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 Kenya Women’s Microfinance Bank (KWFT) in developing a comprehensive strategy to enhance the performance of the individual and SME businesses managed by the bank. This intervention included a complete revision of KWFT’s lending methodology and a thorough overhaul of its credit risk management approach, intended to streamline client selection, strengthen risk assessment and appraisal processes, and boost turnaround times.
MSC played a key role in this strategic transformation by providing expert technical assistance and guidance throughout the process. The team worked closely with KWFT to redesign its lending framework and integrate a revised credit risk management system. Additionally, MSC supported the implementation of a customer relationship management system and conducted capacity-building sessions for the bank’s management team and staff. Their efforts ensured that the pilot phase delivered more robust risk assessment, increased operational efficiency, and fostered the development of a highly capable lending team.
The pilot phase significantly improved the lending process, marked by better client selection, robust risk assessment and appraisal, and quicker turnaround times. MSC’s support not only reduced credit risk and enhanced operational efficiency but also contributed to a marked improvement in portfolio quality. As a result, KWFT is set to expand its outreach to over 100,000 individual and SME clients by the end of 2019, with a diversified portfolio that dedicates 40% of its overall commitments to individual and SME finance, and with a strong emphasis on women-led businesses.
Kenya Women’s Microfinance Bank (KWFT) – Kenya, commissioned the project.
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.
IFC engaged MSC to execute a comprehensive customer segmentation study on the use of mobile financial services (MFS) by women in Bangladesh. The study covered 4,000 respondents and identified specific challenges that women face in their use of MFS, identified personas of MFS users, and provided in-depth insights on the need for more female DFS agents.
MSC developed a toolkit and collaterals for MFS providers to assist in on-boarding women MFS users and provided product concepts on the financial service needs of different women customer segments.
Bangladesh Bank has hosted both the report and the toolkit on its website under the regulations, policy, and licensing section for MFS, implicitly validating and advocating our work. The positive response from the central bank would also propagate the toolkit to onboard more women agents for the sector.
