Context
A microfinance programme in rural Ukraine, run under the National Bank of Ukraine, lending to small entrepreneurs. Borrower engagement was stalling and hardly anyone understood the terms.
Diagnosis
Low engagement doesn’t always mean low interest. In the interviews it usually meant something closer to "I don’t understand what I’m agreeing to, and nobody has explained it in words I use."
The default reading of low engagement is low demand, which sends you straight to more promotion. Here, more promotion would have made things worse.
People were facing forms, jargon, social pressure in a village where everyone knows everyone, and a rational fear of a risk they didn’t understand. Push harder on someone uncertain and it reads as pressure, and pressure in lending gets you exactly the borrowers you don’t want.
The interviews flipped the problem. The barrier was comprehension, not interest, which meant unclear communication wasn’t only holding enrolment down. It was generating defaults, because somebody who doesn’t understand a repayment schedule is more likely to miss it. Clarity was a growth lever and a risk control at once, and those two usually pull against each other.
Decisions
- Started with interviews instead of campaigns: only borrowers could say what was actually in the way
- Redesigned the education materials and repayment touchpoints in plain local language, aiming at understanding rather than persuasion
- Built templates for SMS, print, and community briefings, the formats people already used
- Worked through people the community already trusted instead of broadcasting
Results
Enrolment up 28%. Defaults among new borrowers down 12%. Together that’s roughly 1.4× growth in a healthier loan book, not a bigger riskier one.
Donor reporting got clearer too.
The thing I had to resist was promoting harder. Every standard answer to low enrolment involves more outreach, and here that would have grown the programme while quietly degrading it.
Enrolment and default rate usually move against each other. Here they moved together, because both were being held back by the same thing.