We call it 'Riding the Gravy Train'

We’re sitting around a large wooden conference table in the back room of the Emuhaya Financial Service Association, where managers from 6 of the 7 regional FSAs have gathered for their monthly meeting. I’m seated next to Anthony, Africa Now’s programme coordinator and my boss for the next few months . He’s invited me to come along with him so that I might get a better feel for how the banks are run. Anthony’s the kind of guy who uses words like “unfruitful” and “vexing”, whose impeccable sense of style and neatness is clearly evidenced by his matching ties, and whose driving skills are politely referred to by his co-workers as “cautious”. He's a decent man, though, and I have a strong professional respect for him.

“Our position is clear,” Anthony says in his sharp, serious tone, each word enunciated with more precision than is perhaps necessary. “It is very clear. It is up to the FSAs, and the FSAs alone, to decide with whom they contract and with whom they choose to do business. If the managers decide – together, of course – that partnering with K-Rep is in their best interest, Africa Now will back that decision 100%.” The meeting thus far has been revolving around areas for expansion of the village banks; at the moment, the discussion is of the possibility of partnering with K-Rep, a major commercial bank in Kenya, for the benefit of management services. “However,” he continues, “if you examine the contract and find that their management fees of 15% - thats's 15% of income, mind you, not profit - is not to your liking at this time, then you must not be hesitant. Do not be afraid to speak your minds when dealing with these people, do not fear them!”

I search the eyes of the managers seated around the table, 3 men and 3 women, looking for a sign of their intentions. There’s not much to go by. A silent deference greets the flood of corporate jargon that makes up much of Anthony’s vocabulary. Blank stares fill the void left in the wake of his speech, a speech that might have been intended to inspire self-confidence but instead seems to have only served to intimidate. One thing’s certain: there’s now little doubt as to who in this room has the most experience when it comes to business matters.

Part of me wants to admire his willingness to talk straight business with the managers, despite their timidity. It is helpful – scratch that, essential – that they master the vernacular of the business and banking worlds; otherwise, there is little hope of competing with the large, well-established commercial banks of Kenya, banks that would be more than happy to take over the fledgling FSAs. After all, they’ve already accomplished the difficult task of creating a market for banking services in rural villages, and they’ve done so almost single-handedly. These managers have worked tirelessly over the past few years to educate and train first a banking staff, and then each of the thousands of shareholders, account holders, and borrowers who come to their banks, about the most basic principles of saving and lending, interest rates and late repayment fees, asset financing and fixed-deposit accounts. Now that the society has been exposed to these ideas and a banking culture has emerged, its not surprising that larger banks would want to enter the scene. And quite clearly, this is becoming an increasing threat to the still-vulnerable village banks that have only just begun to gain a solid footing.

To be sure, learning the hard way, school of the hard-knocks style is probably the quickest and most effective way of ensuring that a lesson sticks. Any of the orphaned, glue-sniffing street boys around Kisumu can testify to this. And better to get some tough love from Anthony before the FSAs are sent into the far-less-coddling jungle of the banking industry. Maybe I’m just too soft for the cutthroat corporate world. But something in me wants to yell out, “Stop! Slow down and explain yourself! Can’t you see they’re not retaining even half of what you’re saying?!”

At one point later in the meeting Anthony makes reference to “The Four P’s” of marketing. I have a vague recollection of what these P’s stand for, but I’m not entirely sure just which P’s he’s talking about. I have a hunch that others in the room might be somewhat less certain. When nobody stops him for clarification, I swallow my pride and risk sounding very dumb, “Anthony,” I ask hesitantly, the first time I've raised my voice during the meeting, “what exactly are the four P’s?” He tells me. The four P’s, it turns out, are used to determine the extent of any potential new market, and they include: product, price, premises (or place), and promotion. Shame creeps in as I realize those many hellish hours spent in Bronfman have proven all for naught.

But then I notice movement around the table. Looking up, I see that every last manager at the table is writing furiously on their single scrap of note-paper, making sure they don’t waste this precious morsel of wisdom. All hail the Marketing Mix! It dawns on Anthony that the managers’ silence, which he had previously been interpreting as tacit agreement, might actually be that of confusion and embarrassed fear. He looks at me and I think I can see the exact moment of revelation as it crosses his face. He pauses for a beat, then looks away and continues:

“On the issue of marketing, there’s something else we’ve been working on. I didn’t intend to bring it up here, but Africa Now is currently in the process of developing a fresh-fruit processing center in the area. The idea is to set up an industry for dried fruit production amongst local farmers, who will then process and export their products. They will be able to obtain a much higher selling price than they are currently getting.

“I’m having trouble, though, finding a site to locate this drying center,” he explains. He asks the managers to survey their customers, who are mostly small-scale farmers, regarding the production levels of bananas, papayas, mangos, and pineapples in the area. They are then to report back on potential sites for a processing center that would be centrally located for maximum accessibility. One of the managers asks about the possibility of the FSAs investing in the venture themselves. “Well to be honest, I hadn’t given that any thought at all,” admits Anthony. “But it is definitely an idea worth looking into.”

As we leave the meeting and load into the Land Rover waiting outside the bank, Anthony asks me how I think it went. I tell him I found it interesting. “I think I talked too much,” he confesses. I ask if the managers had ever brought up the possibility of investing bank funds in a project before. “No, never. That’s the first time I’ve ever heard such talk,” he replies.

I’m a bit in awe of the whole thing: being witness to an industry, especially one that is so fundamentally engrained in the Western world, as it forms itself in the limited environment of a developing country is a bit surreal. Moving from a business model that earns income on operations alone to one which seeks out external investment and financing opportunities is a fairly huge step, and I think I’ve just seen the first seed of inspiration being planted in the minds of the managers. If I were to totally embrace the spirit of unabashed nerdiness that is running rampant through this post, I might follow up on that analogy by saying that I'd like to do what I can to add some water to that seed in the hopes that it will grow. Though on second thought, some things are better left unsaid.