e-MFP is delighted to welcome Low-Income Financial Transformation – L-IFT – as one of its newest members. L-IFT is a research organisation committed to empowering communities through data. L-IFT strives to make anonymised data accessible to all as a utility service, continuously building evidence to support the work of the financial inclusion and other sectors. L-IFT’s mission is to help communities take ownership of their data, learn from this data and to train youth to be customer-centric. Its motto is “listening to the unheard”.
We at e-MFP invited L-IFT’s managing director Anne Marie van Swinderen to submit a guest blog telling the rest of the global e-MFP member base about an aspect of L-IFT’s work. In the following blog, she introduces Business Diaries (BuD) as the successor to the Small Firm Diaries, outlines the differences and future plans, and the role of the Android app and data portal FINBIT in the project.
Welcome to the e-MFP network!
Many of you will already be aware of the Small Firm Diaries, an initiative of the FAI at New York University, led by Jonathan Morduch and Tim Ogden. The Small Firm Diaries was done in partnership with L-IFT, the main research implementation partner. The goal of this study is to understand why small firms seldom grow. For the purposes of this study, "small" refers to all firms with two to twenty non-household employees. Since small firms provide employment to many, including people living below the poverty line, their growth in size would not only contribute to growing the economy, but also expand the number of people small firms employ.
The original Small Firm Diaries (SFD) studied around 130 small firms each in Ethiopia, Colombia, Nigeria, Kenya, and Indonesia. In Fiji the study is still ongoing and includes a smaller sample, 50 firms. The study tracked these firms for an entire twelve months with Field Researchers visiting each firm weekly, interviewing them, and taking copies of their records. The diaries recorded the small firms’ daily transactions for income, expenses, savings, and loans as well as hours worked (by owner and workers), salaries, and what owners paid themselves. It also tracked their assets and how much the assets were used. Besides the diaries, the study included some 25 surveys to better understand the firms and their owners with modules on record keeping, firm history, financial services, employee management, and aspirations & strategy. The study shows in great detail the dynamics of a small firm over a period of a year. This gives uniquely detailed and sophisticated data that can show like no other study how complex the financial and business management of a small firm is.
The FAI team is analysing the data and sharing important findings from the study across the different countries. To read about the learnings visit the Small Firm Diaries website.
L-IFT is now setting up BuD: Business Diaries, which is the successor to the Small Firm Diaries. The BuD will be more action oriented, and not purely a study. The BuD will be a combination of learning, designing, testing, and improving and the participants themselves will be stakeholders that benefit from the process. During the BuD we will have lively and continuous communications with multiple organisations who need the data: financial inclusion actors (banks, MFIs, government agencies, international NGOs) and business development organisations (incubators, government departments in charge of SME development, etc). These partner organisations can be involved from the start if they like. They can receive the data on a continuous basis, with results accessible for them soon after collecting each round, allowing them to start reflecting on what story the data is telling. As the learning progresses, they can explore further and add surveys or individual questions and potentially get into a dialogue with (groups of) respondents. From the start partners will be invited to contribute questions or hypotheses to the BuD. For instance, to find out whether available training for businesses address their needs, and if the trained businesses implement what they learned. We also expect to explore the dynamics of employees and workers. Why do firms have trouble finding and keeping staff while there is such high unemployment? What skills do they need for recruitment and employee management? We also want to dive deep into the new digital options, particularly marketing via social media. How effective is this and could all businesses learn to use social media for sales? We also have great interest to learn more about collaborations between businesses and how useful business associations can be?
Secondly, L-IFT proposes that the BuD also serves the participating small- and micro-businesses. They benefit from the diaries process, the resulting data, the analysis, and, ultimately, the BuD data may contribute to them accessing finance. In other studies, we have learned that diaries participants appreciate the time spent on diaries and that the intense repeated interviews help them get a better grip on their financial lives. Through the data analysis the project offers, the participating businesses learn more about the specifics of their own financial and business situation and the analysis helps them make informed decisions and focus more on those parts of their business that are more lucrative.
The BuD will actively support the businesses to benefit from the data they report themselves. The BuD participants can access their financial history in FINBIT and use that information to convince a financial service provider to offer a loan or other financial services.
The BuD can also be used for collecting ideas for improving businesses. Each BuD participant will be able to make suggestions for small interventions that they expect could strengthen their businesses. The study can then roll out some of these ideas, and the diaries data collection can measure the success of the experiment. The study will work with the BuD participants using a participatory process to gradually identify and design the intervention pilots. After designing the pilots, they can be rolled out with a sub-group of BuD participants to track in detail the changes (if any) that emerge in the pilot participants as compared to BuD participants who are not in the pilot.
Finally, the BuD can include many participants making it possible to study more detailed segments, such as rural and agri-processing businesses per region, more women-owned businesses, and more youth-owned businesses.
While it would be important that some proportion of the small- and micro-businesses in each country would be interviewed weekly by a trained field-researcher, we could have contingents of additional BuD participants who report their data themselves, with the help of a coach and some distance support. This approach will help reduce the cost per participant and expand the potential benefit of the study to hundreds of businesses.
We are having conversations with many stakeholders from a number of countries. We hear what potential partners want to learn about these businesses, what experiments they want to run, and which interventions they want to test.
If you want to be involved in this conversation, please get in touch with aswinderen@l-ift.com
You can also attend a video-conference in which we present you more about BuD and how you may be able to get involved in Business Diaries. To receive information about the video-conference, reach out to Adonay Kebedom on adonayn@l-ift.com .
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