Alliance for a Green Revolution in Africa (AGRA) hired MSC to provide technical assistance to its partner, SELF MF Tanzania. The institution provides wholesale loans to mass-market banks and MFIs in Tanzania. The MSC team worked with four MFIs and SACCOs to develop seasonal agriculture loan products to enable approximately 25,000 smallholder farm inputs including seeds, farm labor, and fertilizer.
The tranched loan product also provided some funds for household expenses, just before harvest time when many farmers have low-income streams. The loans are disbursed through mobile money services and therefore reach many more farmers than would have been the case through the few branches of the partner MFIs and SACCOs.
The number of farmers accessing these loans gradually increased in the first farming season in Southern Tanzania to reach 1,000 farmers. By mid-2018, three partners had disbursed loans worth USD 500,000 to smallholder farmers in Tanzania and improved farming activities in the country significantly.
MSC led an intervention on access to finance with the Central Bank of Papua New Guinea to build a microfinance sector in the country. As part of the four-year-long intervention, we facilitated setting up a risk share facility (RSF).
The RSF helps manage some of the risks associated with MSE lending to encourage partner financial institutions to expand their loan portfolios. It improves the quantum of lending to MSMEs and channels a greater number of the deposits collected into loans to businesses rather than into inter-bank deposits and government securities. We also set out procedures and provided support for rolling out the RSF facility for partner financial institutions.
Through the project, MSC’s intervention reduced the turnaround time of individual loans to MSMEs from two months to eight days, while the average loan disbursed increased by 95% to USD 5,500. As at the end of 2017, the bank had reduced its PAR 30 from 29% in 2012 to under 5%. By June of 2018, the Central Bank had given 1,765 loans to MSMEs, including 1,086 women clients, under the risk share facility.
Urwego Opportunity Bank (UOB) is a commercial microfinance bank in Rwanda. UOB contracted MSC to determine the financing needs of the MSME sector in Rwanda. MSC was engaged to conduct primary research, improve UOB’s products, and thereby increase product uptake and profitability.
MSC helped UOB conduct a detailed market segmentation, develop products for MSME finance, formulate financial projections, define loan processes and procedures, formulate a credit-scoring model, and support the pilot test and implementation of the products developed. MSC’s intervention reduced the turnaround time of individual loans to MSMEs from two months to eight days. The average loan disbursed increased to USD 5,500.
At the end of the pilot, UOB financed 550 enterprises, with a portfolio of USD 1.66 million. OUB maintained high portfolio quality, with less than 3% non-performing loans. After the pilot test, the MSC team supported the rollout of the product across all branches in a phased manner. As of September, 2017, SME loans for UOB was about 38% of the overall portfolio, with 300 SME loan clients and a portfolio of USD 8 million. The PAR 30 days reduced from 29% in 2012 to 8%.
DHL intended to complement its training program to a captive SME audience operating across Africa through the development of a training handbook. MSC developed a customized training and handbook for small and medium enterprises (SMEs) in Africa.
The training program for SMEs covered six broad areas:
- Business planning
- Accounting and finance
- Sales and marketing
- Human resources
- Logistics and trade
- Technology
IFC alongside DHL tested and reviewed the training material. The client offered the final handbook on an e-learning platform, which presents each topic in a modular form. Over 1,000 entrepreneurs in sub-Saharan Africa have used the handbook. The e-learning platform continues to be used intensively.
MSC supported the development of a comprehensive strategy to improve the performance of the individual and SME businesses managed by Kenya Women’s Microfinance Bank (KWFT). As part of the assignment, MSC supported the development of a comprehensive strategy for performance improvement.
The assistance included a complete overhaul of KWFT’s individual and SME lending methodology, along with a revision of its credit risk management approach. MSC also supported the implementation of customer relationship management and provided capacity-building of the management team and staff.
The pilot delivered a significantly better client selection, robust risk assessment and appraisal, quicker turnaround, and improved portfolio quality. MSC’s support reduced credit risk, increased operational efficiency, and helped build a highly capable lending team. At the time of writing, the project was in its pilot phase.
After the pilot, the project will enhance the outreach of KWFT to over 100,000 individual and SMEs by the end of 2019, of which over 70% would be women. It would diversify KWFT’s portfolio to an extent of 40% of the overall portfolio committed to individual and SME finance.
MSC led an intervention on access to finance with the Central Bank of Papua New Guinea to build the country’s microfinance sector. As part of the four-year-long intervention, we facilitated setting up a risk share facility (RSF). The RSF helps manage some of the risks associated with MSE lending to encourage partner financial institutions to expand their loan portfolios. It improves the quantum of lending to MSMEs and channels more of the deposits collected into loans to business rather than into inter-bank deposits and government securities. We also set out procedures and provided support for rolling out the RSF facility for PFIs.
As a result of the project, the turnaround time of individual loans to MSMEs reduced from two months to eight days, and the average loan disbursed increased by 95% to USD 5,500. As at the end of 2017, the bank had reduced its PAR 30 from 29% in 2012 to under 5%. By June 2018, 1,765 loans have been given to MSMEs under the risk share facility. Out of this, 1,086 were women clients.