Missions of Hope is located within the Pangani Slums in Nairobi. They provide child sponsorship, education for both children and parents, and support for building a business through their microfinance operations. It turns out their use of Mifos as their MFI platform is very different from the MFIs in India.
Like Indian MFIs, the mostly do group lending, but the groups are not limited to women, anyone can join. They usually meet weekly at someone’s house or business to collect loan repayments. They differ from Indian MFIs in that the loan officer handles no money – it is the responsibility of one of the group members to collect the cash and deposit it into the Missions of Hope (MOH) account at the bank.
They also require members to save a specific amount of money before they will approve a loan (usually 20% of the amount they want to borrow.) This money is held in a single MOH savings account with a regular bank, MOH must maintain all records of how this money is allocated. I believe that they can do this without being regulated as a savings bank because they don’t invest the money. A client cannot “use” the savings (i.e. withdraw money if they need it), it is held as collateral until the client leaves the group, then refunded in full. MOH provides dividends on this savings account.
Group member’s savings accounts are used as collateral for their loans as well as other group members. Members are asked to be a guarantor for other’s loans (but this is not required.) If a member defaults, the money is taken from the guarantors savings accounts to repay the loan.
I don’t know if this model works better or worse than the Grameen model, or they are relatively equivalent. Perhaps it depends on the India vs. Kenya banking regulations. It would be interesting to study this.
It is clear to me now that Mifos is “biased” toward Grameen-style lending (makes sense, it was originally developed within Grameen for Grameen.) But as we redesign the platform, it becomes more important that Mifos is flexible enough to accommodate very different styles of lending.