After reflecting on a wonderful three weeks in Kenya, we’ve decided to blog about what’s been the highlight of our trip – the opportunity to make a major impact at a fantastic young organization preparing to enter the next stage of its development. Juhudi Kilimo is microfinance organization that makes loans to farmers specifically for agricultural products such as cows, chickens and dairy equipment. Recently, Juhudi transitioned from a non-profit to a for-profit social enterprise and the organization is looking to rapidly expand its loan staff and reach 100,000 Kenyan farmers by 2015. A major aspect of this growth will be the project IBD was tasked with taking on, the creation of a loan officer performance scheme. In other words, our IBD team has created a bonus system for Juhudi’s loan officers that incentivizes improvements in loan disbursements and loan quality.
We spent our first week in Nairobi at the head office, meeting with staff, including the eight branch office leads, and finalizing the details of the pilot incentive scheme. Without going into too much detail about the scheme, the general concept is that employees are awarded for hitting monthly disbursements targets and for achieving a low Portfolio at Risk. Although much of the work on the scheme was completed before arriving in Kenya, we made a few major decisions about the project during that first week. First, we decided that the incentive scheme would be group-based, at least for the first year. As mentioned above, Juhudi is growing rapidly and we wanted to ensure that the organization maintains its focus on teamwork during this period. Additionally, we felt that a group-based system would be easier to manage and provide a smoother transition period for the organization. Second, we decided to launch the pilot for the scheme in all eight branch offices as opposed to the original plan of only four offices. In making this decision, we felt that the risks of alienating those offices not participating in pilot outweighed the potential benefits of having a control group. Finally, we decided that Juhudi’s existing system of setting disbursement targets should be revamped for the purposes of the incentive scheme. Instead of having each individual loan officer base their targets on projections worked out with their supervisor, we decided to set a standard organizational target, which represented the upper quartile of historical loan officer performance.
For the last two weeks in Kenya, we’ve been traveling around the country, visiting all the branch offices to train Juhudi’s employees on the pilot incentive scheme. Two weeks ago, we all visited the Marang’a branch office, which is two hours east of the capital. Then Adam and Luis traveled six hours west of the capital to visit the Kisii and Nyamira offices. Allan and Jerry also traveled six hours west to visit the Kericho and Litein offices. This week, Allan and Adam traveled eight hours north to visit the Eldoret and Kitale offices. Finally, Jerry and Luis traveled four hours east to visit the Nkubu office. Presenting to the field staff was a wonderful experience. In addition to getting to see most of the country, we got to spend time with over 40 members of Juhudi’s talented and dynamic staff. Additionally, we all got to spend time with a number of Juhudi’s clients, at their farms and in their homes. For example, this week Adam and Allan shadowed a loan officer at the Kitale Branch and got to travel the countryside on boda bodas (motorcycle taxis) visiting local farmers.
Ultimately, while the creation of our project was a rewarding experience, the most satisfying aspect is that Juhudi Kilimo will actually be adopting our work. Starting today (June 1st, 2012), the organization will begin a month long simulation of the incentive scheme, where they will track bonuses and report them to staff. Next month, Juhudi will launch the actual pilot and begin tracking, and paying out, bonuses. The pilot program will last one year and the head office will survey the staff on their perceptions at the midpoint and endpoint of the program. We’ve also equipped the head office with calculators and formulas that will allow them to quantitatively monitor the efficacy of the incentive scheme. At the end of the year, the head office will decide whether to continue with the incentive scheme and with what changes. And hopefully they will be supported in this venture by another Haas IBD team!
Finally, while our work with the Juhudi was the highlight of the trip, we definitely had some exciting times outside of the office. Immediately after landing in Kenya, we had the opportunity to support the country’s law enforcement in the form of a bribe paid on our way from the airport. On the brighter side, we had an amazing time on safari at the Maasai Mara, where we saw cheetahs, elephants, giraffes, zebras and mating lions. We also fell in love with the local cuisine and consumed more than our fair share of Nyoma Choma and Ugali. On the stranger side, we visited a nature conservancy in Kitale that hosted genetically mutated animals, including a bull named Laser that had four horns and three working eyes. Tomorrow, we’ll leave Kenya and finish our adventure with a visit to Zanzibar, Tanzania!