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Session 3 assmt building blocks mf 2011 05-23
1. Building Blocks of MFI 18/05/11 Practical Microfinance Session 3/7: MF Building Blocks Practical Microfinance Course, Session 3 Microfinance Assignment Sadrudin Akbarali, FCA
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4. THINK of the Country/Region 18/05/11 Practical Microfinance Session 3/7: MF Building Blocks
5. 1. Environment Scanning Research 18/05/11 Practical Microfinance Session 3/7: MF Building Blocks
6. Before preparing your proposal 18/05/11 Practical Microfinance Session 3/7: MF Building Blocks List 7 KEY information points List at least 5 sources of information 1. 1. 2. 2. 3. 3. 4. 4. 5. 5. 6. 7.
----- Meeting Notes (10/11/2010 18:56) ----- Revision of features of MF: financial services for the poor, sustainable, targeting towards poor, poor are highly bankable, poor have ideas and if given the chance will get ahead
Two of you to Research ‘ SOMEWHERE ’ and Submit Preliminary Findings & Suggestions. Budget $10K one month
----- Meeting Notes (10/11/2010 20:27) ----- Make this a workbook sheet for Session 2 Answers: geography, map, cultural background, laws, esp financial and commercial ones; political situation; existing MFIs in region; which MFI could share about their experience; is there a MF association?; other types of finance available and interest rates (do it when you are there); infrastructure; types of businesses and issues they face; any SMEs, large corporates; any insurance
From your Preliminary Research (1) Credit Company (2) Re State Mission
----- Meeting Notes (10/11/2010 20:27) ----- Quantatative and qualitative surveys
----- Meeting Notes (10/11/2010 20:27) ----- Assumptions to make about interest rates: what are others charging? Scientific way of working out interest rates: Y1, Y2, etc. Simple and complicated approaches. Aim to be sustainable and permanent, therefore have to cover costs. Why do MFIs charge flat rate of interest? Easy for clients to understand. How are you able to encourage clients to repay promptly? Increase loan when they come back 2nd time. Huge demand for loans from unbanked. Social mobilisation sometimes contracted out to other NGOs. Even if they are poor, every household has money to spend.
----- Meeting Notes (10/11/2010 20:27) ----- Average balance $50, $20 interest, therefore 40% per annum interest, not 20%. Most MFIs charge a flat rate of interest. Loan portfolio. Pose a Q: when starting a MFI compared to a regular retail shop, eg mobile phone shop. You have stock, sell the phones each day, make a profit, then take expenses out. What is your picture of your MFI? Your stock is your loan portfolio.
What is the PROJECTED LOAN PORTFOLIO? ----- Meeting Notes (10/11/2010 20:27) ----- Biggest stock in shop is your loan portfolio. Loan officers: biggest diff b/w CB (clients go to the bank), MF (you go to the clients). What assumptions do you make about your portfolio? What strategy do you use for capturing the clients?
What is Effective Service Charge. By Year 5, it earns? ----- Meeting Notes (10/11/2010 20:27) ----- Initial fee charged by MFI upfront. Arrangement fee plus interest can be high amt. Don't get alarmed b/c clients have been paying high amt to money lenders. What will Y1 look like? Have to employ 4-6 loan officers at once.