female agents improve acquisition and retention of both female and male customers. They tend to appeal more to women, who are half of the potential customer base. They have proven to offer enhanced customer service with higher activity rates than their male counterparts.

There is also evidence that recruiting female agents brings socio-economic benefits to the women, families and their communities. But, lack of sufficient float and increased competitiveness have largely affected women-owned agency business such as that of Karen through reduced productivity and diminished earnings.

“It’s more common than you think that I have to let my customers go, telling them “sina float”, (Swahili for “I don’t have float) and it has been very hard on my business. I stopped getting customers because they would assume I would not have cash on hand.”

“I began using PesaKit because of the PesaKit float loans. It has been a saving grace for my business as I can confidently serve new customers daily. I no longer tell my customers “sina float”, in fact, my slogan now is “float iko”. (Swahili for “I have sufficient float”).

 

Karen has also been using PesaKit Protect, our micro-insurance product, which covers an agent’s business against fire, theft, fraud and personal accidents at work.

This ensures protection from losses and enables them to bounce back from a catastrophe or an illness.

“My entire family is insured under PesaKit Protect, it is just another way PesaKit has positively impacted my life. I am able to do so much through one app, I have much more confidence in my business and in myself now.”

“Why I enjoy using PesaKit apart from the loan and insurance functions is how it enables me to earn extra income through the sale of essential financial services. I sell my customers airtime, KPLC tokens and pay their water bills and I earn a commission every time I make a sale. Since my business targets women, and a lot of them are homemakers, I get a lot of requests from them to pay their water and electricity bills.

PesaKit has helped me tap into a new way of earning income. I am confident that using the app, I will attract more customers. To every woman running an M-Pesa agent business in Kenya, I encourage you to register with PesaKit so that we can all grow together and contribute to our economy.”

Karen started her household shop in 2018, since introducing PesaKit’s services in her shop, Karen has been able to use her commissions to invest back in her business, make some necessary repairs to the shop and has slowly seen an increase in profits.

About PesaKit

PesaKit is revolutionizing last-mile access to financial services and digital commerce through mobile money agents, for everyone, everywhere. We are a last mile agent network platform enabling digital and human interactions to accelerate digital commerce and financial inclusion. PesaKit currently operates in Kenya and Tanzania.

Our mission is to empower every mobile money agent across Africa to become the source of more affordable and convenient digital financial services, so they and their communities can grow and prosper.

PesaKit is recognized for its innovation in Kenya and beyond. PesaKit was a participating company in Catalyst Fund, a global inclusive fintech accelerator backed by JPMorgan Chase & Co., and UK Aid.

In 2019, PesaKit was the winner at the 3rd Digital Tech Excellence Awards as The Most Promising Agency Banking Tech Solutions Provider. PesaKit was also selected as a finalist in the AppsAfrica Changing Africa Awards and the Global Fintech Hackcelerator organized by the central banks of Kenya and Singapore. In March 2020, PesaKit was selected as a finalist in the Mondato Awards for Fintech Innovation in Africa.

In October 2020, PesaKit was selected as part of the 2020 Inclusive Fintech 50 cohort and received a Financial Resiliency cash prize of USD 25,000 for its efforts towards revolutionizing last mile financial and digital inclusion through mobile money agents.

PesaKit harnesses the power of cutting-edge technology, including artificial intelligence, combining it with human intelligence, a synergy that facilitates accuracy and consistency in delivering a variety of digital and financial services to improve the financial health of the underserved across Africa.

The post How PesaKit is impacting small businesses in Kenya appeared first on PesaKit.

Micro, Small and Medium Enterprises (MSMEs) play a significant role in Kenya’s economy and in many other emerging markets. MSMEs represent a core pillar of the global economy and play a key role in driving sectoral competitiveness, business innovation and wealth creation. They are one of the strongest drivers of economic development and employment, particularly in developing countries.

Access to finance has been identified as a key barrier to growth for MSMEs in emerging economies. Worldwide, MSMEs represent a core pillar of the economy and play a key role in driving sectoral competitiveness, business innovation and wealth creation. In Africa and other emerging economies they play a crucial role in creating decent jobs and improving livelihoods.

According to the World Bank, the finance gap for formal MSMEs in these developing countries is estimated at USD 5.2 trillion. Additionally, it has been estimated that 41% of formal MSMEs in developing countries or 131 million MSMEs are credit constrained. In Sub-Saharan Africa, the potential finance gap for MSMEs is estimated at USD 331 billion while in Kenya, it is estimated at USD 19 billion.

In Kenya, MSMEs already constitute a very important segment of the economy and employ about 14.9 million Kenyans. However, the sector hasn’t fully achieved its full potential because of a series of challenges, among which is limited access to financial services.

Today, most MSMEs claim that access to finance remains crucial to their continued growth, but a large part of them still face difficulty in accessing the amounts they need, mostly because of collateral requirements.

There are approximately 235,168 mobile money agents, a majority of whom operate as micro and small businesses, providing essential and critical financial services to underserved and unbanked populations.

The PesaKit e-float loans lending service enables small businesses across Kenya to serve more customers, increase their revenue and keep their businesses running. At PesaKit, we strive to ease an agent’s daily liquidity and operations pressures by providing working capital in the form of e-float loans so that they do not struggle with unpredictable fluctuations due to in-client demand or incur travel expenses on rebalancing activities.

 

Our app uses insights into their cash flow, to make predictions about how much business a particular agent might conduct in one day. These predictions can then be used to help agents manage their businesses, and for credit scoring for the provision of e-float. If the prediction indicates the agent’s income might be low that day, for instance, they will not extend the agent a loan. This helps prevent agents from entering a debt spiral, and through insights and financial planning tools, furthers their understanding of how to balance their own cash and float.

PesaKit aims is to build a network of resilient small businesses across the continent, united via a single platform which will serve as a local distribution channel for digital financial services, reaching underserved populations on the ground. This not only improves their access to financial services, but increases their exposure to fintech innovations that can greatly improve their financial health, via trusted sources in the form of their local agent businesses.

Beyond business management tools, the PesaKit app transforms agents into digital merchants, offering additional revenue sources through the sale of digital services (such as airtime and electricity tokens) and micro-insurance.

As part of our disruption in last mile distribution of financial services, PesaKit is improving agent viability in rural areas through greater service aggregation. In rural areas, sparse populations lead to lower transaction volumes thus unattractive financial incentives for businesses to serve as agents. By diversifying the range of services offered by mobile money agents, PesaKit is improving the agents’ ability to generate more CICO transactions per customer thus enhancing sustainability of agents in underserved areas.

Our supply-side intelligent platform creates new markets for financial and ecommerce service providers. It enables them to expand their reach, consumer base and expand last mile distribution through our API.

The post The significant role of MSMEs in the Kenyan economy appeared first on PesaKit.