Earlier this year, we partnered with Munafa - a social micro-finance company based in Sierra Leone - to provide business training, savings support, and micro-loans of roughly £80 each to twenty-five entrepreneurs based in Moa Wharf, a low-lying community in Freetown where many entrepreneurs engage in the fish trade.
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After 8 months, the project was recently concluded. Out of the twenty-five loans, ten have been paid back already, and fifteen are due to be paid back in the next few weeks. Two entrepreneurs paid back their loans early and have already received a second loan of about £160.
Overall, all entrepreneurs reported positive growth in their businesses, with one entrepreneur even increasing net income by 15%. This project is one of the most successful the village has funded to date, and much of this is due to the expertise and hard work of our partners, Munafa.
Munafa presented the impact of this project directly to Kwanda villagers. Click here to watch the presentation Munafa delivered.
Trusted organisation
Munafa Social Microfinance was incorporated in February 2019 to innovate around micro-finance and provide business and social training. Munafa predominantly works in slums but has been expanding to peri-urban and rural areas in 2021. The entrepreneurs in the communities Munafa works in, which include about 40 vulnerable communities in Freetown and the Western Area, lack access to affordable funding and training to help them make their businesses more profitable and to increase their capacity as business owners.
Recognising the reality in which these entrepreneurs operate, Munafa provides loans without the need for collateral or joint liability, meaning that if the entrepreneurs fail to repay, they will not be prosecuted, nor are they at risk of losing assets that might mean the difference between surviving and not surviving for them and their families. Munafa operates in partnership with social impact organisations to provide holistic support to the entrepreneurs, who Munafa refer to as 'partners'. Alfred Jusu, the Executive Director who leads Munafa and is one of our main contacts for this project, has been with the organisation since its inception.
Community-first approach to financial inclusion
We found Munafa via Kiva. They were one of few organisations we came across that had a good rating as a reputable, impactful organisation and had affordable interest rates (roughly 2% per month).
Our first conversation at the end of 2019 revealed Munafa's dedication to sustainable financial inclusion. They lend into groups, which typically have 20-30 partners (entrepreneurs). Funding thresholds vary based on whether it is a partner's first loan or subsequent loan and are also adjusted for inflation. The average disbursement is 1mSLL (roughly £80). Munafa's field team of 18+ meets with partners every two weeks and focuses on building long-term relationships and encouraging partners to save at least $0.50 per fortnight.
Munafa has reached well over 3,000 entrepreneurs with their training and savings support and deployed over 2,000 loans. Impressively, Munafa's entrepreneurs have also amassed almost $20,000 in savings to date, showing how small contributions, made consistently over time, can add up and be incredibly impactful. Munafa is building the ground-level infrastructure to make financial inclusion possible for these entrepreneurs. An estimated 87% of Sierra Leone's population is financially excluded. With financial education and verifiable financial history, these entrepreneurs will be empowered to participate in the wider financial system, access more financial services and continue to grow their income.
Proven approach
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Most of the entrepreneurs on this project were operating businesses in the fish trade. Saffie Koroma is one of them. She was born into a large rural family and was never sent to school as her parents could not afford it. She joined Munafa to access savings and finance so she could support her family. Through the loan and training from Munafa, Saffie was able to increase her customer base and grow her net income by 15%. She paid back her first loan early and has already received a second loan of £160.
Saffie says:
“I am grateful for Munafa Microfinance and Kwanda who have supported my business growth. I, in turn, have been able to directly support two other family members who will soon own and operate [businesses] for their livelihood and independence; this is simply growth. My quality of life has improved and the impacts are pleasing; we desire continuity of Munafa’s services for long term [business] support and impact. Tenki (thank you) Munafa and Kwanda."
Mariatu Njai is another one of the entrepreneurs who paid back her loan early and has already gotten a second round of funding. Mariatu dropped out of school, entered the fish trade at a young age, and now has over 15 years of experience. With her first loan, she was able to purchase more stock and move into selling new items. As a result, she has increased her income and has been better able to manage her household expenses and send her four school-age children to school.
Mariatu says:
“Because of Munafa and Kwanda, I smile again! I now purchase more stock for [my business] and increase my sales frequency. The business net income is supporting me and my children in terms of basic household provisions and meeting expenses related to school and health. I want to continue this path and grow my businesses, to educate my four young children to the highest peak so they can achieve better than me and attain a better life! I have been through a lot”
Sustainable long-term impact
We provided Munafa with a grant they on-lent to a group of entrepreneurs specially selected for this project, our first one focused on affordable microfinance. It has been a great opportunity for us to learn how we can best support entrepreneurs operating in uncertain, last-mile environments in an additive, non-extractive way. As part of our agreement with Munafa, they have committed to reinvesting the returned funds into these entrepreneurs - so our £2,000 invested in this project will continue to create an impact long into the future.
We hope to be able to continue to support Munafa’s work. Despite the challenges that the pandemic has posed, and despite the fact that they require no joint liability or collateral, Munafa has maintained a strong position, with less than 5% of its loans at risk. As with most of our investments, we considered the impact not only on the individual and the community but also on the organisation that serves them. Our contribution is small (roughly 1% of Munafa’s loan book), but the outcomes of this project have given us a strong indication of how we can support financial inclusion and economic stability in this community and beyond.
A big thanks to our villagers, who make this work possible.