MICROCAPITAL STORY: Mifos, a Freely Available Open-source Management Information System for Microfinance Institutions

The New York Times recently published an article highlighting the Mifos Initiative; a microfinance-focused open-source software development community that is addressing the growing information management needs of microfinance institutions (MFIs) by engineering and distributing a freely available management information system (MIS). Their product, called Mifos, provides functionality that helps MFIs run efficiently and achieve scale in respect to data collection and management. MicroCapital first covered the Mifos framework in July 2005 while it was being developed in conjunction with a pilot credit bureau project in Morocco.

The Mifos Initiative was launched in 2006 by the Grameen Foundation‘s Grameen Technology Center. The Grameen Foundation is a global non-profit organization founded in 1997 by Alex Counts that promotes the philosophies of Dr. Muhammad Yunus and the Grameen Bank‘s microfinance model through a global network of partners and MFIs. The Grameen Foundation provides ongoing support of the Mifos Initiative by providing guidance as well as investment. The Mifos Initiative is lead by George Conard. Mr. Conard recently spent nine months in Rwanda launching the Grameen Foundation Village Phone program (reported on by MicroCapital in September 2007). Prior to joining the Grameen Foundation, Mr. Conard spent seven years at Microsoft in a variety of roles including international marketing, open source competitive analysis, and most recently program management. The Mifos Initiative and Mr. Conard are not alone. Last month IBM, a global computer technology and consulting corporation with revenue over USD 90 billion, announced it would partner with the Grameen Foundation and the Mifos Initiative to help with the development of the open-source platform. According to the New York Times article, IBM has committed 10 software engineers to the program. IBM’s support is both philanthropic and strategic in nature. IBM wants to help ensure the Mifos technology is free, accessible and reliable but also hopes some MFIs using the software will grow into full-fledged banks and become IBM clients.

In November 2006, MicroCapital reported on the announcement of the Mifos Initiative at the Global Microcredit Summit and provided basic detail on the product’s roadmap, expected features and potential. As far as today’s current features, Mifos supports the creation and management of clients, groups, and lending centers. It also has complete support for loan/savings products and accounts. Through Mifos, an MFI can also define up to five levels of offices from branch office to regional office to sub-area to area to head office as well as manage system users and permissions. Mifos supports financial and accounting transactions, audit trails, bulk and batch processing functions, searching, and a reporting module. Mifos is a web-based application that uses a standard Internet browser, so no software needs to be installed on a user’s machine. Web-based applications simplify deployment. However, MFIs working in regions with limited or unreliable Internet access may find this feature a disadvantage.

Mifos is open-source software, meaning anyone can download its source code. An MFI can freely install and customize Mifos without paying a licensing fee. However, Mifos installation and maintenance requires a certain degree of technical expertise. MFIs should plan on costs to install, train users, and maintain the software. Open-source software, just like licensed software, requires up-keep. So, although the software is free, maintenance costs may be similar to that of licensed alternatives. MFIs wishing to customize or re-program the software to meet their business needs should also plan on costs for software engineers. In addition, there are server hardware and connectivity costs to run the software.

Mifos is currently in-use at five MFIs. Its largest user is Grameen Koota, an MFI in India with 121,359 clients, 44 branches, and a staff of over 400. For a Mifos product demo, please visit http://www.mifos.org/product/demo-the-software/demo.

Additional Resources:

MicroCapital article, September 7, 2007: “MICROCAPITAL STORY: Grameen Foundation partners with local Microfinance Institutions in Rwanda to Relaunch Village Phone Initiative”

MicroCapital article, November 14, 2006: “Tunisian Techies Take Note: Open Source Meets Microfinance with Grameen Foundation’s Mifos Initiative”

MicroCapital article, July 21, 2005: “New Open-Source Credit Bureau Application Introduced in Morocco”

Mifos Initiative: http://www.mifos.org/

New York Times: http://www.nytimes.com/2007/11/12/giving/12micro.html

Grameen Foundation: http://www.grameenfoundation.org/

Grameen Koota: http://www.grameenkoota.org/