• Purpose

JUMO’s Theory of Change: a framework for impact

21 November 2023

We all know that change is constant, or that the only constant is change. But do you know what the Theory of Change is? It’s about driving change for a particular positive outcome based on certain assumptions, and it is well-known and documented in the social impact community.

JUMO’s Head of ESG, Jade Potgieter, explains how we promote good outcomes through our work at JUMO, and what our customised Theory of Change is. 

‘The general explanation for a Theory of Change (ToC) is a systematic and comprehensive framework used by organisations to plan, execute, and evaluate the potential impact of a particular initiative, program, or project. It outlines underlying assumptions and pathways through which activities and interventions are expected to lead to specific, desired outcomes or impacts. 

‘Developing a theory of change works backwards. You start with the systemic impact you would like to have, then work backwards to likely outcomes, outputs and the inputs needed to achieve the impact. Working in this way means you need to work through the layers to understand the connections between activities, the results of the activities, and the long-term goals. While it can feel counterintuitive to work backwards, it is similar to creating project timelines, which I’ve had a lot of experience with. You start with the targeted end date and then work backwards with your activities. The result of this way of thinking about the impact you want to achieve, is that you can be intentional and more effective in your decision-making processes. 

‘At JUMO, we view access to financial services and specifically credit, as a gateway to financial inclusion and growth. Using a ToC, we are able to articulate and quantify our assumptions of the systemic impact we have on the communities we serve. 

‘We believe that if people with low incomes and low access to financial services in emerging markets can receive access to competitive and useful digital credit and savings products, their household resilience will improve, which in turn will allow them to build micro and small businesses, and improve their personal and community resilience. I have seen this first-hand in the markets we serve from engaging with customers and hearing their many inspiring stories.

‘As part of developing JUMO’s 2022 impact report, the Theory of Change was created and we defined our inputs. We agreed that using AI and machine learning to process large amounts of behavioural data for credit decisioning and asset management, in conjunction with the right distribution and capital partners aligned with our mission, leads to 3 main outcomes.

1. Information creates efficiency


Information efficiencies allow us to judge customers’ risk profile personally and individually instead of as part of a segment. 

Large data sets allow us to respond to customers’ needs quickly, with the result being that we are moving towards a segment of one. Put another way, we have the opportunity to offer personalised products for each customer rather than having to rely on generalisation and segmentation. Working with advanced AI segmentation allows JUMO to individualise credit scoring models to include historically marginalised groups. This has resulted in a 24% increase in serving the youth, and a 31% increase in female customers being included into the financial system.

2. Customisation adds value

We customise offers and value propositions so that customers can use their credit for immediate household or business needs.

Our realtime lending models take customers’ point-in-time needs and behaviour into account. This has enabled JUMO to more than double the number of customers that qualify for a loan, while significantly reducing the product price for these individuals.

3. Progression promotes choice

Reinforcement of positive financial behaviour through JUMO’s progressive loan journey and in-loan financial education, leads to even more choices for customers. 

For many customers, a JUMO loan is their first formal credit, and therefore JUMO is an entry point for helping them to start building credit profiles. This enables access to more traditional financial products, which further increases financial inclusion. About 80% of JUMO’s customers have no credit history so access to a JUMO loan helps build credit scores based on their transactional data.

The outcomes of these inputs and outputs have been proven to build an understanding of financial services among customers, resulting in good risk adjusted returns for capital providers. This leads to increased capital commitment which allows JUMO to increase eligibility, and reduce the price for customers. The sustainable, risk-adjusted return attracts additional capital providers, which means we can drop the price further, increase eligibility even more and offer products that add value to customers, resulting in a virtuous cycle.

Advancing financial inclusion means continually dropping the price for customers. In 2022, we reduced the year-on-year price by 7.6%.

In my opinion, the interesting part of any ToC is the impact. JUMO’s impact is what attracted me to the company, and as the Head of ESG I love it when we are able to create a visual representation of the important work each JUMOnaut does to drive real positive impact to advance financial inclusion. These are the outcomes of JUMO’s ToC:

1) Customers become increasingly financially resilient to short-term financial shocks, and households experience an improved ability to budget and save. This leads to more productive use of capital such as investing in education. In a geography where, according to the 2021 global Findex report, routine healthcare costs, medical emergencies and the cost of education are reported to be the biggest worries for more than 50% of the adult population, access to affordable, consistent and reliable credit is a lifeline. 

2) Customers progress to greater financial choices and product utility increases. They are able to use loans more frequently for business purposes, and MSMEs become more resilient. 65% of JUMO’s customers are MSMEs in the informal sector, and more than half of these employ at least one other person. 

3) Finally, local economies experience growth in economic activities and job creation. Stimulation of economic activity is evident in the mobile wallet transactions data. In the ecosystems we are part of, once a customer progresses past their 6th loan, we see an increase of mobile money transactions of up to 56%  in the 90 days following their loan use.

Part of the power of using a theory of change for achieving meaningful impact is that you can use the roadmap the ToC creates to make informed decisions. The assumptions that underpin a ToC mean that enhanced transparency and accountability result in the right resource allocation, design, and strategy with a way of checking in against your assumptions to make sure you are moving in the right direction. 

At JUMO, using data from customer surveys, we have been able to work through our own ToC assumptions of what drives systemic change for financial prosperity for our customers and ecosystems.

We have proven that:

  • Information technology advances have removed barriers to sustainably serving 100% of the adult population. 
  • Lower prices in the hands of the customer results in greater sustainability for borrowers and lenders
  • Customers progress from using loans for immediate household needs, to business investment
  • Business investment increases economic participation and fuels growth in the markets we serve
  • Improved customer resilience results in greater ability for banks to serve customers within sustainable risk parameters
  • Customers having access to the best banking brands increases self worth and positive behaviour. 

Despite the impact of the work we have done, we are not stopping here. We are now working on proving that improved financial resilience results in greater investment in education and that business investment will result in more resilient and profitable MSMEs. The ability to invest in education and their businesses is important, not only for our customers, but also to drive economic growth and positive social change. 

Research continues to show that when low income people have better opportunities to manage their money, their income and resilience slowly improves. And according to our own data, 80% of JUMO customers say access to a loan has improved their quality of life which further supports our theory of change. 

Despite this, globally there are still 1.4 billion people with no access to financial services so there is still much work to do to drive financial inclusion, but it is heartening to be able to track, and share the real positive impact of the work we do at JUMO.

See our stories of impact.

Connect with Jade on Linkedin.