Project Everest

Experiment Results

[Experiment Result]: Microfinance II Malawi - Currency Test to Village Banks - July 2019

Experiment Design Post: https://projecteverest.crowdicity.com/post/2052790

Lean Phase: Solution

Assumption: Village banks are willing to share their accounting information and customer data with PEV, in exchange for a low interest loan to be used as increased capital for the village bank, therefore allowing them access to larger loans and more frequent loans for their customers.

The end goal for this currency test would be to get village banks to use a digital tracking system on Google Pixel mobile phones to enter accounting data and records, that we could use to track payments from Australia from July-December.

Results: In conducting this experiment, the Microfinance II Team altered our assumption. The assumption was changed to focus on the first aspect only, which is as follows: 

  • Village banks are willing to share their accounting information and customer data with PEV, in exchange for a low interest loan to be used as increased capital for the village bank, therefore allowing them access to larger loans and more frequent loans for their customers.

The Microfinance II Team decided that the second aspect of our assumption (regarding the digital tracking system) would be best suited to form part of the contractual agreement with village banks once a loan was offered.

With regard to this updated assumption, we successfully received the accounting books and customer information of 5 village banks - Titukalane 2, Tithandizani, Mtendere, Chisomo 1 and Tikondane. 

Validated Learning: Our results match our success point, as 5 village banks were willing to share their accounting and customer information in exchange for the potential to receive a low interest loan from PEV. The 5 village banks allowed the Microfinance II Team to borrow their accounting books for the first banking cycle of 2019. From this, our team analysed the information and inputted the data into our financial valuation model (which we had previously designed on Excel). This enabled us to quantify if the information we had previously received from individual village banks was accurate, particularly with regard to interest rate, level of capital and the size of loans to members.

Further, analysing the accounting procedures enabled us to determine if individual village banks were suitable to be offered a loan contract from PEV. This judgment was largely based on the accuracy and quality of the accounting books. Some of the books we analysed had fundamental operational errors in the accounting procedures, which led us to the assumption that some village banks may struggle to correctly use the digital accounting methods required from July to December. Our judgment was also based on the level of capital each village bank held in share deposits, as based on the accounting books we received. We determined that village banks with lower shares posed a greater risk as it was less likely that the village bank would meet loan repayment requirements on time.

Next Move: The next step is to offer loans to 3 village banks. The Microfinance II Team will determine which villages banks are most suitable to invest in, as based on our extensive profiling criteria and analysis of accounting procedures. A loan contract will be written and this will outline the principal amount, interest, Google Pixel procedures, and contractual conditions. This contract will be signed by both PEV (the lender) and the chairperson, secretary and treasurer of the individual village bank (the borrower). Following this, the loan amount will be transferred using Airtel money and the borrower will be required to make repayments using Airtel money. Additionally, the borrower must submit their accounting information weekly using Google Sheets by leasing a Google Pixel smartphone from PEV.

edited on 25th July 2019, 06:07 by Courtney Dudgeon

Grace Blackford 6 months ago

Status label added: Experiment Results

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