Muhabura Micro Finance Programme
Se og last ned
Om publikasjonen
Utført av: | Olive Kabatalya and Betty Walugere |
Bestilt av: | Stromme Foundation |
Område: | Afrika, Uganda |
Tema: | Bank- og finansnæring |
Antall sider: | 0 |
Prosjektnummer: | GLO 01/410 |
NB! Publikasjonen er KUN tilgjengelig elektronisk og kan ikke bestilles på papir
Background
Muhabura Diocese established a partnership with Strømme Foundation (SF) in 1989 for support of the Community Based Health Care (CBHC) project. The microfinance intervention was introduced in 1995 after the realization that assistance to the target group of the CBHC i.e. widows, guardians of orphans would yield better results if credit was extended to them to improve their micro businesses. Accordingly the programme received loans and grants, the latter in form of technical support and assets. With initial target group recording high default, the programme changed its target group to 'enterprising poor' in June 1999 and repayment performance improved between 1999 and 2000. A leadership crisis ensued in the diocese, with two groups one pro and the other against the elected successor of the first bishop who retired in 2001. The disagreements intensified negatively affecting including performance of the programmes supported by SF e.g. clients taking sides and being encouraged not to pay back their loan obligations. In July 2003, one of the groups moved the operations of the microfinance to another location and formed a company, which was named Muhabura Financial Services Institution (MFSI) Ltd in August 2003.
Purpose/objective
The scope of work involved evaluating the operations of the microfinance programme from inception to date and recommend a way forward, in the background of the leadership crisis in the diocese that has adversely affected the micro finance programme.
Methodology
The process included holding meetings with management of Strømme Foundation and reviewing documents pertinent to the assignment. Interviews with the Muhabura Diocese including different stakeholders: staff of the diocese, staff of the programme, clients and board members. Relevant literature at the site of operations was also studied.
Key findings
i) Management and staffing
Management was by a coordinator who supervised a sole credit officer for all the operations of the programme. The programme was understaffed right from the inception and both categories of staff lacked the competences required to manage and deliver microfinance services efficiently and effectively.
ii) Products
The programme offered loans and savings products. The loan products were delivered through solidarity groups and this was appropriate given the rural setting of the programme and the nature of clients i.e. the poor. The savings product offered was the compulsory savings which clients had to accumulate before accessing loans.
iii) Clients outreach
The programme covered 21 out of the 33 parishes of Kisoro district by the time disbursements ceased in June 2003. Client outreach totaled 1,635 out of which about 700 have outstanding loans. The programme had disbursed a cumulative total of Shs. 372.3 million. By end of the year 2003 it had an outstanding loan portfolio of Shs. 178.5 million.
iv) Operation manuals
There were no written down policies and procedures, accounting, loan tracking and human resource manuals in place and accordingly the operations lacked standardization and benchmarks to guide the staff. As a result, accounting and loan tracking records were poorly maintained.
v) Performance of loan portfolio
Performance indicators portray a very poor quality of the loan portfolio. Apart from the initial year of operation when portfolio at risk was 0%, the subsequent years saw the ratio rising to 20% before hitting 100% by November 2004.
vi) Financial Management of programme
Management demonstrated some degree of transparency in managing the funds as shown by operating four separate bank accounts (by function) and requiring at least three signatories. Some control was exhibited in cash payment processes. However, prudence in loan loss provision was not properly executed. SF extended a total of shs.242,781,391 in loans during the partnership and out of this shs.157,140,873 was still outstanding as principal and shs.20,229,474 as interest accrued.
vii) Programme Achievements/Impact
Interviews conducted with different stakeholders revealed that the programme registered positive impact on its recipients. Impact ranged from increased business income to construction of residential and commercial houses and general improvement in the standard of living.
Recommendations
The microfinance Programme with Muhabura Diocese had very good intentions and was very useful to the poor people of Kisoro district in that it had positive impact on the day-to-day lives of the borrowers. However, it experienced some challenges that led to a very poor performance. The main challenges were operating under a church environment and the leadership crisis that occurred. Several options have been suggested as a way forward for Stromme Foundation regarding the future of the microfinance programme of Muhabura Diocese. These include:
i. Overhauling of the microfinance programme but keeping it under the diocese:
ii. Getting the microfinance operations out of the diocese/church environment
iii. Negotiating with other MFIs in the area to take over the loan portfolio
iv. Pulling out of the partnership completely
Comments from the organisation
The programme continues to suffer from leadership wrangles in the Diocese. Strømme Foundation had to write off its loan in 2005. Despite instructions to the Bank to release money to Stromme Microfinance from 'Muhabura frozen bank account' bank has not followed, as a result Strømme Foundation had to go to court to get a order to the bank to release the money and the hearing is fixed for March 2007.