Matching Grant Program EVALUATION July 2001 Prepared for USAID, PVC Division Contract: FA0:OO-98-00080-00 Prepared by Larry Hendricks and Mennonite Economic Development Associates -. .International Economic Development 155 Frobisher Drive, Suite \--lo6 Waterloo, ON N2V 2E1 Canada Table of Contents Executive Summary ....................................................................................... 1 .............................................................................. 3 - 2 . Proaram Backaround ................................................................................. 3 History ................................................... ; ............................................ 3 2.1 . 1 Current implementation Status .................................................... 3 2.1.2 Partners ....................................................................................... 3 2.1.3 Proqram Goal and Purpose ......................................................... 4 2.2 Availabilitv of Data .............................................................................. 5 2.2.1 Annual Re~orts ......................................................................... 5 . 2.2.2 Prior Evaluation ........................................................................... 5 2.2.3 PVO Monitoring and Evaluation System Data ............................. 6 2.2.4 Other Sources ............................................................................. 6 2.3 Purpose of the Evaluation ................................................................... 6 - 3 . Evaluation ................................................................................................. 7 3.1 Proaram Implementation .................................................................... 7 3.1.1 MEDAHeadquarters ................................................................... 7 3.1.2 Kulane Ka Ntwananu (Growth throuah UnityJ ............................ 17 3.1.3 Haiti Rural Business Development Program-Community Banks26 3 .I . 4 Lessons Learned and Recommendations ................................. 37 - 3.2 Proaram Manaaement ...................................................................... 41 3.2.1 Oraanization's Manaaement Ca~acity ........................... ; ........... 41 3.2.2 Lessons Learned and Recommendations ................................. 44 4 . Evaluation Methodology ......... : .................................................................... 47 Annex 1 Annex 2 Annex 3 Scope of Work Schedule of Activities and People Met Informal Market Survey MFA MEDA PVC Matching Grant Evaluation July 2001 page i Acronyms AIS BDS CAS CB CGAP ClDA DIP MEDA MG MI1 MIS PAR PVC PVO SEEP TA TRU Accounting Information System Business Development Services Client Account System Community Bank Consultative Group to Assist the Poorest Canadian International Development Agency Detailed Implementation Plan Mennonite Economic Development Associates Matching Grant MEDA Investments Inc. Management Information System Portfolio at Risk Private and Vofuntary Cooperation Private Voluntary Organization Smail Enterprise Education and Promotion Network Technical Assistance Technical Resource Unit EVA MEDA PVC Matching Grant Evaluation July 2001 page ii Executive Summary MEDA1s first Matching Grant from USAID's Bureau of Humanitarian Response1 Private and Voluntary Cooperation Division operated from October 1998 to September 30, 2001. The project was designed to build capacity in MEDA headquarfers and in two of its microfinance programs in Mozambique and Haiti. Objectives largely have been achieved. MEDA headquarters' plans for building capacity included components to increase MEDA's ability to provide financial resources to its local partners, to refine methodologies and transfer proven techniques to its programs through technical assistance, and to develop and deliver training modules. These plans were achieved almost completely, a remarkable feat in a rapidly changing environmenf. The Sarona Global Investment Fund has tested and revised its structure to deal more effectively with investors but does not expect to be sustainable until 2002. Through its technical assistance and training, MEDA has developed and delivered the planned tools, although the community banking methodology remains in Creole. In terms of its own sustainability, MEDA has achieved a 114% increase in its fundraising but has not reduced its dependence on donor funding to the desired extent. However, it has achieved a financial surplus each year. At an industry level, MEDA continues to be an active and reputable participant, and its consulting arm makes its newly developed tools available through training opportunities. MEDA's Mozambique partner is MEDA Mozambique, a registered foreign NGO. This program received capital for its microfinance program in a loan from the Sarona Global Investment Fund. The program uses solidarity group and individual lending methodologies. Initial, unanticipated staffing problems included minor frauds and lack of capacity. However, the program now is poised to scale up, with a solid staff and improved methods and procedures. Although it will need additional staff, it is moving toward self-sufficiency with a detailed business plan. Currently, rapid devaluation of the local currency and erosion of its capital fund hamper the program. Without workable short- and long-term'action plans, the fund will erode to the point where the program will be unable to pay the annual interest on its capital fund loan to Sarona in hard currency. MEDA has proposed continued support for MEDA Mozambique in its followup matching grant proposal. MEDA's Haiti partner is MEDA Haiti, a registered Haitian NGO. In the PVC Matching Grant area, MEDA Haiti successfufly operates a rnicrofinance program using community-banking methodology adapted to the rural Haitian context. The operation that PVC finances is one of three community banking programs MEDA Haiti manages, and has been combined with literacy training. Short-term plans involve a steep growth curve, developing community bank numbers and consolidating the three community bank programs into a for-profit, sustainable subsidiary. Longer-term plans include merging the subsidiary with other like-minded rural community bank operations. The stafland management now have the capacity to fulfll the long-ferm objectives. Until the project achieves sustainability or finds other financing, MEDA will continue to finance the community banks' operation in the project area. In addition to the small amount of money obtained through Sarona for loan capital, MEDA Haiti maintains a line of credit and a fund transfer arrangement with Fonkoze, its literacy partner. The unique nature of MEDA's community bank methodology has caused problems in finding an MIS program adequate to handle periodic balloon payments of principal while accepting monthly interest payments. This probfem will be remedied within the next 12 months. MEDA Matching Grant Program PVC Division, USAID Contract Number: FAO-00-98-00080-00 I Program Identification Mennonite Economic Development Associates (MEDA) a. Contract Number: FAO-00-98-00080-00 b, Term: October 1, I998 - September 30,ZOOI c. Date of Evaluation: June/July 2001 d. Country Programs: Mozambique, Haiti 2. Program Background 2.1 History MEDA has been involved in developing rural and urban credit, training and marketing facilities for nearly two decades. This is the first project that MEDA has had with the PVC Division, USAID. MEDA was organized in 1953 by a small group of Mennonite business people who were interested in encouraging development of business enterprises in less-developed areas of the world. Today, MEDA is an organization of 3,000 Christian business people, mostly from North America. MEDA began by investing in development-oriented businesses through a venture capital fund. MEDA's first microcredit programs opened in Haiti in 1985. Since then, MEDA has replicated its microcredit programs in Jamaica (1987), Bolivia (1988), Nicaragua (1990), Tanzania (1 994), Russia (1 995), Zimbabwe (I 995), Mozambique (1 996), and Romania (I 997). The key to successfully replicating these programshas been their systematic packaging. MEDA offers training courses in microenterprise credit management to other development agencies, and regularly offers consulting services in business-oriented development to major donors and other PVOs. MEDA is a member of the SEEP (Small Enterprise Education and Promotion) Network. 2.7 Current Implemenfafion Stafus The project will be completed on September 30, 2001, and a followup proposal has been submitted to USAID. This proposal includes continued support for capacity building at MEDA headquarters and for its MEDA Mozambique partner. During the evaluation, the organization received confirmation that the majority of the proposal had been accepted. 2.1.2 Partners As part of this PVC project, MEDA is working with two partners. In Mozambique, the partner is MEDA Mozambique, a new PVO registered in late 1996. MEDA Mozambique is establishing and operating a microfinance program primarily in the major markets of Maputo. In Haiti, the MEDA partner is MEDA Haiti. This partner has operated since 1985. As planned, this project is implementing a previously piloted community bank model, with cooperatives which MEDA Haiti had earlier been working with to market cocoa. MEDA PVC Matching Grant Evaluation July 2001 Page 3 PREVIOUS PAGE BLANK 2.7.3 Program Goal and Purpose Goal: To build and strengthen sustainable, local capacity to promote economic growth with and among the economically-active poor, using enterprise development in selected countries in Africa, Latin America and the Caribbean. ObjectiveslPurpose: MEDA Headquarters Objectives - 1. Global Investment Fund will play a critical role in: Raising external capital Managing fund assets Developing a financially viable investment structure. 2. Training will be provided to local partners, to transfer and adapt proven, successful methodologies and techniques to incipient programs. 3. Technical Assistance (TA) will be provided to local partners, to transfer and adapt proven, successful methodologies and techniques to incipient programs. 4. Financial resources will be provided to local partners. 5. Collaboration with local partners will test and develop techniques. MEDA Organizafional-Level Targets - To attain 200% increase in member contributions To decrease government funding from 74% of total to 66% To increase revenue from consulting, trade and investment to 21 % of total To achieve a financial surplus each year Industry-Level Targets - To develop the following tools further and make them available to the industry through consulting services and publications: Quality standards for microfinance institutions Client Account System (CAS) Best practices training modules Cost-Benefit Analysis Toot MEDA Mozambique - Kulane Ka Ntwananu (Growth through Unity) Objectives - I. To increase the program's institutional capacity 2. To improve the quality of services to clients 3. To increase the program's sustainability 4. To introduce effective impact-assessment methodology Client-Level Baseline - MEDA Mozambique currently uses the solidarity group methodology. As of November 1998, the DIP included the following baseline: 250 active clients 64%women Average first loan is slightly less than US$100, increasing by about $50 per cycle Loan term is four months with weekly repayment Flat interest rate of 45% p.a. Real effective rate of interest 11 8% I\IEPA MEDA PVC Matching Grant Evalualon July 2001 Page 4 Client-Level Targets - 2,400 active loan clients $153,600 loan portfolio in operation r Less than 5% of portfolio more than 30 days late Country Partner-Level Targets - Establish two new satellite lending offices To attain 100% overall operational self-sufficiency To attain 87% overall financial self-sufficiency MEDA Haiti Objectives - 1. To increase profitability and sustainability of the Community Banks (CB) Program. 2. To increase institutional capacity of the CB program. 3. To improve quality of services to CB clients 4. To improve MEDA's monitoring and evaluation capacity. Client Level Baseline - MEDA Haiti is expanding on a completed pilot project based on a community-banking model. The DIP included the following baseline information on the pilot: Three months to form and train a community bank and management committee 30 to 50 people per bank 65% women Loan amount per person US$100-$350 Average terms: Commerce, six months; Agriculture and related, nine months Interest 2.5% per month, declining balance paid monthly Quarterly capital repayment 5% commission per loan 15% forced savings during life of loan Client Level Targets - 1500 active community bank members $1 31,250 loan portfolio in operation Less than 5% of portfolio more than 30 days late Country Partner Level Targets -- To establish 50 new community banks To establish five community groups, each serving as liaison with 10 banks To attain 62% overall operational self-sufficiency To attain 49% overall financial self-sufficiency 2.2 Availability of Data 2.2.1 AnnualReporCs Annual project reports for the first two years of the project (I99811999 and 199912000) were made available for the project 2.2.2 Prior Evaluation Although the agreement with USAlD calls for a midterm evaluation by MEDA and a joint final evaluation, the midterm evaluation has not been completed. An annual report evaluating the situation in Mozambique in 2000 was deemed to have been a midterm evaluation. USAlD made MEDA PVC Matching Grant Evaluation July 2001 page 5 no other prior evaluations of this project. MEDA did, however, make available other institutional evaluations performed by other donors. 2.2.3 PVO Monitoring and Evaluation System Dafa Trip reports and monitoring sheets, dating to before the beginning of the PVC project, were made available for Mozambique and Haiti. Separate trip report files were incomplete, but staff found trip reports in other files. 2.2.4 Other Sources MEDA made available all material required for evaluating this project. This included: + MEDA's Annual Review and Plan of Operations for the years 1998 to 2001; Training, environmental impact assessment, gender equity materials and other training materials generated for this project; Results of the Strategic Planning Workshop for the Community Banking Program in Haiti; The preliminary strategic plan for MEDA Mozambique The ASOMEX, Bolivia case study Budgets and financial reports for MEDA, and financial and correspondence files - paper and electronic The Technical Resource Unit's technical and resource documentation, based on the research, best practices and lessons learned used to support and advise projects. The Country Managers' Management Handbook Baseline and impact assessments for Mozambique and Haiti Human resource policies, procedures and job descriptions 2.3 Purpose of the Evaluation The goal of this project has been to build the capacity of local partners in Mozambique and Haiti and to strengthen the capacity of MEDA's headquarters, to deliver programs that are more effective. The purpose of this evaluation is to: Report to USAID the results the project has achieved. Because this is the first PVC matching grant that MEDA has received, it is important for USAID to verify that it has gotten val ev for kinvestment. Using this information, USAID will be able report to -use the lessons learned, to share with other PVOs and to improve its own methodology. -+wp 1;pR Report MEDA programming improvements that have resulted from this project. MEDA also wants to use the evaluation to gain new insights into its operation, and to add energy to its continuous improvement efforts, in programs and at headquarters. Report to MEDA and its local partners in Mozambique and Haiti the results of the capacity building efforts and an initial impact assessment of those efforts on the livelihood of the clients they are serving. It also outlines steps that these organizations can take to strengthen themselves and become sustainable more quickly, while meeting needs of their entrepreneur clients. o MEDA Mozambique is interested in gaining two primary pieces of information from this evaluation. First, it wants ideas for cutting operations costs. Second, it wants ideas for managing delinquencies better, particularly in the second and third cycles when the solidarity groups' problems surface and the dropout rates increase. o MEDA Haiti is interested gaining information about its program's strengths and weaknesses. It would like ideas on consolidating the PVC program with the two other community bank programs it operates, and about changes that might help the program more effectively meet its combined goals of self-sufficiency and of having a positive impact on clients' livelihoods, 3. Evaluation 3.1 Program Implementation 3. I. 7 MEDA Headquarters 3.4.1.1 Progress Toward Goal MEDA was organized in 1953 by a small group of Mennonite business people interested in encouraging development of business enterprises in less developed areas of the world. Today, MEDA is an organization of 3,000 Christian business people, mostly from North America, who believe they can use their faith, skills and resources to help overcome poverty. In the 1970s, MEDA obtained PVO status in the United States and Canada. It remains a bi-national PVO with offices in Lancaster, Pennsylvania, Waterloo, Ontario and Winnipeg, Manitoba. MEDA has registered in, and maintains offices in, Bolivia, Peru, Haiti, Mozambique, Nicaragua, and Tanzania. MEDA currently supports small business development activities in 12 countries, including the US. It is organized into three divisions: Member ServicesIMarketing and Fund￾raising, North American Services (NAS) and International Economic Development (IED). MEDA's annual budget is $5.4 million. Objectives Global investment Fund will play a critical role in: Kaiiing external capital Managing fund assets Developing a financially viable investment structure Indicators Existing program has access to necessary capital Decreased dependency on donors Increased capacity for sustainability Current Status - 1 I tesponding to lessons learned 1 the limited partnership $46,900 to Mozambique. lr Year One for a total of $70,600 375,000 Gourdes to Haiti it￾Year Two. Renamed "Sarona Fund" The former Global Investment Fund has been restructured by incorporation of an investment management company, MEDA Investments Inc. (Mil). MI1 is a wholly-owned MEDA subsidiary designed to manage 311 of MEDA's investment initiatives. During 2000,m sxperimented with a lim~ted￾3artnership company. This has since closed due to two n amff ica The Eost of audits and regular valuations of the portfolio was too high for partners. I Individual donors do not want to be part of a large anonymous fund. They want to feel a more direct connection with the investment. -he Sarona Global lnvestment :und is a non-profit trganization that invests in lther organizations and raises apital through fixed-income 'fferings. NE~A MEDA PVC Matching Grant Evaluation July 2001 page 7 Indicators - 0 bjecf ives Local partners will be trained t 4- c i F companies to invest in particular locations. This aspect of Mll's development is at the concept paper stage. By end of project, income from investments still will not fully support costs. However, significant progress will have been made. Sarona expects to be profitable by the end of its - -- a Training plan developed 2001/2002 fiscal year. Initially, the training plan 1 o transfer and adapt proven, ;uccessful methodofogies '' md techniques to incipient rograms. framework was developed as part of DIP Completed during preparation of the DIP. Regional workshops held annually - Annual Review and Plan of Operations meetings, with Country Managers. Monitoring trips by the TRU, ocal strategic planning ;essions and performance .eviews provide training needs Training needs are also met hen experienced and less￾2xperienced staff travel and work together on various 3spects of the projects. Training plan carried out by providing direct, country level training and regional workshops rraining that has been ielivered has focused on iimple, effective policy and wocedural systems to ensure :ompliance. Training focused on establishing simple, effective policy and procedural systems ;ustainability is the focus of all nicrofinance operations. 'remotion of financial viability lrives all aspects of the Irogram. Methodologies used by partners promote financial viability xhnical Assistance (TA) I1 be provided to local irtners transferring and 1 lapting proven and ~ccessful methodoloqiea -A provided in the development I of: Drafted in 1999 and refined in 2000, currently in use Program monitoring and evaluation systems id techniques to incipient Performance and financial ograms. ratio analysis Mozambique MISIAccounting ~roviding detailed info. >redit Officers have received :redit Analysis training Strategic planning training has Ieen provided, and MicroFin Projection models 0 biectives provided to local partners -'" Indicators A system of applying a gender-sensitive approach to SBDP programs Partners will: Use proven lending models Monitor and control portfolic quality, profitability and efficiency ratios Operate streamlined programs that promote scale-up to financial sustainability in 3-5 years. Some start-up operational costs covered Initial capitalization of loans provided On-going operational costs increasingly covered by interest and fee income from operations Current Status has been used to develop Business Plans for both Mozambique and Haiti. Policy and strategies developed. Implementation plan completed; actual implementation not yet begun. Gender surveys completed in both Hait1 and Mozambique. The solidarity and individual lending model used in ~ozambi~ue replicates other MEDA experiences. Haiti's Community Banking model ha: been redesigned and refined during the project's course. Mozambique and Haiti now monitor and control their own ratios. In Mozambique, schedule has been slowed by difficulties with staff; it is positioned to scale up now. In Haiti, limited literacy among clients limits capacity for self￾sufficiency. Also, clients have limjted opportunity to generate Income outside agriculture- .elated enterprises. Weather ?as been inconsistent during :he past few years. Political nstability has not helped the ;ituation. 'rovided in both Mozambique and Haiti. nitial capitalization provided. 4lthough below target, ;ufficient funds to meet iemand are in place. lperational sustainability ldicators provide evidence hat operational costs are leing covered to a greater legree. NEP& MEDA wc Matching Grant Evaluation July 2001 page 9 partners to test and develop techniques Indicators Systematic assessment of successful experiences A plan to develop concrete methodologies and specific tools developed Identified methodologies and tools documented Documentation shared with others through SEEP and microfinance networks with whom MEDA and its partners are affiliated Current Status Mozambique has used and refined generic policies and procedures on solidarity lending, individual lending and lending to associations. Completed as part ARPO, the plans are developed annually. Bolivia long range study; Bolivia ASOMEX bean marketing case study; Devetopment of BDS handbook; CGAP MicroFin beta tester. In Nicaragua, documenting transformation of CHISPA into CONFIA has been deferred to the next PVC grant Bolivia ASOMEX case study presented to SEEP; BDS handbook development presented to SEEP BDS workshop; MEDA's work on internal controls shared with SEEP - MEDA has provided wo workshops to SEEP nembers and has presented -esults at the Boulder nicrofinance course. Constraints & Unantici~ated Effects Year One There were significant staffing and structural changes in the organization. Key long-term people left to pursue other interests. This gave new staff the opportunity to restructure and streamline the organization to meet future needs. Successes and Explanation The synergy of the Technical Resource Unit and the consulting arm of MEDA led to development of additional resource and training materials that continue to strengthen the program. These materials include: Revised material on how to conduct environmental assessment. MEDA's Mozambique staff attended the training in Tanzania. A Fraud Prevention and Internal Control training program. 3.1 .I .2 Progress Toward Sustainability The goal of MEDA's MG program is to build and strengthen sustainable local capacity and to promote economic growth with and among the economically active poor, by developing enterprise in selected countries in Africa and the Caribbean. NEE? MEDA WC Matching Grant Evaluation July 2001 page 10 Client Level income for individual clients in Mozambique and Haiti Indicators Mozambique 2400 active loan clients $153,250 loan portfolio in operatjon <5% of portfolio over 30 days late Haiti r 1500 active community bank members $131,250 loan portfolio in operation ~5% of portfolio over 30 days late Achievement to Date 405 active clients (249 women) in Year One (480 and 312 women targeted); 101 0 active clients(667 women) in Year Two (1200 and 780 women targeted); 1325 active clients (861 women) in December 2000 - the last available information $26,000 in Year One (target $31,200) $64,415 in Year Two (target $75,000) $73,735 at mid-Year Three 30% of portfolio at risk in Year One (target 4 5%) 4.82% of portfolio at risk in Year Two (target I day at mid-Year Three Prospects for Sustainabiiitv Mozambique In terms of capacity, if the new staffers required for scaling up are trained to a level equal to the current staff, MEDA Mozambique will be well positioned to scale up. Haiti At the client level, difficulties relate to client literacy, to first-time introduction to institutional credit, to working in groups for financial purposes for the first time, to limited economic opportunities, to inconsistent weather that damages crops, and to political instability. Demand to join the program by people in the region, in spite of these difficulties, demonstrates that it meets clients' needs. ~gfi MEDA PVC Matching Grant Evaluation July 2WI page 11 Country Level 0 bjective Mozambique - the program will work with one partner serving clients directly. Haiti - the program will work with 5 partners, each collaborating with 10 community banks, and plans will be jeveloped to create a sustainable ~rganization that will serve each of these ~artners. Indicators 2 new satellite lending offices established 100% overall operational self￾sufficiency attained 87% overall financial self￾sufficiency attained 50 new community banks established 5 community groups serving as liaison with 10 community banks 62% overall operational setf￾sufficiency attained 49% overall financial seff￾sufficiency attained Achievement to Date 'Using an assignment method instead of actual building 15% in Year One (target 19%) 44.1 6% in Year Two (target 53%) 42% at Midyear in Year Three & -*, 41 % at Midyear in Year Three 51 community banks established by July 2001 5 community groups liaising with 10 community banks (I has 11 community banks) Year 2 - 42.5% (target 2 1%) 18% at Midyear in Year Three, due to expansion to five credit officers from two 18% at Midyear in Year Three due to the expansion to five credit Mcers from two PVy Mozambique The ~oz~mbi~ue Meticais' inflation and devaluation will rapidly deplete the hard currency capital fund. Without a realistic, quickly implementable action plan, the program will begin to encounter difficulty generating the income it needs to pay interest on its capital fund loan. Until this issue is resolved, trying to scale up the client base to a sustainable size could be counterproductive. Haiti At the organization level, there is a constant struggle to find the balance between sustainability and client impact. The organization is addressing internal factors that affect client-level issues. Continuing modification of the methodology and products has moved the program steadily away from its charitable roots towards sustainability, when it can be shown that these changes do not have negative consequences on clients' Iive!ihoods. Revisions in 2001 should bring the methodology close to an optimum balance between sustainability and client impact, and so reduce any need for further major changes. MEDA Oraanizational Level Objective Strengthen MEDA's capacity in its Small Business Developmen Programs Strengthen MEDA's zapacity in capital 'ormation Strengthen MEDA's :apacity in systems leveloprnent Indicators Current technical skills augmented Community banking methodology refined Community banking methodology documented Support provided to the Global Investment Fund Capital needed to finance Mozambique and Haiti generated Capital generated for other microfinance and marketing institutions Monitoring Evaluation Achievement to Date Technical Resource Unit (TRU) staff increased by the equivalent of one person. One staffer attended Microfinance training program in New Hampshire. Staff attended workshops on strategic planning, financial modeling and business planning, and results￾based management. Original five loan products consolidated, developed into two and two new products - individual loan and community loan. Methodology documented, but is in Creole. Has yet to be translated into English Marketing capability has increased with registration as the revised Sarona Global Investment Fund. $46,900 to Mozambique in year One 375,000 Gourdes to Haiti in Year TWO^ 4bout $-I .5 million raised to date. 4n additional $650,000 has been Aaced into Latin American Aevelopment projects. MIS/Acctg systems working in Vlozambique. Haiti is upgrading its spreadsheet system to make it nore user-friendly. donitoring Sheet system fine￾uned. :valuation Process document ;ompleted in the form of the luality Standards 3aselinehmpact survey. Database ;ompfeted. ' This was a conversion of money originally received by MEDA Haiti from the ClDA Canada Fund placed in Sarona and then lent back to Haiti. Sarona charges 8% interest in Gourdes. NEPA MEDA PVC Matching Grant Evaluation July 2001 page 13 Objective Improve MEDA's financial self￾sufficiency Indicators Tools for business development services Gender equity Three year targets 200% increase in member contributions Government funding decreased from 74% to 66% of total B Revenue from consulting, trade and investment increased to 21 % of total D Financial surplus achieved each year Achievement to Date A major Business'Developrnent Services Handbook, also nearing completion, will be made available on CD. Implementation plan for new gender policy and strategy developed. Field office survey completed during Qtr. t of Year Three in Haiti. Mozambique was completed in November 2000. Gender training provided to Board and staff. Year Three - estimated 114% over the baseline Year One - 66% Year Two - 64% Year Three estimate - 67% Year One - 19.2 % Year Two - 16% Year Three estimate - 19% Financial surplus achieved in all tears Prospects for Sustainability Small Business Development Programs A synergy between the TRU and its consulting arm position MEDA very well, and strengthen its capacity significantly. Training and TA assignments in the TRU contribute to organizational sustainability. This is because other assignments and lessons learned contribute to methodology and support the consulting group's income. These consulting assignments and lessons learned then are reinvested into the projects. For example, training in CGAPJs MicroFin for the PVC project led to a consulting assignment in Peru. The staff person who was involved followed up by using the MicroFin methodology to develop better-quality strategic plans for Haiti and Mozambique. MEDA's initiative in developing a BDS Handbook will contribute significantly in the future, as the MicroFin strategic and operational planning tool has already. Capital Formation MEDA's capacity in forming capital has improved significantly because of the restructuring that has taken place and the lessons that have been learned. Organizationally, for the Sarona Fund to become sustainable over the long term, MEDA needs to work to ensure a smooth transition between development and investment. Systems Development Judgment of the long-term impact arising from developing these systems must be based on the ability of management to include and institutionalize their use in standard operating procedures. M&?A MEDA PVC Matching Grant Evaluation July 2001 page 14 The field survey has uncovered concern about how to help women in their businesses. This contributes to, and builds on, the impact assessment work of the organization. Financial Self-sufficiency Fundraising has increased more than 100%, but has fallen short of targets. As a contractor for donors, its income has increased. This is largely due to the continuing capacity building that makes it possible to win competitive contracts. This raises a question of whether donor dependence is a valid target. lndustrv Level Objective Make 4 tools available to the industry through consulting services and publications I Costlbenefit analysis tool Indicators o Quality standards for microfinance institutions Clientaccountsystem(MIS b Best practices training modules o Understanding microfinance o Credit Officer Training o 'Portfolio Management and Control o Financial Management o Staff Performance Management Achievement to Date Quality Standards developed and used to perform institutional assessments in Mozambique and Haiti. The CAS has been made available as shareware and MEDA's consulting arm is prepared to offer support. The CAS has been requested by the Microfinance Bank of Tanzania and by a ClDA project monitor in Russia. Best Practices training modules completed: o Understanding microfinance o Program Start-up o A Planning Framework o Understanding the Microentrepreneur and Credit Delivery . Methodologies o Credit Delivery Channels o Loan Analysis and Delivery o Financial Management Wanual completed in Year One. Serves as basis for a two-day ~orkshop. Pros~ects for Sustainability These tools are available to other MEDA programs. MEDA also makes them available to the industry through direct marketing, MEDA's consulting arm, its web site and the industry networks to which MEDA belongs. Beta-testing MicroFin indicates MEDA's reputation among its peers. Development of a handbook for Business Development Services also indicates MEDA's capacity and future prospects as a leading PVO. mbP6~ MEDA WC Matching Grant Evaluation July 2004 page 15 Cost Recovery The synergy developed between the TRU and the consulting arm of MEDA has a parallel impact on cost-recovery. On the one hand, the skills and capacity MEDA gains from its consulting work make it a more credible and competent executing agency for donors. On the other hand, experience in implementing successful projects gives MEDA a reputable record of accomplishment on which to build its consulting practice. Both efforts bring new ideas, methods, best practices and lessons learned into the organization. The result is that MEDA may possibly increase revenue while appearing to remain donor-dependent. 3.1 .I -3 Strategic Partnerships Mechanisms 1 Rate and Responsibifitv I Fiscal Autonomy conkact with Sarona Headquarters Fund regarding loan Provides TAI Consultancies capital and Monitoring and Evaluation. Also charges a 15% management fee on funds raised by Mozambique for projects. Mozambique Implements targets outlined in the Annual Review and Plan of Operations and $70,000 USD loan @ ' 8% revalued monthly; provides an Annual Review and Plan of Operations and budget (both based on DIP and other project objectives) for approval by Director, International Operations 1 budget MEDA has a policy to implement new partnerships. These partnership organizations are started by MEDA based on an assessment of potential in the country for a new affiliate to meet the overall goals and objectives of MEDA. ~~fi MEDA FVC Matching Grant Evaiuation July 2001 page 16 MEDA Haiti MEDA Haiti is a registered Haitian NGO MEDA has a policy to implement new partnerships. These partnership organizations are started by MEDA based on an assessment of potential in the country for a new affiliate to meet the overall goals and objectives of MEDA. 375,000 Gourdes @ 8% in Gourdes revalued monthly; provides an Annual Review and Plan of Operations and budget (both based on DIP and other project objectives) for the approval by Director, International Operations. MEDA Waterloo provides financial support to cover any costs not met through interest income. MEDA Haiti is an afFiliate office of MEDA. MEDA Haiti has a contract with Sarona Fund regarding its loan capital MEDA Headquarters countersigns and guarantees the Fonkoze line of credit Headquarters Provides TA/ Consultancies and Monitoring and Evaluation. Also charges a 15% management fee on funds raised by Haiti for projects. Haiti Implements targets outlined in the Annual Review and Plan of Operations and budget 3.1.2 Kulane Ka Ntwananu (Growth through Unity) Proaram Methodoloav MEDA Mozambique operates its microfinance program in eight large informal market areas and in seven smaller markets of Maputo and its suburbs (peri-urban areas). The program, which began in Xikelene market and then expanded to other markets, uses both solidarity group and individual lending methodologies. TypicaHy, after a second or third cycle in a group, a client graduates to individual lending. Few people working in the markets have the close relationships and trust required to jointly guarantee loans in a group setting when loans become larger. Currently, 89.5% of the loans are to solidarity clients and 10.5% are to individual borrowers. Solidarity groups form by themselves, and can receive loans after training in the group process and the program. In a variation on the solidarity model, MEDA Mozambique works with various local associations, partly to have them screen applicants and partly to use the solidarity of the association. Individual borrowers require basic training in business management before they qualify for loans. Loan terms and conditions vary with a borrower's experience in the program and with the type of loan - solidarity or individual. For example, group loan members pay weekly during the first two cycles, biweekly for cycles three to five, and monthly for loans after five cycles, Individual borrowers repay principal and interest monthly. Each borrower must place 15% of their loan in a forced savingslguarantee fund. For larger loans, clients pledge their personal assets as collateral. Loan terms begin at four months and vary according to cycle. No grace period is given at the beginning of a loan, and loan interest is calculated on a flat rate. Administrative and Financial Information and Control Systems MEDA Mozambique has a Client Account System (CAS) and an Accounting Information System (AIS). The CAS monitors program performance and acts as the program's management information system. Critical information is exported into the AIS to allow overall financial management of the program. Needs and requirements for information about clients change constantly, so baseline client data is kept in hard copy format and additional information is collected through specific surveys as needed. The Credit Committee meets twice a week to approve loans. People in four different positions review loans. A loan of more than 4 million Meticais, whether to an individual or a group, requires a pledge of assets. In solidarity group loans, assets are pledged to other group members, to ensure their repayment. Marketinu Strateav Credit Officers receive 15 minutes to speak at weekly meetings of the Market Commissions, each attended by an average of 50 people. When potential clients show interest in participating in the program, credit officers give them seminars and training in the program. The cashier operating in the Xikelene market deals with inquiries one-to-one. As another marketing mechanism, MEDA runs contests for T-shirts. MEDA is aware of its competitors and of the features of their programs, but has done no surveys to study the nature of its competition or its market share, During the evaluation, an informal market survey was conducted by interviewing members of the Xikelene Market Commission and the president of the Association of Informal Markets. Results of these interviews are attached as Annex 3. Assumptions and Features of Business Plan MEDA is a beta tester for CGAP's new MicroFin program. A major business planning session was held in May 2001. However, some significant assumptions are still under review. Implementation of the plan is expected to begin July 1, 2001~ssumptions used indicate a plan to scale up the operation over the next couple of years, moving from the current number of five loans officers, to eight. Other major features of the plan relate to increasing the percentage of M~A MEDA PVC Matching Grant Evaluation July 2007 page 17 clients that receive individual loans and to increasing the terms of higher-value loans. The govmn e issue remains to be addressed as does how to deal with the devaluation/inflation of thi! P-" ocal currency that is the income source, and with the fact that the loan capital and major costs are all in hard US dollars. Ideas are under discussion but no firm implementation strategy has been developed yet. 3.1.2.1 Progress Toward Goal Objectives I. Increase the institutions capacity of the SBDP program 2. Improve the quality of services to SBDP clients indicators Operations manager hired in year 1 MIS system installed by end of year 1 Loans and training provided to over 2,000 microentrepreneurs Diverse financial services available (individual lending, savings services) Three satellite offices in full j Current Status I Completed in Year One. Now attending management school to obtain a diploma in accounting and management. Also attended the New Hampshire microfinance training institute. Installed in Aug 1999, then placed under review due to data entry errors and system bugs. By the end of Year Two, bugs were fixed, and operating procedures developed and implemented. The system now meets reporting expectations. A local accounting information system was purchased for overall accounting. By the end of Aug 2000, the system was automatically calculating all major SEEP ratios from the MIS system, to give management immediate access to loan ~ortfolio and accounting info;rnation. n Year One, loans were einstated after a 5 to 6 month muse due to a minor fraud. rhis allowed time to improve raining, methodology and to ate pattern. rain in^ has been itreamlined to 2 sessions of 2 lours each instead of 4 kessions of .1 hour each. 3eginning in Sept 2000, an idividual lending program itroduced for those whose lroup loan amount exceeds ;'i200. Only banks and ooperatives are legally ermitted to offer savings ervices. )ne branch office operated in 'ear One. Bv the start of Year Objectives 3. Increase the 4. Introduce effective impact assessment methodology Indicators 100% operationally self￾sufficient by Year Three Portfolio at risk (over 30 days in arrears) less than 5% w Monitoring system covering representative 5% of sample (initially 20%) established in 2000 client intake form used to gather baseline information Key performance data disaggregated by gender Current Status Two, through its main office and branch, the program operated in 8 of Maputo's maior markets, including ~aiola suburb! - A5% achieved in Year One. 44.16% achieved in Year Two - partly due to the Meticais' devaluation. 42% by mid-Year Three 30% during Year One 4.82% during Year Two 2.5% by mid-Year Three Cleanup of issues caused by poor performance of previous staff continues Baselinelimuact survey and database completed. Baseline survey of 10% of clients performed for the Annual Evaluation in February 2001 New client intake forms that include basic financial data implemented. Gender disaggregation complete, but performance by gender difficult to analyze, because groups permit both men and women to ~articiuate. constraints & Unanticipated Effects .Year One Staffing issues were largely responsible for problems during the project's early stages. The main difficulties were weak staff and financial irregularities at the management, accounting and Credit Officer levels, Due to staffing problems and turnover, much unplanned time was required to reconcile bank and accounting records Lack of staff capacity led to poor records, and made following up the deteriorating portFolio more difficult. Resulting actions were to halt all lending, to retrain loans officers, and to revise procedures and record keeping methods. Although loan operations were halted, project operators decided to pursue defaulting clients, to deter against future defaults. Rather harsh measures made it clear to future clients that defaulting on loans was unacceptable. In spite of initial wariness among new clients when lending resumed, apprehensions soon dissipated and demand for new loans exceeded capacity to lend. M$A MEDA PVC Matching Grant Evaluation July ZOO1 page 19 Client feedback during Year One: Loan levels reached $500 (per group), necessitating a review of the solidarity group strategy, and introduction of individual loans. Complaints about the 16 weekly payment format prompted a review to decide whether bi￾weekly and monthly payments were more appropriate. Contracts, policies and procedures were revised, to allow easier handling of default situations. For a period, the Xikelene Market Commission's participation became more of a hindrance than an asset. Leaders believed they had a monopoly on the project and some became problem clients. The partnership strategy was changed, to no longer permit Market Commission leaders to receive loans. Collaborative arrangements were established with associations to take advantage of their solidarity. MEDA's experience with slow and cumbersome government bureaucracy affecting even the smallest matters has been confirmed as the norm by other microfinance operations in the informal microfinance network. These constraints delayed addressing governance issues. Year Two A poorly performing credit officer who had not been dealt with in the previous year was encouraged to resign. This resignation improved morale, resulted in a more focused approach toward delinquent clients, and improved the portfolio quality. Lack of solidarity among clients in the group formation process led to increased portfolio risk, and partial payments. For security reasons, group members personally deposited their individual payments at the bank, and not paying for a defaulting member. Two policies were developed to respond to this problem. First, the bank stopped accepting partial payments, and the late payment penalty was increased to 50% of an installment. Second, an asset.pledge form developed for groups assisted them in confiscating assets pledged to the group, when a client refused to make their payment. Persuading credit officers to find new clients while managing existing clients was a problem. Early in Year Two, emphasis was placed on acquiring new clients. When the PAR started to rise, lending was halted. Focus was placed on delinquency until the portfolio was reasonably balanced again. The imbalance was related to credit officers' lack of accountability for their entire porffolio. The MIS, weekly plans, and reports by credit officers on follow-up have combined to improve the situation and balance the approach. Successes and Explanation Microfinance projects in Mozambique target urban-based informal markets. Even though delinquent clients can easity move to other markets and can be extremely difficult to successfully track down, expansion to both large and small markets is helping. The use of expatriate interns was a significant boost to stabilizing the management and operational difficulties. They gave valuable support during a difficult period. With proper leadership, they are also a valuable additional resource during start up. Placing and properly operating the MIS and the Accounting Information System (AIS) has been a key to obtaining timely and accurate statements that reconcile with the bank statements. The MIS now provides an audit trail that is very useful for managing the program. MEDA PVC Matching Grant Evalualon July 2001 page 20 An Incentive Program has been introduced to reward Credit Officers both for meeting new client targets and for managing their portfolios at risk. The latter operates on a sliding scale. By its nature, this program will have a tendency to promote individual lending. This is not seen as a problem. Strong, experienced leadership has improved performance and increased capacity. Because this leadership is shared with another program, it necessitates strengthening capacity at the lower levels to handle day-to-day operations. Effectiveness of the Model The program's solidarity-group lending portion gives MEDA an opportunity to test clients and determine if their business and loan performances will be satisfactory. The individual lending portion of the program addresses the lack of solidarity in the urban setting and allows head-to￾head competition with other microfinance providers, all of whom only provide individual loans. Overall, the model is working quite well. Currency devaluation and the cost of capital in hard currency make long-term sustainability an issue. Policv advocacy MEDA Mozambique actively participates in an informal microfinance network that discusses regulatory framework. On its own, MEDA Mozambique does not play an active role in policy advocacy. 3.1.2.2 Progress Toward Sustainability The purpose of the project's initial phase in Mozambique was to test the replicability of MEDA's lending methodology, including client demand, the impact of loans on clients' businesses, and the capacity of credit officers. In subsequent years, given the new capacity of credit officers, and as lending volumes increase, operations support was expected to decline until Year Three. when no direct operational subsidy would be required. Technical Elements Objective Accounting system Client tracking data base Client and Staff training material designed and delivered Indicators Yields accurate information Yields timely monthly reports Reports are relevant System control is improved (data entry validation, auditing and security External support decreased and users solve own problems Yields reliable information on clients Yields impact of loans on client businesses Training uses adult education techniques Client training designed and delivered Staff trainina desianed and Achievement to Date Year One: Although installed ir Mozambique there are serious questions about the accuracy 01 the information. This led to a re￾evaluation of the software to be used in Haiti. Year Two: MIS was fixed and an Accounting Information System (AIS) was successfully implemented Year Two: Baseline/impact survey and database completed, with an extensive survey completed in February 2001 During Year One: Operations Manager studied Credit Officer Performance in Tanzania M~$A MEDAPVC Matching Grant Evaluation July 2001 page 21 F 0 bjective Indicators delivered Training material has detailed facilitators guide, overheads and resource guide for participants Training modules include o Understanding microfinance o Credit Officer training o Portfolio management and control o Financial management o Staff performance management o Gender toolkit o Cost-benefit tool Training associated with a Marketing Framework & environmental assessment Achievement to Date Two Credit Officers took a CGAP fraud workshop Training Officers took courses in: o Credit policy and procedures o Impact analysis o Business skills for clients o Understanding the market During Year Two: Operational audits and a new code of conduct for credit operations developed, and staff trained. Follow-up through weekly meetings has institutionalized the process Operations manager received training overseas (New Hampshire) and the senior credit officer attended environmental impact assessment training in Tanzania luring Year Three: Strategic Planning Workshop for he program completed in May ,001. Training continues. All >redit Officers trained in client tssessment for group loans, ndividual loan business ~ssessment and how to teach :lients the basics of accounting. jpecific credit officers have eceived additional training. Prospects for Sustainability Technically, MEDA Mozambique is poised for scaling-up. The current staff is well trained, but requires continued training to deepen its capacity. The program will need to train the proposed additional three credit officers planned for the next year. A qualified support person to supervise credit officers must be identified, hired and trained, so the Manager of Operations can spend the required time on strategic and corporate issues. The qualifications and training of the Credit Officer Supervisor are particularly important, because the Program Manager is relocating to another office to spend most of her time managing another project. Therefore the Manager of Operations needs a person on whom he can rely. One constraint upon ongoing staff training and capacity building is a lack of local microfinance trainers. This situation certainly justifies the continued emphasis on capacity building in the followup Matching Grant proposal. Financial Element I sufficiency 1 3-8 I 1 1 1 40 at Qtr 1 in Year Three 1 Objective Achievement to Date MEDA PVC Matching Grant Evaluation July 2001 page 22 Indicators Operational self- * Loans Officers increase from 1 5 Loans Officers are currently * Objective l ndicators Each Loans Officer capable o! a portfolio of 60 loans by year 3 Loan loss ~2% by end of year 3 Average loan term Average loan size 3 satellite offices in full operation by end of year 3 2400 (1,560 women) active clients Percentage group and individual borrowers Percentage of loan volume by group and individual borrows Portfolio at risk 6% by end of Year Three Active loan portfolio $1 53,600 by end of year 3 100% Operational self￾Achievement to Date Currently at 65 loans per Loan5 Officer -i 2.28% at Midyear in Year Three Average loan term is 4.3 months Average loan size is 4.4 million Meticais One branch office. Will assign credit officers to a market but likely will not rentlbuild an office - Matola. 405 active clients(249 women) in Year One (480 and 312 women targeted) 101 0 active clients(667 women) n Year Two (1 200 and 780 Nomen targeted) 1325 active clients(861 women) 3y December 2000 -the last wailable information 37.7% of borrowers are in ;olidarity groups, 2.3% are ndividuals '.5% of the loan volume is to ndividual borrowers 50% of portfolio at risk in Year 3ne (target Comment on the utility and timeliness of PVO's required reports. => Comment on the organization's (headquarters) public outreach activities Logistics (subtotal - 2.5%) => Comment on the adequacy and timeliness of material inputs. Supervision (subtotal -- 5%) Assess if there were sufficient staff with the appropriate technical and management skills to oversee program activity at both headquarters and -in the field programs. Human Resources Development (subtotal -- 5%) - Did the PVO assess and address staff training needs? - Strengthen the organization and local partner professional or technical capacity? B Cite the major lessons learned and management recommendations 4. Proposed Schedulelftinerary June 4-8: 2 days during the week for preparation/review of materials prior to Waterloo visit (2 billable days) June 1j-15: Meetings with Headquarters staff for HQ component of evaluation, meet with USAID program officer. (5 billable days) June 16 -July I: Travel and Field work in Mozambique (16 billable days) Jufy 8 - 21: Travel and Field work in Haiti (14 billable days) July 23 - 28: Report writing (includes debriefing in Waterloo on July 25) (6 billable days) Final Report due: July 31,2001 5. Proposed Partners To Be Visited Haiti: If there is sufficient time, Larry could visit all 5 areas in the North where micro credit programs have been established. If time is limited, we suggest Larry visit Robillard, Port-Margot (the first 2 programs that started) and Grande Riviere du Nord (one of the three most recent programs). Mozambique: MEDA's partner in Mozambique is MEDA MozambiqueiKulane ka Ntwanano located in Maputo. Annex 2 Schedule of Activities and People Met June 11/01 Lunch SARONA, MEDA investments; budget/accounting and briefing on Haiti June 11/01 )m Document Review Waterloo une 14/0j Waterloo Document review and Program Overview Waterloo interviews Program Details interview and document review me 14/01 1 Waterfool I Travel to Maauto I Toronto/ New I York I Offices I meeting; ~riefin~ with Ed Epp, Director, International I - I June 15/01 1 AdvisorlConsultant MEDA I Julie Redfern, I Operations and Julie Redfern, Manager, TRU; Julie Redfern, Manager, TRU; Pam Fehr, Technical Advisor/Consultant, and Cherie Tan, f echnical Advisor/Consultant Offices Manager, TRU; Cherie Tan, Technical Advisor/Consultant Mary Herbert, Program Officer, USAID: Kim MEDA Offices MEDA Offices New Yorkl Johannesburg1 Offices Alan Sauder, Executive Vice President, International Economic Development Division Ed Epp, Director. International Travel to Maputo 1 Operations MEDA Scott Beech, Capital Offices Fund Manager; Gerhard Pries, Director, MEDA Investments tnc.; Gerald Morrison, Financial Manager. lnternational Economic Development; Cherie Tan, Technical Pityn, Director Human Resources; Jennifer Helmuth, Human i Resources Trudi Swartz, Country Manager; Dionisio . Matos, Operations Manager; Herminio Tchauque, Loans Officer; Sergio Chusane, Loans Officer; Assia Abdul, Loans Officer; Olga Bernardino, Loans MEDA Offices and USAID June 28/01 Maputo Maputo Meetings with MEDA Mozambique staff and USAID mission briefing 1 MEDA Consultant; Sydney Bliss, USAID; Christine De Voest, USAID June 19/01 Review of files, interviews Trudi Swartz, Country and attended a Credit MEDA Offices Maputo Manager; Dionisio Matos, Operations Manager; Credit Committee (Loans Officers, Operations Manaaer and Finance/ Committee Meeting Review MIS ~dmirktrative Manager June 20101 Maputo MEDA Trudi Swartz. Countw Offices Manager; ~ionisio - Matos, Operations Manager; Helder Goncalves, Finance1 Administrative Manager; lrine Duvane, MIS Operator June 21/01 June 22101 Maputo Maputo Report writing Client visits Estrela and Xikefene Markets Dionisio Matos, Operations Manager; Herrninio Tchauque, Loans Officer June 23/01 June 25/01 June 26101 Maputo Maputo 3ebort writins w'isit Clients Fomento and Matola Pf markets, 3nd 4DEMlNO Maputo Dionisio Matos, Operations Manager; Olga Bernardino, Loan Officer; Sergio . Chusane, Loans Office and 5 group members Iune 27/01 locument Review and visit Seraio Chusane. Loan: :lients uIEDA Nice and bsociation Maputo officer; and president of association plus two of Informal officials Markets MEDA Office; Mavalene and Fog ardo markets MEDA Office lune 28/01 Maputo Iocurnent review and visit :lients Dionisio Matos, Operations Manager; and Sergio Chusane, Loans Offker; une 29/01 Maputo Sydney Bliss, USAID; . rrudi Swartz, Country Manager; and Dionisio Matos, Operations blanager locument review and lebriefing une 30101 Maputo to Atlanta Atlanta to Ottawa Ottawa to Port au Prince Port au Prince ravel uly tl01 uly 5/01 ~ly 6/Of ravel ravel eetings with MEDA Haiti WEDA Mce lean Claude Cerin, ;ountry Manager; and Irnmanuel Noel, CB )evelopment :oordinator 1 ( c ieport Writing I rravel to north zap Haitien disit 4 Community Bank's Bahon I Jean Claude Cerin, :lients in Bahon I 1 Country Manager; Pam ;p~p";t@# July 11/01 July 42/01 luly 13/01 luly 14/01 luly 16/01 uly 17/01 uly 18/01 U~Y 9,20,23,24, 627, 8,30,31 uly 25/01 Cap Haitien Port au Prince 'or- au Prince 'art au Prince Port au Prince Port au Prince to Ottawa Waterloo clients in ~rande Riviere Visit 3 community bank's clients in Robillard Meetings with MEDA Haiti staff and document review Meeting with Country ~anager and ~epos Writing Meetings with USAID and locument Review and 3ebriefing rravel ieport Writing @fR \$iie"% Grande Riviere Robillard UEDA 3ffice JSAlD and =on koze Iffices dEDA Iffice AEDA lffice ~dvisor; Phanorde Dejean, Credit Officer, Bahon and Mireille Dizidor, Credit Officer, Grande Riviere Jean Claude Cerin, Country Manager; Parr Fehr, Technical Advisor; Mireifle Dizidor, Credit Officer, Grande Riviere and Phanorde Dejean, Credit Officer, Bahon Schiller Rosarion, Director, FEDEREC; Pam Fehr, Technical Advisor; Antonine Diminy, Credit Officer, Robillard, Nelson Jackson, Credit Officer, Thibault; Jacques Homere, Credit Officer, Port Margot Jean Claude Cerin, Country Manager; and Lionel Jean Baptiste, Finance Manager Jean Claude Cerin, Country Manager Donald Sam, Private Sector Development, USAID; and Anne Hastings, Director General, Fonkoze Pam Fehr, Technical' Van Sauder; Executive Jice President, nternational Economic 3eveloprnent Division; Manager, TRU; Cherie Tan, Technical Advisor/Consultant; Gerald Morrison, Financial Manager, International Economic Development; Kim Pityn, Director Human Resources; Wendy Dischke, International Operations Annex 3 Informal Market Survey This informal survey about MEDA and its competitors was completed by interviewing approximately five members of the Xikelene Market Commission in Maputo on June 22, 2001. This was followed on June 27 with a brief interview with the president of the Association of lnformat Markets and on June 28, 2007 with an interview with the Fajardo Market Commission and a senior individual borrower. The following is the combined results of the interviews and does not contain any analysis as to the validity of the comments received. Characteristics - Strengths and Weakness of each Program Novo Banco: Itisa bank Has lots of conditions Its conditions are not flexible Takes a long time for loan officer to respond to request ' Want guarantor instead of asset pledge SOCREMO: Almost like MEDA r Provides individual loans Monthly repayments Does not work in other markets - possibly not enough capital Requires a guarantee similar to MEDA Coliection methods are the same as MEDA . Interest rate - thought to be higher Does not provide any training Thought to have repayment problems 0 People who are failing, are doing so because the need training Tchuma Take a long time to give credit MEDA: Sfrengfhs Has the best track record in working positively with clients Has an office in the Xikelene market If they could take savings people would use them Individual loans have been available since September 2000 Training provided is good and necessary Current time of training best available MEDA has room to expand MEDA knows the challenges of the informal sector whereas its competitors do not Solves problems in a caring ("lovingly" was the actual Portuguese word used) way The training MEDA offers is good. People need training in how to use their loan wisely Uses market commission as receptionist for credit officers outside Xikelene Weaknesses People do not join because they think MEDA only provides group loans People say they don't have time to attend training Loan size too small MEDA needs to give loans of 2-3 million Meticais instead of 1 million Want charismatic speaker from MEDA at market commission meetings to promote the program MEDA could do better by being constantly seen in the markets so they are seen as one of them MEDA could do better by knowing what its competitors are offering and developing a better product The problem with the solidarity group is not trust but cashflow because weak businesses are not diversified If available, spouse should witness loan so they know about it Should use stall neighbors as primary reference instead of market commission