In smallholder finance, big learnings start with sharing real failures

Published on

July 26, 2018

Closing the USD 150 billion smallholder finance is no easy feat – but it is possible. With 450 million smallholders worldwide, key stakeholders such as financial and digital service providers, will need to develop new solutions and scale existing ones to help close the gap.

While this directive may sound obvious, the reality is that innovation and scale come with inherent risks, often leading to failure for many bold entrepreneurs. To many, this narrative is daunting. But if we as a community believe that innovation will close the smallholder finance gap, we should be prepared for failure, and be willing to share our lessons learned with the broader sector.


Building the case for failure

Across the RAF community, data on our collective failures has historically missed the mark – and for understandable reasons. Most financial solutions in the RAF community rely on outside funding from foundations, government agencies, or civic donations. As such, publishing a case study about an organization’s failings could result in reputational damage, potentially jeopardizing future funding. But both funders and providers need to recognize that the analysis and lessons learned from a given failure are critical for propelling the industry forward. Most organizations in the RAF community are running against time in their mission to close the gap and make an impact. As a result, every scarce resource counts, making it critical for organizations to learn from past failures, iterate quickly, and ultimately address the needs of our beneficiaries.

Take the tech industry for instance. For Silicon Valley’s heavy-hitters, many early-stage tech firms had to be comfortable with the idea that the industry’s failure rate was upwards of 80%. As the industry recognized the inherent risk for failure, it became normal for industry leaders to share their lessons learned, allowing for other enterprises to learn from past mistakes, iterate quickly, and more efficiently deliver quality products to their customers.


Sharing lessons learned from the Kiva Labs portfolio

In July 2018, Kiva Labs, in partnership with the Mastercard Foundation, hosted a workshop to do just this – share lessons learned to encourage collaboration and rapid iteration. To jumpstart these conversations, leaders from three Kiva Field Partners discussed the challenges they faced in the process of scaling.

While the case studies themselves yielded some insights into overcoming specific failings, the real value of the Fail Fest was its capacity to open intra-organizational dialogue between partners. After each of the three presenters had presented their case studies, multiple members of the audience stood up to tell their own stories of failed initiatives.

We heard stories of failed asset repossession, organizations mired in costly and unsuccessful court cases with borrowers, unsuccessful attempts to develop clean energy products, and a failed product to finance livestock husbandry.

The high level of engagement during this workshop demonstrated Kiva’s capacity to act as an information hub and conversation facilitator for the RAF community. Moreover, the session served as a proof of concept that leaders in the space are eager to hear from other’s failures, and if given the right environment, many are willing to share their own stories as well.

The RAF community has an opportunity to facilitate more and better conversations around shared failures to help move the industry forward, despite discomfort. To do this, and to do this well, we believe:

  • Funders can develop a more holistic view of their partners to provide a “safe environment” for failure
  • FSPs can share BOTH successes and failures more often, tipping the sector away from solely competition and distrust toward openness and cross-learning
  • Practitioners can engage sector stakeholders early and often, promoting a collaborative problem-solving approach toward shared goals in scaling impact

We all recognize that without failure, there cannot be innovation. And without innovation, there cannot be growth. While it may not be easy, we must not only accept, but in some sense, celebrate failure.

About the Author(s)

Learning Lab Partner

Kiva Labs is a program to deepen the outreach and impact of financial services to the most underserved part of the market through the extension of Kiva’s proven low cost re-finance model to incentivize loan products with high impact potential. Kiva Labs presents a rich platform for learning and acceleration across a diverse set of alternative models aiming to address the challenges of poverty reduction against the backdrop of the known limitations of the standard microcredit model and slower macroeconomic growth in Africa. Kiva’s unique capital, diverse network, technology, and highly visible brand can help the financial inclusion sector better adapt to the challenges of the day.

Kiva's partnership with The MasterCard Foundation will enable us to deepen financial access and impact in Africa by providing crowdfunded capital, capacity building, data and research to introduce, expand, and ultimately encourage others to replicate the delivery of evidence-backed loans in underserved markets.

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