Developing Cash Flow Based Individual Business Loans: The Experience of Equity Bank with Biashara Imara

Deciding to venture into microcredit after realizing that there was a substantial and largely unmet demand for this kind of a product, Equity Bank, a MicroSave partner, in 2003, ran an initial pilot test of its Binashara Imara (meaning stable business) product. However, the product floundered majorly due to:

• The pilot test structure;
• Product operation;
• Competing priorities and the challenges of growth.

Careful assessment and closer monitoring of the products led to a number of positive changes like better policies, procedure manuals, pricing, careful monitoring, etc. The key lessons learnt include:

• Follow a structured process;
• Conduct design research in order to minimize the cost of product redesign if needed at a later stage;
• Ensure capacity and support;
• Install an MIS that accommodates product features and also has the capability to produce reports for productivity and trend analysis;
• Develop effective and efficient product procedures with accompanying operational manuals;
• Carry out careful monitoring;
• Ensure that the scale of the test is adequate to reveal deficiencies in the products design and processes.