The Jipange KuSave Experiment in Kenya
Two trends in financial inclusion that are widely discussed today are the development of savings products designed specifically for poor clients and the ability to deliver financial products over the mobile phone. P9 is a savings product that was developed and tested in Bangladesh to meet poor people’s variable savings and credit needs. M-PESA is a mobile payments product that was launched and scaled up in Kenya to enable the mass market to move money more easily. This Brief highlights the experience of Jipange KuSave, the mobile version of P9 designed to work over the M-PESA system.
Developed by Stuart Rutherford at SafeSave in 2007, P9 is a product that responds to financial constraints faced by many poor people stemming from their lack of liquidity and the inability to save.2 In this “lend-to-save” model, clients take an interest-free loan, one-third of which is placed in a savings account. The client repays the loan at the pace she chooses, and once she repays the loan in full she becomes eligible for a larger loan under the same conditions. Her savings grows as she takes subsequent loans until eventually her savings balance covers the value of her next loan such that she is technically borrowing from her own savings. P9 offers quick liquidity to help clients deal with everyday money management needs while at the same time providing a savings mechanism. This product is part of the full suite of products and services offered by SafeSave to existing clients and can therefore be easily integrated into clients’ other accounts once their savings goals are reached.
Clients are encouraged to set a savings target with a penalty levied if money is withdrawn before the target is reached. While there is no interest on the loan, and no interest is paid on savings balances, the client pays a fee to open the account and to receive the disbursed loan. Collectors visit clients daily to collect any repayments clients wish to make. As of February 2012, a rural location where P9 has been piloted had 790 clients, who on average borrowed $300 per year over 4.3 cycles.