1. Five Talents / Mama Bahati Foundation
Mobile Money Challenge
April 2013

2. 2
Contents
1
1 Introduction and overview of the challenges
2 Progress so far by Five Talents / MBF
3
4
Recommendations and next steps
5
Challenge 1: MFI market research
Challenge 3: Consider alternatives
6
Challenge 2: Assess Musoni

3. Introduction - About Us
Wu Wei
Scott Lennard
Kim Croucher
Doug Pearman

4. Iringa Location
>Placeholder for link to Google Earth here<

5. Background to Mama Bahati Foundation, Tanzania
Who are The Mama Bahati Foundation?
- History: inspired by the case of a subsistence fruit vendor with 7 children
- Model: MFI, Credit-led group lending to women (lending out at 2.5%pm)
- Scale: small – 3000 borrowers, 17 staff + management board
- Funding: reliant solely on Five Talents UK, £335k invested over 6 years
- Operating environs: Iringa, Tanzania (rural and urban, <20% of people have
access to mainstream banking, loan portfolio size is ~$300k)
- Strategy 2013-15: Intention to expand to 6500 clients by 2015, including more in
disadvantaged groups. No intention to become a non-bank financial institution
(Microfinance Company); intending to incorporate M-PESA.
- Interest in Mobile Money: Reduce security risks from cash handling; reduce
fraud; release staff time for training; reduce costs; improve record keeping
- Spark: MBF accountant murdered (August 2011) while transporting £6000 in rural
savings and loan repayments back to safe in Iringa

6. Challenges Posed by Five Talents to our team
Challenges:
1.What have other Tanzanian MFIs done/learned from Mobile Money?
1.Is Musoni a viable option?
2.Are there better alternatives to Musoni for MBF?
Five Talents Mission
[To] fight poverty, create jobs and transform lives by empowering the active poor in
developing countries…
…using innovative savings and microcredit programmes,
business training and holistic development.

7. 7
Contents
1
1 Introduction and overview of the challenges
2 Progress so far by Five Talents / MBF
3
4
Recommendations and next steps
5
Challenge 1: MFI market research
Challenge 3: Consider alternatives
6
Challenge 2: Assess Musoni

8. Progress so far by 5T / MBF
Immediate actions:
-‘Netting off’ loan repayments against savings monies to reduce cash transported
-Rural group members accompanying MBF officers back to main road
-Engaged with other 5T partners globally (13 country offices) to ensure they are
aware and following security protocols
Who are Musoni?
-History: launched in May 2010 in Kenya, combine mobile money with a
Management Information System (MIS) for Microfinance

9. 9
Contents
1
1 Introduction and overview of the challenges
2 Progress so far by Five Talents / MBF
3
4
Recommendations and next steps
5
Challenge 1: MFI market research
Challenge 3: Consider alternatives
6
Challenge 2: Assess Musoni

10. Current use of mobile money in Tanzanian MFIs
Market Size in Tanzania
Use of mobile money by MFIs in Tanzania
Note – Licensed banks excluded, e.g. National Microfinance Bank (using M-PESA) and BRAC are larger, but serve different
client groups with larger loans
MFI MM System used Notes
Finca M-PESA(assumed) 20,000 repayments each month are cashless – recently recvd banking licence
Pride No evidence Mobile money feasibility study carried out with Tai Mobile Solutions
YOSEFO M-PESA Use since April 2012 for disbursement of loans
Opportunity International No evidence Also using ATM-on-truck delivery service. Have a director of mobile money.
Care M-PESA Use of VSLAs in Tanzania in combination with mobile money. 39 VSLAs
using M-PESA as of Dec 2010
Source – TAMFI 2010Source – TAMFI 2010
Source – Corporate websites / blogs
Mama Bahati - <0.5% Mama Bahati - <1%

11. Client benefits and lessons learned
Benefits of using Mobile Money
•Lower cost of transferring money over a distance (one alternative: buses which take 10%)
•More secure to transfer money
•Meeting times can be focused on financial literacy training (and Musoni even do social impact
assessments and invite health experts to sessions) – no requirement for unnecessary administration
Mobile Money MFI Lessons learned
“Drive to expand customer base
must come from the phone company
– not the financial institution”
“Agents’ remuneration
must be sufficient
-the business case
must stack up for them”
“If people aren’t made to attend
group meetings to make repayments,
they may cease happening”
“If payments don’t go through smoothly
first time…people will be put off”

12. 12
Contents
1
1 Introduction and overview of the challenges
2 Progress so far by Five Talents / MBF
3
4
Recommendations and next steps
5
Challenge 1: MFI market research
Challenge 3: Consider alternatives
6
Challenge 2: Assess Musoni

13. Disburse loan
Would Musoni help MBF disburse loans securely?
Management
Information
System
Mama Bahati
foundation
MusoniM-PESACustomer / M-PESA
Server Disburse loan
Answer: YES

14. Make repayment
Would Musoni help MBF receive repayments securely?
Management
Information
System
Mama Bahati
foundation
MusoniM-PESACustomer / M-PESA
Server Review
repayment data
Answer: YES

15. Would the Musoni technology function in Iringa?
>95% signal coverage

16. Urban Areas Rural Areas Total
Number of Locations 40 29 ~70
% with access to
Agents
93% 53% ~75% of Clients
Would the Musoni technology function in Iringa?
Answer: YES
Outcomes:
• Three-quarters of MBF clients would be able to use the Musoni system
• The remaining number of clients (about 800) would have to use existing system until M-
PESA agents can be set up in their area
• Would have to work with Musoni and Vodacom to bring in new M-PESA agents
• Mobile Vodacom coverage in whole area is very strong

17. Would the Musoni technology work for customers near Iringa?
By Income
Source: InterMedia FITS study of households in Tanzania, April-May 2012, N=2,980
By LocationBy Education
Outcomes:
• Substantial impact of education level
• Substantial impact of income
• Moderate impact of rural / urban location
Answer: YES, if primary educated and above

18. Would Musoni lead MBF to financial sustainability?
Current Operating Cost Comparison
Competing approaches
Provider
Operating
cost (GBP pa)
#
customers
Loan
Portfolio size
Operating costs per
customer per year
Operating costs as %
of portfolio
MBF Tanzania £117,296 2,478 £138,231 £47.33 84.9%
Musoni Kenya £284,116 6,831 £606,107 £47.59 46.9%
Sources: MixMarket 2011; Op Costs from MBF financial statements (2012); Musoni financial report (2011)
Answer: No
Provider
Operating
cost (GBP pa)
#
customers
Loan
Portfolio size
Operating costs per
customer per year
Operating costs as %
of portfolio
Village Savings
and Loan
Associations
Near-zero operating costs; setup costs per client in Africa range from £13 - £40.
Sources: MasterCard Foundation (~2009)

19. Would Musoni be affordable for MBF customers / Five Talents?
Estimated Capital costs of implementing Musoni solution:
Costs to MBF customers of implementing Musoni solution:
Cost Item Cost Year 1 (GBP) Cost Years 1-5 (GBP) Notes
License Fee £21,000 £38,000 Discounted offer price
Field Officer
Tablet Devices
£0 (paper-only) £2,000
10 x Huawei tablet devices for team (@
£200 per unit)
Broadband Network
Upgrade
£1,000 £5,000 estimated
M-PESA loan
disbursement charges
£100 £2,200
Assumptions:
500 MBF customers (all registered) using
M-PESA Y1; 1,500 Y2, 3,000 Y3
1 x £50 loan per customer per year
TOTAL £22,100 £47,200
Equivalent to £9,440 p.a. ~10% of 5 Talents annual ~£80k stipend
Answer: Yes – see sustainable funding group!
Source: M-PESA tariff; Vodacom website
Cost Item Cost Year 1 (GBP) Cost Years 1-5 (GBP) Assumptions
M-PESA Charges per
customer
£2 £10
52 x £1.50 loan repayments per year
1 x £75 loan withdrawal per year
M-PESA Charges (all
customers)
£966 £21,247
500 MBF customers (all registered) using
M-PESA Y1; 1,500 Y2, 3,000 Y3
Sources: Musoni proposal; Musoni CEO (Cameron Goldie-Scot); M-PESA Tariff, Vodacom website

20. 20
Contents
1
1 Introduction and overview of the challenges
2 Progress so far by Five Talents / MBF
3
4
Recommendations and next steps
5
Challenge 1: MFI market research
Challenge 3: Consider alternatives
6
Challenge 2: Assess Musoni

21. Alternative – Voluntary Savings and Loan Association (VSLA)

22. Alternative – Banking Vans

23. Alternative – ‘Alternative Currency’

24. 24
Contents
1
1 Introduction and overview of the challenges
2 Progress so far by Five Talents / MBF
3
4
Recommendations and next steps
5
Challenge 1: MFI market research
Challenge 3: Consider alternatives
6
Challenge 2: Assess Musoni

25. Option Comparison
Short term Considerations Long-term considerations
Resolves
Cash
risks?
Immediately
Implementable
?
Fit with MBF
Strategy
2013 – 2015
Inclusive
for Rural
Clients?
Affordable
in Y1-2?
Financially
sustainable in
long term
Fit with Five
Talents Core
Competencies?
Musoni
Reduced
– some
risk on
agents
Yes Yes Yes Yes
Does not
resolve high
MBF costs
Yes
VSLAs
Reduced
– some
risk on
box
holder
Questionable No Yes Yes Yes Yes
Banking
Vans
Depends
on van
Yes Unknown Yes No Unknown Unknown
Bitcoin
Reduced
–
requires
top-up
Questionable Questionable
Questiona
ble
Questionab
le
Questionable Questionable
Musoni offers a good short and long term option only if MBF reduce cost per customer
VSLAs offer a realistic long-term solution.

26. Response to Challenges
Challenges:
1.What have other Tanzanian MFIs done/learned from Mobile Money?
1.Is Musoni a viable option?
2.Are there better alternatives to Musoni for MBF?
Mobile money is growing in use overall in Tanzanian MFIs. To avoid putting off existing
customers, any mobile solution must be fully tested and reliable on Day 1.
Yes, but:
•No guarantee of reduced costs to serve
•Option relies on rural agent coverage improving.
•MBF are a guinea pig here – must ensure it is reliable on Day 1
•Impact of organisational change on current activities
VSLAs merit consideration as a parallel, low-cost option

27. Recommendations for Five Talents
Recommendations:
•Five Talents to decide if the priority is to offset the risk, or also to encourage MBF
to become more sustainable
•If just to offset the risk – sign up with Musoni tomorrow.
•If also to make MBF more sustainable:
• Conduct detailed financial forecast of operational cost and scaling impact
of implementing Musoni
• Engage with foundations to see if they can fund the implementation or if
they have a mobile money programme MBF can be part of
• Engage with competitor Tanzanian MFIs to validate benefits and risks of
implementing mobile money in Tanzania
• If realistic to scale and become self-sustaining through Musoni, provide
capital investment for Musoni partnership with MBF

28. Thinking more broadly…
Mission Drift?
- Five Talents mission is to empower the active poor, particularly those without
access to financial services
- MBF now have 3130 clients. 45% live in Iringa/urban areas where many MFIs
operate
- 5T have invested £335k into MBF over the past 6 years (£75k in 2012)
- For their target clients, this is an investment of >£40 per person per year
- Five Talents may wish to reconsider if the partnership with MBF is the most
efficient way for to reach poor, rural people in Tanzania
Possible Alternatives
- Fund Musoni, but in exchange, agree with MBF that 5T will be reducing annual
investment from £75k p.a. to £0 p.a. over the next 5 years, and that MBF will need
to scale up and reduce costs using the Musoni solution
- Invest in the VSLA program leveraging the existing Anglican church network
- Invest in larger MFIs (e.g. Opportunity International) to reach poorer, rural clients

29. • Malcolm Harper
• Cameron Goldie-Scot (Musoni)
• Maude Massu and Sybil Chidiac (Care)
• Phyllis SantaMaria and Gabriel Flores (Microfinance without Borders)
29
With thanks to:

30. Cover Photo
•“Article from The Guardian UK: Talking Telephone Numbers”, Louder then Swahili, 2008,
http://pernille.typepad.com/louderthanswahili/2008/11/article-from-the-guardian-uk-talking-telephone-numbers.html, accessed 3/2013
Map Data
•Financial Sector Deepening Trust of Tanzania, “FSDT Financial Access Map Tanzania”, 2012, http://www.financialaccessmaptz.com/#, accesed 3/2013
•“Interactive Coverage Map, Vodacom, Tanzania”, Steetmap.co.uk, 2013,
http://gsma.streetmap.co.uk/custom/barts/gsma/TemplateNTTDocomo.srf?cu=NTTDocomo&id=553, accessed 4/2013
•Mas I. & John A., “Where’s The Cash? The Geography of Cash Points in Tanzania”, CGAP Blog, 2013, http://www.cgap.org/blog/geography-cash-points-tanzania,
accessed 3/2013
Financial and Market Data
•“Country Survey: Tanzania”, MFTransparency, 2012, http://www.mftransparency.org/wp-content/uploads/2012/05/MFT-RPT-106-EN-Country-Survey-Tanzania.pdf,
accessed 3/2013
•Kannenberger M., “Mobile Money is on an Upward Trajectory in Tanzania”, InterMedia, 2013,
http://www.intermedia.org/2013/03/28/mobile-money-is-on-an-upward-trajectory-in-tanzania/, accessed 4/2013
•“Mama Bahati Foundation - MFI Report”, Mix Market, http://www.mixmarket.org/mfi/mbf/report, accessed 3/2013
•Millinga A., “The State of Microfinance In Tanzania”, 2012, http://www.tamfi.co.tz/index.php/resources/view/the_state_of_microfinance_in_tanzania, accessed
3/2013
•“[Microfinance Client list]”, Tai Mobile Solutions, http://www.mobilemoneyconsultancy.com/#!Clients|ServicesPage-bmmaq7o0, accessed 3/2013
•“News Resources”, YOSEFO.org, http://yosefo.org/news__resources, accessed 3/2013
•Mas I. & John A., “Mobile Money Agents in Tanzania: How Busy, How Exclusive?”, CGAP Blog, 2013,
http://www.cgap.org/blog/mobile-money-agents-tanzania-how-busy-how-exclusive, accessed 3/2013
•“Backgrounder on VSLAs”, The MasterCard Foundation, http://www.mastercardfdn.org/pdfs/VSLA_Website_Brief.pdf, accessed 4/2013
•“[Vodacom M-PESA transaction charge list]”, vodacom.co.tz, http://www.vodacom.co.tz/mpesa/consumers/send_and_receive, accessed 4/2013
Internal Documents
•Mama Bahati Foundation Strategy 2013 – 2015
•Mama Bahati Foundation Financial Statements (2012)
•Musoni Proposal to MBF (2013)
30
References