Program
for the institutional strengthening of Micro Crédit
National S.A. for expansion to rural and underserved microfinance
markets in Haiti
Description: The project
is designed to increase the productive potential of micro and small
entrepreneurs in a sustainable manner.
The focus will be on rural areas of Haiti. The project’s objective
is to be accomplished, on the one hand, by geographic diversification
and branch expansion into rural areas, on the other hand, by introducing
innovative financial services such as seasonal loans, lines of credit,
small loans to finance equipment purchases and housing improvement
loans.
The design
of the financial products is a key element which will enhance MCN’s ability to adjust to the clients’ characteristics
and demand. In order to achieve MCN’s mission to provide
financial services to all entrepreneurs excluded from formal sector
credit
yet who are able to manage debt, the development and implementation
of new credit products will have the following components:
- Introduction of at least three new loan products;
- Technical assistance in design, development and implementation
of those new products;
- Train senior staff to implement housing loan mechanisms;
- Conduct seminars to train all staff on how to market
the new products to the target group.
USAID/ Establishment of Enterprise Bank of Angola
The goal of the program is to create a sustainable, profitable
commercial microfinance institution in Luanda, Angola. The
aim of the program
is to have a significant development impact in Angola by providing
credit and other financial services to micro, small and medium
sized businesses which are currently unable to grow due to lack
of access to finance. The objectives of the new bank are:
- Contribute to economic development in Angola by providing banking
services to businesses currently unable to access financial services
- Become the leading commercial bank for micro, small and medium
sized businesses with a target of at least 17,000 credit
clients at the end of 5 years;
- Mobilize deposits from lower and middle income individuals
reaching at least 11,500 deposit accounts;
- Achieve a sustainable return on equity of at least 15% within
5 years;
Programa
de Fortalecimiento Institucional a INTERFISA para la Expansión
de los Servicios de Microcrédito al Area Rural del Paraguay
Since 1996 Financiera Interfisa has been serving the microfinance
sector in Paraguay. In fact 30% of its total loan portfolio amounts
to the lower segment of the market. However, micro entrepreneurs
in rural areas represent only 5%, despite the fact that 5 of Interfisa’s
13 branches are located in Paraguay’s rural hinterland.
This contract was awarded
to FFI to support Financiera Interfisa in successfully providing
financial services in rural regions. The
program is co-funded by the Multilateral Investment Fund. It aims
to implement changes to Interfisa’s organizational structure
in order to sustain the expected expansion into rural areas. In addition,
new products will be developed. Appropriate lending procedures and
manuals will accompany the effort. FFI’s consultancy services
also concentrate on the implementation of a management information
system. Finally, to ensure the sustainability of a growing rural
loan portfolio in the long term a new risk management system is being
implemented.
Rural Financial markets Activity
The management of Financiera
Calpiá in El Salvador believes
that the agricultural sector will provide solid growth aspects. Currently,
rural markets suffer from a lack of product variation and the penetration
of micro finance programs is limited. Against this background, Calpiá has
decided to make rural portfolio expansion a strategic medium-term
goal. The strategy consists of two principal components:
Expansion of Branch Network:
Calpiá operates 13 branches
serving nearly all departments of the country but lacks formal presence
in some of the more remote regions. Calpiá intends to open
two branches in rural areas (Cara Sucia, San Juan Opico) in order
to increase its outreach. In 2002/2003 this growth pattern will continue
with the opening of a total of 4 branches mainly in rural areas.
Expand the range of products: In order to speed up growth and offer
better more efficient service to customers new products will be designed:
a) design of automatic and repeat loans for rural customers; b) design
of pre-agreed credit lines analyzed before the peaks according to
the requirements of a working capital line at the outset; c) development
of deposit services with branch expansion; d) examination and determination
of loan size to be made available to rural business.
New
Rural Financial Services and Innovative Cost Management Tools
in Microfinance
Institutions
in Bolivia, El Salvador, Haiti, Ecuador & Nicaragua.
For microentrepreneurs
it is a problem not only to obtain financing for their businesses,
but also for shelter and housing. Recently, financial institutions
specialized in micro lending have begun to add loans for housing improvement,
however, there is still no long-term financing available. For the
institutions themselves, new products that entail high degrees of
risk and new branches in rural areas will only be viable if the MFI's
possess an appropriate analytical tool to assess the impact of the
expansion of operations.
Therefore, the
goals of the project are threefold:
First, innovative long-term credit products will be introduced in
rural areas to finance investment projects such as housing construction
or the acquisition of fixed assets. In addition a money transfer system
for remittances will be developed. Ultimately, the third component
is the introduction of an appropriate process-oriented cost accounting
system. As microfinance institutions mature, it becomes imperative
that they acquire the tools they need to analyze the precise impact
of operations in their various lines of business on their overall
performance. The project will be launched initially in one (Bolivia)
or two countries but once there has been sufficient opportunity to
evaluate the products implemented, they will be disseminated at all
other institutions and countries that participate in the network (Ecuador,
Haiti, Nicaragua, El Salvador).
Sikaman Savings
and Loan Company in Accra, Ghana
This three-year
USAID grant to FFI was awarded with the purpose to support the technical
assistance needs of a new Savings and Loan Company in Ghana and cover
branching costs. Sikaman Savings and Loan intends to provide financial
services on a country-wide basis to clients at the lower end of the
market. It will provide credit to micro and small enterprises and
deposit services such as passbook savings and term savings to salaried
workers, private individuals and the general public. Sikaman expects
to begin lending in September of 2001. The contract covers training
of local staff, purchase and installation of IT hardware and software,
and acquisition of other equipment and fittings for the head office
and branches.
NovoBanco,
S.A.R.L. in Mozambique
This USAID grant
to FFI was awarded to fund inital technical assistance for the operation
of NovoBanco, a new commercial microfinance bank in Mozambique, where
it is the first of its kind. This assistance pays the salaries of
the management team for a 30-month period, at the conclusion of which
NovoBanco should be profitable or on the verge of profitability. Becoming
profitable quickly is important because private investors and even
equity investors with a developmental or social mandate may not want
to become involved in inherently risky deals that would otherwise
require at least five years to break even. Hence, this funding is
essential to achieving the objectives of NovoBanco and its international
and local owners and to ensuring a sustainable presence at the low
end of the market for micro and small loans and other banking services.
The contract also covers training of local staff, purchase and installation
of IT hardware and software, and acquisition of other equipment and
fittings for the head office and branches.
