By George Nhepera-

Facilitator/Coordinator
gnhepera@zamfi.org/
gnhepera@gmail.com

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 OUTLINE OF SESSION ONE

• Thought Provoking Insights and Ideas on MFIs

• What is our the main goal of organization as
an MFIs
• What is Sustainability in Microfinance sector
• Empirical Evidence on Global & Local Statistics
on MFIs Sustainability

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 Thought Provoking Insights and
Ideas
 In many countries MFIs business is more of the same
thing/same products/same way and nothing new and
creative.
 In Nigeria there are 980 deposit taking MFIs but all
doing more of the same.
 Instead of being creative MFIs are busy “copying” and
“pasting” each other.
 Either you look, copy and paste or you look, copy
and paste special or you look and not copy and
paste but learn and then adopt
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 What is our Your “ WIGS” & “
PIGS”
 In the past, the world used to talk about GOALs but Today
the new thinking is to classify GOALs into two classes – “
WIGS and PIGS”
 “WIGS” refers to “ Wildly(passionately ) Important Goals.
 “ PIGS “ refers to “ Pretty(nice and good) Important Goals
 “PIGS” are an enemy of WIGS –All over the map
 Right Focus should be on : WIGS
 What is Apple “ wigs” ( the largest company in the
world)

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 Apple Wigs – Widly( passionately Important
Goals) Quotes from Steve Jobs
1. “ Our goal is to make the best personal computers in
the world and make products we are proud to sell
and would recommend to our family and friends
2. We want to do that at the lowest price we can
3. We just cannot not ship junk(products) …….. Because
of Who We Are

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 GROUP DISCUSSION-1
 In groups or pairs do the following ( 10 mins) :
1. Identify the “ WIGS” of your organization/
microfinance you are currently working for
2. Share/Present

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 ZAMFI “WIGS”

Assist in the creation of

sustainable
Microfinance Institution
in Zimbabwe
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 What is Sustainability of MFI
 It has been argued by most researchers that :
1. “Unsustainable MFIs might help the poor now, but
they will not help the poor in the future because the
MFIs will be gone”(Schreiner,2000)
2. Others have added to say “it may even be better not to
have MFIs than have unsustainable
ones”(Ganka,2010)
 While the above two statements may appear offensive to
some, however there are indicative of how indispensable
the issue of sustainability of MFIs is to all who cares about
microfinance performance all over the world.
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 What is Sustainability
 Sustainability is the cornerstone and bedrock of sound
microfinance business in any part of the world, be it
developed or developing country; western or eastern
country.
 The first step in unpacking this issue of sustainability
of MFIs is to understand its definition which is
acceptable to stakeholders in microfinance i.e.
academics, researchers, regulators, microfinance
practitioners and associations

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 Two prominent Definitions
1. According to Thapa(1992) sustainability, especially as
it relates to financial sustainability of microfinance
institutions is referred to as the ability by an MFIs
to cover all its costs from its own generated
income without depending on external support
or subsidy.
2. Dunford (2003) simply defines it as the ability to
keep on going towards microfinance objective
without continued donor support.

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 Empirical Evidence on Sustainability – Global &
Locally

 Reports from international organizations such

as CGAP and IMF have reported a huge problem of
financial sustainability in MFIs worldwide
involved in credit provision to the poor
 According to CGAP report of 2005, only about 5% of
MFIs worldwide are financially sustainable while IMF
in their own report during the same year puts the
figure at only 1%

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 Evidence Locally
 Locally as a sector, at least according to our figures for
credit only MFIs, our Operational Self Sufficiency for
the past two quarters was : 117% [March 2019] & 114%
[June 2019]. The international benchmark is 120%
 We can therefore conclude that in our current
economic environment, many MFIs are facing the
challenge of being sustainable.
 This is primarily due to rising operational cost and
reduction in operating revenue.

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 What can be done to improve on Sustainability

CLASS
DISCUSSION

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 Three main Ways to Improve
1. A stable macroeconomic environment particularly with respect to
stable inflation, stable exchange rate and stable and low
interest rates are a prerequisite for the growth and sustainability of
microfinance sector. The evidence of 2006-9 negative impact on
microfinance confirmed this position.
2. When MFIs embrace technology, it often leads to reduced
transaction costs as well as massive improvements on efficiency and
productivity Flexibility in determining interests is an important
factor for a sustainable microfinance sector.
3. Many MFIs the world over are of the opinion that interest rates
should be determined by market forces and government should
not intervene by way of regulations

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 Break for Tea

Break For TEA 15

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 OUTLINE OF SESSION 2
What is Performance Monitoring

CGAP “FIVE” CORE

MONITORING AREAS FOR MFIS.

Stakeholders Interested in PM

Benefits of PM to MFIs

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 What is Performance
Monitoring?
 Performance Monitoring is the collection and
analysis of MFI financial data to determine operational
efficiency in a number of key areas.
 The analysis of financial data is what is commonly
referred to as “ Financial Analysis”
 According to the Consultative Group to Assist the Poor
(CGAP, 2007:1) guidelines, there are five ( 5) key areas
that should be monitored and these are :

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 CGAP “FIVE” CORE MONITORING AREAS
FOR MFIS
Key Monitoring Area Comment
Outreach How many clients are being served?

Client poverty level How poor are the clients being served?
Collection performance How effective is the microfinance institution in
collecting its loans?

Financial sustainability Is the microfinance institution profitable enough

to maintain and expand its services without
continued support from subsidized donor funds?
Efficiency How well does the microfinance institution
control its administrative costs?

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 Short Exercise by participants-2
( 10 minutes)
 Participants to discuss in groups
1. Identify 5( five) key stakeholders that your think are
interested in performance of your microfinance
institution
2. What could be their key area of focus or interest.
 Share with us

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 Stakeholders Interested in PM
Stakeholder Focus of Interest
Borrower Repeated use of microfinance products to gain
benefits from microcredit loans
Donors Increased Outreach of Financial Services to the poor
achieved from donations given
Investors High profitability from the investors’
investment
Regulators Financial Stability of the sector and Consumer Protection
Microfinance Financial Sustainability of MFIs
Association
Staff Financial self-sufficiency of the MFI to guarantee job security

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 Benefits of PM to MFIs
1. Allows MFIs to identify institutional weaknesses and
then provide solutions
2. Service builds transparency
3. Attract donor funds and investors to the MFIs/Sector
4. Build the reputation and credibility of MFI/sector
5. Contribute to development of performance standards
within the MFIs
6. Legitimize the sector/MFI in the eyes of government,
investors, members of public.

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 Benefits of PM to MFIs
 Due to the above benefits , most MFIs have a
Microfinance Financial Analyst or the function is
delegated to someone within the MFI to execute the
following duties:

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 Work of Microfinance Financial Analyst
1. Collect the financial data from departments within
MFI.
2. Assess the quality of this information
3. Analyze the data into individualized analytical
reports
4. Disseminates the reports to all Stakeholders within
the MFI eg senior managers, board members

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 END OF SESSION 2

 Take a five minute break/ have an energizer

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