Evaluation of IMBITA Credit Operations Swaziland 
Advisor: 
Margaret Jiri 
Submitted by: 
The Services Group 
Submitted to: 
U.S. Agency for International Development/South Africa 
Gaborone, Botswana 
September 2007 
USAID Contract No. 690-M-00-04-00309-00 (GS 10F-0277P) 
P.O. Box 602090 ▲Unit 4, Lot 40 ▲ Gaborone Commerce Park ▲ Gaborone, Botswana ▲ Phone (267) 390 0884 ▲ Fax (267) 390 1027 
E-mail: info@satradehub.org
2 
Table of Contents 
 
Executive Summary 4 
 
1. Introduction 8 
2. Country Context 9 
3. Imbita Swaziland Women Finance trust 11 
4. Credit Operations 13 
5. Management Information System 27 
6. Finance and Accounts 29 
7. Financial Performance 32 
8. Human Resource and Technical Assistance 37 
9. Stakeholders Analysis 39 
10. Emerging Issues 40 
11. Conclusion and Recommendations 42 
3 
Acronyms 
BDS Business Development Services 
FCO Field Credit Officers 
FNB First National Bank 
ISWFT Imbita Swaziland Women Finance Trust 
KNH Kinder Not Hilfe 
LMC Local Management Committee 
LP Loan Performer 
MFI Microfinance Institutions 
MSE Micro and Small Enterprises 
SHG Self Help Groups 
SME Small and Micro Enterprise 
4 
Executive Summary 
Imbita Swaziland Women’s Finance Trust (ISWFT) was founded by a group of 
women (professionals and micro-entrepreneurs in 1991 as a direct response to the 
financial needs of women. ISWFT is a membership based microfinance institution 
(MFI) and its strategic operations are guided by a set of core values as well a vision 
and a mission. ISWFT requested for technical assistance among other things to 
evaluate its credit operations. 
The evaluation of the ISWFT examined the products and services on offer, loan 
policies and procedures in place, lending methodologies being used, management 
information system, human resource and financial performance. 
Products and services 
ISWFT is providing 3 financial services (savings, credit and funeral scheme) and 
training of members. The need for an insurance scheme in view of the effects of 
HIV/AIDS on lost capital was strongly shared. The recommendation is to consolidate 
current operations before introducing another product in view of current poor quality 
of portfolio. Portfolio at risk as of end of June 2007 was 63%. 
ISWFT will require technical assistance on product development. 
The current training program is at two levels i.e. business training program which is 
more of an orientation to ISWFT’s loan policies and processing procedures and is 
provided by ISWFT field credit officers (FCO). The other one is the leadership 
training 
There is need to consolidate the training unit by developing training plans with a 
vision and clear objectives. This will include, developing training needs assessment, 
funding and resource mobilization. In the long term ISWFT can also entertain the 
idea of establishing a resource centre for both micro entrepreneurs and 
microfinance training needs. 
Loan policies and procedures
The current loan policies and procedures need to be improved. ISWFT designed 
and developed all the key loan policies and are well documented for easy access. 
However, the current loan processing takes far too long and need to be streamlined 
for the operations to be efficient and productive. One way to overcome these 
challenges is to deploy some loan processing activities to the LMCs. Such activities 
include, loan appraisal, prospective member mobilization, mutual guarantees and 
monitoring of repayments. 
Lending methodologies 
ISWFT implements three types of lending methodologies, namely individual, group 
enterprise and groups. However, the current approach to group lending 
methodology is weak in that the groups are not operating to overcome the 
fundamentals which make it a desirable lending methodology. Firstly, groups 
overcome issues of collateral by utilizing a mutual guarantee system. Secondly, the 
management team of groups should be engaged in appraising loans and monitoring 
5 
repayments. These two fundamentals have been proven to contribute to the quality 
of portfolio tremendously. 
ISWFT would improve current operations by implementing a group lending 
methodology particularly to rural areas. 
MIS and monitoring 
ISWFT acquire a loan tracking system – the Loan Performer two years ago. Despite 
a few problems with integrity of reports being produced the LP is capable of 
integrating loan activities with accounts. ISWFT and the consultant have been in 
touch with the service provider who confirmed that the integration can be effected. 
Training on how to use the integrated system will be provided. 
Financial management 
Examination was limited to those financial processes affecting the credit operations 
namely, monitoring of expenses, disbursement of loans, repayments and budgeting 
processes. ISWFT operates a Pastel accounting system. 
ISWFT does its financial business with four banks, thus, Nedbank, Standard Bank, 
Swazi Bank and First National bank (FNB). The current procedure for 
disbursements is that all members with bank accounts receive their loans through 
their respective bank and those without bank accounts will receive a cheque through 
any of the banks depending on which one has funds available. With regards to 
repayments member deposit in any of ISWFT bank accounts. 
IMBITA charges its members E1.00 for bank charges. FNB is more expensive 
compared to other ISWFT accounts. 
One of the main challenges facing ISWFT with regards to its financial management 
is the difficulty in tracking payments when made. For example a member might have 
received their loan through FNB and make repayments through Swazi Bank or a 
member make a deposit in Standard Bank this month and next month in Nedbank. 
This is apparently causing confusion and taking too long to reconcile all the financial 
activities timely. 
The recommendation to overcome this challenge is to have separate accounts for 
separate use. 
Monitoring expenses
Other aspects of financial management that impact on the credit operations include 
administrative expense related to credit operations. 2006/7 fiscal year expenditure 
show the top five categories of high expenses as salaries, bank charges, 
communication, technical support and transport, in that order. The evaluation 
examined transport expenses in detail, even though it is only 3% of total expenses 
but has potential to escalate. 
6 
Although ISWFT currently has log books, these are not being monitored and 
analyzed to understand the usage and related expenses It is crucial that ISWFT 
start to monitor vehicle especially as the fleet of vehicle sis getting old. 
With regards to bank charges which are second highest ISWFT negotiated with 
Standard Bank and got a concessionary but have not been able to strike the same 
with others. ISWFT is encouraged to continue trying to negotiate and to rationalize 
usage of checks and other bank services. 
Budgeting process and Financial Planning 
The current budgeting process and disbursement plan is informed by previous 
performance. There is no consideration of new loans, categories of loan terms that 
ISWFT should capitalize on and planning for self sufficiency. 
Recommend using the microfin financial modelling tool. Microfin is one of the 
recommended tools in strategic and business planning of microfinance programs. 
Financial performance
Financial strength is the primary indicator of the overall efficiency and long-term 
viability of an MFI. Two sets of indicators were examined i.e. the productivity and 
efficiency and profitability ratios. 
ISWFT is currently operating under capacity in comparison to industry’s best 
practice. There is a deficiency of 53%. On the other hand, the cost per loan as of 
end of March was approximately below the average size of loan disbursed, which in 
itself is better than spending more. The trend should be moving downwards. 
To improve on productivity and efficiency ISWFT needs to streamline loan 
processing and to increase the case load of each FCO. 
The portfolio at risk is 63%, which mean half of its portfolio is at risk, indicating 
serious problem of delinquency. 
ISWFT has been generating over 60% of its income from interest from the loan 
portfolio, with least generated from bank investments and other sources of income. 
This has boosted the operational self-sufficiency to current 112% and institutionally 
it stands at 82% as end of March 2007. 
To improve on this situation ISWFT needs to implement a group lending 
methodology to overcome challenges of close monitoring repayments, streamline 
loan processing to improve efficiency and to rationalize on expenses particularly 
bank charges and communication. Most importantly is to increase productivity by 
increasing the outreach efforts per FCO. 
Human resource and technical assistance 
ISWFT has been exposed to training in various microfinance components and 
received technical assistance. This has assisted ISWFT to develop to where it is 
now. There still remain skills gaps particularly in financial management, portfolio 
7 
management, and good governance. However, in Swaziland (like many MFIs in the 
region) there is a huge skills shortage in the microfinance sector. 
It is recommended that ISWFT build its capacity through mentorship particularly for 
the management. It would be ideal if the mentor is an all rounder so that on job 
training takes place. An all rounder would be someone conversed in all areas of 
institutional development particularly in microfinance programs. Expert areas to be 
included are: 
• MIS, interpretation and analysis of quality portfolio 
• Financial planning, modeling and management at both branch 
level and institutional 
• Strategic planning 
• Budgeting processes 
• Human resource management 
• Funding proposal writing skills 
• Marketing of products and services 
This is a challenge and ISWFT will require assistance from agencies such as the 
Trade Hub, particularly in the engagement of a mentor. 
Emerging issues 
Three emerging issues identified included the following: 
• The challenges of decentralization include: 
i) the need for an internal networking system i.e. branches to head 
office and vice versa 
ii) financial management 
iii) portfolio management 
iv) program planning, and 
v) sustainability 
With the network ISWFT needs to identify an IT firm that can connect its 
branches to the network so that all field staff have access to important 
portfolio reports as well as be able to capture and log in data immediately. 
This is envisaged will ensure quality of portfolio is maintained and improved. 
• Good governance in terms of board members accessing loans. There is 
conflict of interest as the board serves as credit committee and to approve 
loans more than E.5, 000. Recommendation is to develop a policy that does 
not allow members of board to access a loan during board tenure. 
• Lack of a pool of skills and expertise in the microfinance sector. This 
challenge is compounded by a weak microfinance network, which could 
have assumed the role of providing training and technical assistance to its 
members. ISWFT has to build its capacity, through on job training and 
mentoring. 
8 
1.0 Introduction 
This report is being submitted as part fulfillment of an evaluation exercise of the 
Imbita Swaziland Women Finance Trust (ISWFT) credit operations. The Trade Hub 
approached ISWFT early 2007, as part of its wider Trade Hub campaign to identify 
potential implementing partners in the Southern African region and explore common 
interest in microfinance. In response ISWFT expressed interest in respect to 
technical assistance on issues of microfinance, particularly in evaluating its 
revolving fund, assess capacity development and support for integrating the loan 
tracking system and the institution’s accounts. 
1.1 Objectives of the Assignment 
The objective of the assignment is to provide technical assistance in microfinance 
issues and specifically to: 
• Recommend additional products and service that will encourage ISWFT 
’s members to take advantage of credit 
• Evaluate current revolving fund mechanisms and recommend steps 
forward 
• Provide advice on creating a more integrated system for loans, saving, 
funeral schemes and accounting, and 
• Conduct a maximum of a one-day training session for ISWFT’s staff on 
microfinance. 
1.2 Methodology 
The evaluation used the following methods for gathering information: 
o one to one discussions 
o group discussions on issues germane to each department 
o review of relevant reports and documents 
o Assessing the loan tracking system in terms of capacity and utilization 
o Training on key identified microfinance topics 
The evaluation was carried out within the context of building financial sectors for 
development approach and was guided by the objectives of the scope of work 
(section 1.1 of this report). This entailed a comprehensive examination of ISWFT 
operations focusing on: 
o products and services provided, 
o loan fund performance 
o management information system (MIS) and accounting systems 
o human resource development and management 
The information generated is envisaged to provide the basis for the formulation of 
comprehensive recommendations and strategies on the way forward. 
1.3 Structure of the Report 
The report is structured as follow: 
9 
Section 2 provides background information on country context in which ISWFT is 
operating, while section 3 highlights the background of ISWFT. 
Sections 4-7 provides analyses of ISWFT operations particularly the credit 
operations, the management information system (MIS), finance and accounts and 
human resource and technical assistance, respectively. Each section describes 
current status, highlights areas of concern and provides some solutions based on 
best practices in the industry. 
Section 9 assesses other stakeholders in the sector, particularly on potential 
collaboration opportunities, while section 10 discusses some emerging issues, and 
section 11 provides the recommendations and conclusions. 
2.0 Country Context 
It is important to have some knowledge of the environment in which ISWFT is 
operating to appreciate and understand the various dynamics and activities taking 
place in ISWFT. This report focuses on socio-economic and the small and micro 
(SME) enterprise factors. 
2.1 Socio-economic Context 
Swaziland is 17,366 km2, in extent and is located in Southern Africa where it 
borders with Mozambique and South Africa. It is a very mountainous country, with a 
population of 1.1 million people with a population density of 34 persons per square 
km2. The population growth has been 3% per annum. However, this annual growth 
rate is expected to be below zero, due to an extremely high HIV/AIDS prevalence of 
32%1
. These figures could change in the short term as Swaziland has just 
completed a population census (results not published yet) 
The economy is highly polarized and characterized by large commercial agricultural 
farms, some large manufacturing companies, a lot of imports but a large section of 
the population is at or below the poverty datum line. According to government 
statistics 70% of the population earns less than E70 (the local currency Lilangeni is 
pegged at the same value as the South African Rand. One can buy using the Rand 
in Swazi shops). E70/Rand 70 is about US$10 of the current exchange rate 
(US$1:Rand7). 
Swaziland has good agricultural and forestry resources, irrigation potential and 
minerals, such as coal, asbestos and diamonds. Sugar cane is the main export and 
it absorbs a vast majority of the manpower. Swaziland has the largest man-made 
forest covering 7% of the total area, which is also an important export product. Most 
of the export commodities, mainly manufacturing products are, sold to the South 
African market. The country's economy is highly dependent on that of South 
Africa's, with tourism playing a major role in the economy. 
 
1 Data provided at a meeting with the Director of SME Unit, Ministry of Enterprise and Employment 
10 
2.2 The small and micro enterprise (SME) sector in Swaziland 
The information on the state of the SMEs is scanty as no comprehensive study of 
the sector has been undertaken since the last USAID 1991 Gemini project2
. 
However, there is a study which was carried out in 2006 but the results have not yet 
been published. The Gemini project identified over 50,000 MSEs employing over 
100,000 people. It also found that 40% of all Swazi households were involved in the 
SME sector and that most of them are in the rural areas. 
Without a subsequent, comprehensive survey it is difficult to ascertain the dynamics 
of the SME sector particularly the numbers, their growth rate, sector concentration, 
i.e. rural vs. urban and various enterprises in each business sector. Furthermore, 
many are engaged in the manufacturing, service, retail and wholesaling sectors. In 
2000 the UNDP study3
 identified the following: 
• 77% of SMEs were located in the rural areas but only providing 65% of total 
employment 
• 9% of SMEs were in secondary towns, providing 10% of the sectors 
employment 
• 16% were in major cities providing the remaining 25% of employment and 
• the majority of SMEs (66) in towns were involved in retail trade 
The very high concentration of rural SMEs and the high levels of women employed 
by the SME sector are significant for impact on the well being of the population. It 
has been proven that extra income earned by women tends to be invested in the 
family and has an important impact on nutrition, education and healthcare. The 
assumption therefore is that the major source of employment opportunity for the 
average Swazi is in the SME sector, concentrated in the informal sector. 
The above indicates an environment in which microfinance can play a vital role in 
reducing poverty incidences, particularly among women. 
2.3 Overview of financial sector and microfinance 
The commercial banking sector is the dominant player in Swaziland’s financial 
sector. There are five active commercial banks – Nedbank, First National Bank 
(FNB), Standard bank, Swazi Development Bank and Swazi Building Society. These 
banks have a comparatively well developed branch network system around the 
largest towns of the country. This excludes most of the rural areas. The commercial 
banking sector is highly liquid and has shown very limited interest in investing in the 
SME sector4
. This is partially influenced by the interest rate differential with South 
Africa. They take deposits and then deposit the funds in South Africa and earn a 3-4 
point spread. This risk-less use of funds keeps them profitable, while SME lending is 
always a high risk. 
While commercial banks are not making microloans, Swaziland has a vibrant 
industry of microlenders imported from South Africa. These microlenders 
concentrate on 30 day loans to salaried wage earners. Short of a comprehensive 
 
2 Ccountry wide study of Small Enterprises in Swaziland, December 1991. 
3 UNDP Swaziland :Strategy for Supporting the Micro and Small Enterprise Sector, 2000 4
 ibid 
11 
study of the sector observations indicate that there is a sizable number of 
microlenders. 
However, there is also the savings and credit cooperatives (SACCOs) sector which 
is the dominant player in the microfinance sector, with over 20,000 members holding 
E90 million in assets in 19995
. SACOOs operate either as closed or open 
membership cooperatives. They were created to service the employees of specific 
companies or government agencies. For example, the teachers’ association, the 
correctional services, the military, hospital workers etc. 
There was an increase of microfinance organizations in the early 2000 but over the 
years many have closed shop. There are however very few pure microfinance 
NGOs in Swaziland. Most NGOs involved in micro-lending are doing it in 
conjunction with other services, such as water and sanitation, food and health care 
programs. Amongst the NGO MFIs, ISWFT, World Vision and Inhlanyelo are 
leaders in terms of outreach and numbers of clients. 
3.0 Imbita Swaziland Women Finance Trust 
3.1 Historical background 
ISWFT was founded by a group of women (professionals and micro-entrepreneurs 
in 1991 as a direct response to the financial needs of women. It is a registered Not￾For-Profit organization under the terms of the Swaziland Companies Act. ISWFT is 
wholly owned by its members without any share capital. The institution operates 
from its own property on Plot 97 of Manzini town. 
ISWFT’s major aim is to address the constraints faced by business women in 
establishing or expanding small businesses. The constraints addressed include, non 
availability of financial services from the formal financial institutions due to the 
women’s businesses legal status as well as the lack of credit worthiness and 
business acumen and mentoring. These constraints have continued to plague many 
poor Swazi women, as the Swazi financial institutions continue to marginalize this 
sector of the economy. This is a niche which ISWFT sought to fill as its services are 
in demand particularly in the rural areas of Swaziland. 
ISWFT’s strategic operations are guided by the following vision, mission and core 
values: 
o The Vision: 
• is Accessible credit for the poor 
o Mission 
• To uplift the economic status of the poor 
o Core Values 
• Innovation 
• Professionalism 
• Quality and 
• Commitment to all operators within the informal sector 
o Core business 
 
5
 ibid 
12 
• To transform and uplift the lives of the SMME sector operators in 
Swaziland in order to alleviate poverty by: 
o providing financial services to women and men in the rural and 
peri-urban areas 
o Promoting a culture of saving 
o Providing demand driven high quality training services 
o Building the capacity of women and men participating in the 
SMME sector with the aim of becoming large enterprises capable 
of creating job opportunities. 
e) Business objectives are: 
• To enhance the economic self sufficiency of women by providing them 
with financial and technical services 
• To increasing participating members’ income generating capacity and 
ability to enter the economic main stream 
• To strengthen ability to participate in financial decision making in the 
homesteads 
ISWFT started its operations by targeting the urban and peri-urban areas and in 
recent years has included the rural areas. The reason for this focus was mainly due 
to demand of services that are on offer. ISWFT like most microfinance institutions 
(MFI) offers its members a variety of services and products both of financial and non 
financial nature demonstrating an integrated approach in its service delivery. The 
choice of products and services has to a large extent been informed and influenced 
by its membership. 
3.2 Current 
Since inception ISWFT has grown from one stage to another particularly in its 
membership, portfolio size, performance and as an organization. It currently has a 
total membership of 15900 made up of 15436 individuals and 26 groups (464)6
 . 
ISWFT has a staff complement of 14 persons, comprised of 4 Field Credit Officers 
(FCO), 4 Tellers, 1 Finance and Admin Officer, 1 finance Clerk, 3 Office Assistance 
(cleaners) and 1 Chief Executive Officer. 
It has recently embarked on a decentralization process with the aim of bringing 
services to the members. The plan is to open an office in each region and currently 
1 office is functional in Lubombo region Siteki business centre. The second office is 
to be opened in Hhohho region at Pigg’s Peak business centre. 
ISWFT’s financial year runs from April to March and its three year (2005-2007) 
business plan is still in implementation. 
 
6 IMBITA Progress report Jan-March 2007
13 
ISWFT Organogram 
4.0 Credit Operations 
In any MFI the credit operations unit is at the heart of microfinance activities; it is the 
core business regardless of which approach is being implemented in delivering 
services to the poor. The success of any microfinance institution (MFI) is dependent 
on how the credit operations (policies, procedures, and lending methodologies) are 
designed and adhered to. This section will highlight the evaluation findings; identify 
areas that ISWFT should address in order to improve on its current credit 
operations: 
o Credit operations structure 
o products and services being provided, 
o description of loan policies and procedures in place 
o lending methodologies 
o an analysis of how these impact on the overall performance of credit 
operations 
4.1 Credit Operations structure 
The structures commonly found in MFIs are to a large extent influence by the 
approach adopted in the delivery of services and by the way such institutions are 
founded. MFI’s that use the minimalist approach usually have units/departments 
supporting the delivery of financial services and these usually include, operations 
unit, finance and administration and management information. Whereas with the 
integrated approach in addition would have training unit and other units providing 
AGM 
Board of Directors 
Chief Executive Officer 
Credit Operations Finance and Administration Training 
14 
non financial services to its clientele. As the MFI expands its outreach and services, 
it decentralizes by opening up branches in areas of operation. 
ISWFT credit operations unit is comprised of four Field Credit Officers (FCO) each 
managing a region. Swaziland is divided into four regions, Hhohho, Manzini, 
Lubombo and Shiselweni, thus, IMBITA has presence in every region. In this case a 
region is treated as a branch. 
The credit operations are currently in the process of decentralizing. One 
office/branch has already been opened in the Lubombo region and a second in 
planned for the Hhohho region. While these offices are being opened it is noted that 
operations are still centralized in the sense that the respective staff for the new 
offices are still located in head office largely because everything is located there, 
e.g. forms, MIS, and staff. 
The rationale for opening regional offices is not only very plausible but is also in line 
with the notion of taking services to the clients. This is a necessity for outreach 
purposes and contributes to moving towards sustainability. However, it is a process 
that needs to be well planned and managed, otherwise will defeat the purpose set 
out to achieve. 
4.2 Products and Services 
MFIs can offer a variety of products and services. However, due to the 
characteristics of their target clientele, poor women and men, without tangible 
assets, who live in the remote areas and may be illiterate, MFIs cannot operate like 
formal financial institutions. The very reason for the microfinance revolution is that 
financial institutions do not generally regard a tiny business run by the poor as 
attractive investment and they are not geared up to finance such projects. The 
design and development of products and services is again influenced by the 
approach that the MIF is using, i.e. financial or financial and non financial or 
financial intermediation and social intermediation. The types of these products and 
services are depended on the demand by the target clientele. 
ISWFT provides both financial and non financial services to its members. The 
services and products are detailed as follows: 
4.2.1 Financial Services 
ISWFT provides three types of financial services and these are: 
a) Savings 
ISWFT provides two saving services to members only and these are 
mandatory and voluntary. The mandatory (compulsory) service is linked to 
accessing the loan program. 
Upon becoming ISWFT member one has the option to open a savings account 
with ISWFT and receive a savings book. All deposits and withdrawals are 
written in the pass book by an IMBITA teller. The savings book has a 
photograph of the owner for identification and security reasons. 
15 
Mandatory 
Any member wishing to apply for a loan has to save for at least three 
consecutive months. The condition for a subsequent loan is based on the 
amount saved. In all cases a member can apply for 5 times the amount saved; 
this translates to 20% security on the loan to be borrowed. Upon the loan 
application being accepted the 20% is subtracted from the member’s saving 
book. 
For the most part mandatory savings are considered as part of the loan 
product rather than an actual savings product, since they are closely tied to 
receiving and repaying loans. For ISWFT mandatory savings are useful to: 
o Demonstrate the value of savings practices to members 
o Serve as an additional guarantee mechanism to ensure the 
repayment of the loan 
o Demonstrate the ability of members to manage cash flow and make 
periodic contributions 
o Help to build up the asset base of members. 
International experience shows that requiring members to save in order to 
access loans increases commitment and the likelihood of loan repayments and 
therefore the suitability of the MFI. 
Voluntary 
Once a member, one is expected to make regular savings of minimum E20.00. 
Members receive interest determined at the annual general meeting. Currently 
it is 6% per annual. On face value this is 1% more than what the commercial 
banks are offering. 
The interest rate is calculated twice a year and members can withdraw their 
savings as they so wish. This is done in January and September. The rationale 
behind the timing is that in January most require some money for school fees 
and in September those who are in agricultural business would be starting to 
prepare for the ploughing season. They need the money to use in the tilling of 
land, and to purchase agro-inputs such as fertilizer and seeds. 
Currently all members have a savings account. There are 15962 members with 
total savings of (E5, 687,940) giving an average balance of E356 per account. 
It was not possible establish how much of the portfolio is active (referring to a 
continuous saving habit). Members cannot withdraw their savings before the 
stipulated times (which is twice a year) or when they are still owing part of their 
loan repayments. 
b) Loans 
Initially ISWFT started with business loans only and eventually included the 
consumer and the agricultural packages due to membership demand. The 
main difference is the loan policies and procedure as explained in sections 
4.3.1 and 4.3.2 below. 
16 
Any member of ISWFT has access to both products provided they meet the 
eligibility criteria as set out in annex 1 a. 
c) Funeral scheme 
ISWFT also provides a simple funeral scheme. This was necessitated by the 
expectations of the members to get some assistance from the mother 
organization when a family member dies. The scheme is voluntary and covers 
member, spouse, and five children up to the age of 24. It was felt appropriate 
to include children over the age of 18 (age of majority) because it is common in 
Swaziland to find 24 year olds unemployed and still staying with their parents. 
The member contributes E.300 annually. When the family member dies ISWFT 
pays as follows: 
Member E.5000 
Spouse E.5000 
Child E.3500 
Youngest child E. 500 
Disbursement of a claim is done within 48hours of notification and the scheme 
elapses when member dies. 
It was not possible to establish the active portfolio, how much has been given 
out as claims and the total balance of the scheme. There are total of 122 
funeral scheme accounts with a total of E.34, 985. 
It is possible that a member can be accessing both financial services at the same 
time. At the moment it is not possible to indicate how many of the members are 
accessing which financial product(s). The main constraint is that the MIS is not 
configured to produce such a report. 
ISWFT is experiencing a very common phenomenon in the microfinance sector in 
that it has more savers than borrowers- something that is not unique to ISWFT. 
Without carrying out an in-depth study of savings mobilization of ISWFT members or 
even at national level, in general this situation could have been influenced by the 
fact that ISWFT financial services started by mobilizing savings before a loan 
product could be offered; therefore not many who save are into business or able 
and have confidence in starting one. It might be that many are saving to ensure that 
come January and September they are able to meet some of their pressing needs 
such as school fees and agricultural inputs. 
4.2.2 Non Financial 
For its non financial service ISWFT offers business and leadership training to its 
members. 
4.2.1 Business Training 
Before the loan processing commences a member who wishes to apply for a loan is 
expected to be trained prior to receiving the loan. 
The training is free and it is a one day activity offering the following: 
17 
o Business planning, basically understanding what the business needs are 
and translating these into financial terms. 
o Budgeting 
o Cash flow 
o Loan repayment schedule 
o How to fill a loan application form 
o Testimonies from existing members 
The training is heavily linked to accessing a loan as evidenced by the above training 
agenda. However, it does not matter how many times one has attended the same 
course when in need of a loan one has to attend the training. 
The field visit gave an opportunity to discuss these products and services with the 
recipients. Most members appear to be very happy with them. A few mentioned the 
need for assistance with school fees for their children. Members still felt that the 
January savings withdrawals are not sufficient to meet the high number of children 
who need school fees at that time. 
4.2.3 Leadership Training 
Although ISWFT has been offering training to its members the leadership training 
program for the LMCs was offered as a package for funding by Kellogg’s foundation. 
It was important that the leaders of the LMCs be exposed to good leadership 
principles that would assist them to manage and control their LMCs. The training 
included identifying qualities for leadership and understanding of the roles and 
responsibilities of the key LMC management team. A total of 25 LCMs benefited 
from this training and feedback from the staff indicate that most of the LMCs are 
practicing the ethos of good leadership. 
There are four indicators that prompt formation of an LCM and these are: 
• when the number of people demanding ISWFT’s services are over 15 from 
the same community, or 
• when ISWFT receives an increase in loan applications from a particular 
community, or 
• when other development agencies working with women in any community 
invites ISWFT to talk about its work particularly the financial services on 
offer, or 
• when a member applies for a loan but lives in a remote area, she is advised 
to look for neighbors she can collaborate with to form an LMC as it would be 
costly to service one person 
The prospective LMC arranges a date when the FCO comes to discuss what ISWFT 
is all about and explain the joining and loan application procedures. 
4.2.4 Comments and Issues to address 
ISWFT should consider the following to consolidate current products and services: 
18 
Financial Products 
a) ISWFT is offering the most popular financial services targeting the poor. 
Given the high incidence of HIV/AIDS in the country it will be worthwhile to 
consider looking into possibilities of designing and developing loan insurance 
to safe guard against HIV/AIDS casualties. 
b) To keep abreast with the banking expansion programs ISWFT could take 
advantage of such developments and collaborate with the respective banks. 
This can be done by linking to ISWFT accounts and would make it easier for 
members’ access loan disbursements. However, the cost of this could be 
prohibitive. 
Business training 
a) The current training is not targeted. It is important that a distinction be made 
between training for first timers (first loan) or old members to attend. ISWFT 
should assess and determine the type of training older members should 
attend and should be problem solving. 
b) Considering the level of education of most of ISWFT members it would be 
advisable to keep the number of participants attending training sessions at 
the same time to at least 25 and not 60 as observed. 
c) The training is more of an orientation to ISWFT’s loan policies and 
procedures. This is necessary for members to understand how ISWFT 
operates. Therefore the training can be appropriately called orientation 
rather than business training. 
d) ISWFT needs to consider collaborating with other institutions that are 
offering business development services for the poor entrepreneurs. 
Resources permitting, ISWFT should consider establishing a training unit 
that will specifically focus on offering these services to both members and 
staff. Both training programs would be based on demand. This can be 
designed in such a way that ISWFT can offer staff training on a cost 
recovery basis, especially to other MFIs in Swaziland since there is already a 
lack of such a resource. 
Leadership training 
Through the Kellogg’s Foundation funding ISWFT instituted a leadership training 
program. However, since the funding came to an end so did the training. No ISWFT 
staff understudied the Kellogg’s expertise to continue with the training. 
Comments and issues to consider 
a) The sustainability of a training program, particularly if it is targeting the loan 
clients, should be put into place by developing training plans and identifying 
funding gaps for fund raising. 
b) To include training plan in the budget so that it becomes part of the 
institutional programs. 
4.3 Loan Policies and Procedures 
Regardless of the approach selected the actual loan products need to be designed 
according to the demand of the target clientele. This requires to define the products 
19 
and how they will be accessed and managed, i.e. documenting all systems and 
procedures to be followed by both the institution and the target clientele. The 
emphasis on designing financial products to meet client needs is embedded in the 
belief that microentrepreneurs value access to financial services. 
ISWFT has clearly laid out and documented loan policies and procedures. This 
information is contained in a folder and all staff members have access to this 
important document. Annex 2 contains the loan policies that are being 
implemented. Below are the findings and analysis. 
4.3.1 Loan Policies 
Loan policies commonly found in most MFIs include loan sizes, loan terms, interest 
rates, collateral, and savings. 
a) Loan Sizes 
There is no rule of the thumb for loan sizes. An appropriate loan size is dependent 
on the purpose of the loan and the ability of the client to repay the loan. However, as 
a consideration most MFIs provide initial loan sizes as small as US$100 (this is also 
dependent on the economic environment in which the program is operating). This 
serves to deter those who are not so poor to access such a facility. 
ISWFT loan sizes are determined by amount saved and the business financial 
needs as determined by the CFO during the loan appraisal. The policy stipulates 
that one can apply for up to 5 times the amount saved. Example a saving of E.500 
will yield a E.2500 loan. However, for first time borrowers the maximum a member 
can apply for is E.5000 regardless of how much has been saved. The average loan 
size based on the MIS Loan Performer as at end of March (fiscal year April to 
March) was E.4392. 
The current active portfolio is 840 worth E4, 143,306 
Comments and Issues to address 
Based on current data it is difficult to establish where the large active portfolio is 
located between urban and rural areas. Such data would provide a solid foundation 
for an understanding of the dynamics of loan sizes in ISWFT. This would have 
assisted in understanding the characteristics of borrowers. An initial average loan 
size of E.4392 (appr.US$627) is considered too high in other environments. The 
smaller the average loan size the nearer ISWFT is in reaching the needs of the poor 
women. The current average loan size could be influenced by repeat loans meaning 
there is a small amount of new loans. This is called recycling of old loans and is not 
good considering the core business of ISWFT. 
The MIS could be configured to produce new and old loans per period. 
b) Loan Terms 
Loan terms are influenced by loan sizes. 
In ISWFT the maximum loan term for all loans is 2 years. The actual loan term is 
determined by the FCO during loan assessment. The agricultural loans have a 
20 
specific table of loan terms for a particular business as indicated in annex b)-loan 
policies. This is more manageable and easy to plan for both disbursements and 
cash flow. 
Loan size affects the loan term therefore it is important that the FCO understands 
the members’ cash pattern and loan amounts. Both ISWFT and its members need 
to understand the crucial correlation of the two particularly on how loan size affects 
loan term and how this impacts on the ability of the member to repay the loan. The 
closer ISWFT matches the loan term to cash patterns and members needs, the 
easier it is for members to maintain the loan and making payments on time and in 
full. 
Comments and Issues to address 
It was not possible to verify how many loans are at 3 months, 6 months and so on to 
track for performance. In terms of planning for disbursements it would be useful to 
design categories of loan terms and let members choose which one is suitable to 
them. At the moment it is possible to find 1, 2, 3, 4, 5,…months loans. It would be 
advisable to design for example: 3 months, 6 months, 9 months, and 12 months 
loan terms and detailed repayment schedules. These also help in planning for 
disbursements as well as anticipate cash flow. 
c) Interest rate 
Pricing of loans is an important aspect of loan product design. A balance must be 
reached between what a client can afford and what the MFI needs to cover all of its 
costs (operational and institutional). Generally microentrepreneurs are not interest 
rate sensitive. For the most part, interest rates above commercial bank rate are 
acceptable because the clients have such limited access to credit. 
Annex 2 shows the interest rate charged for different loan categories and table 1 
below indicates the comparison with other stakeholders in the market. 
Table 1 Comparison of interest rates 
IMBITA Swazi bank Standard 
Bank 
FinCorp World 
Vision 
Seclof
E.1000-E10000= 
30% 
E.10001-E1500= 
25% 
E.15001-E20000 
=20% 
E.20001-E25000= 
15% 
Consumer loan 
2.5pm 
For personal 
loans 18% 
business loans 
15% p.a. 
21% p.a. only 
provides 
personal 
loans. Do not 
provide 
business 
loans for 
micro 
enterprises 
17.5% p.a 
for all loans
28% p.a. for 
all loans
 
24% p.a. 
for all 
loans 
21 
Table 1 indicates that ISWFT’s loans are not subsidized. 
d) Collateral
Generally, MFIs lend to poor clients who do not have traditional collateral such as 
property, machinery, land and other capital assets. Various innovative means of 
reducing the risk of loan loss have been developed including collateral substitutes 
(group mutual guarantees) and alternative collateral (compulsory savings). 
ISWFT’s members are low income earners who often have very few assets, if any. 
Currently the collateral required is at two levels, i.e. savings (20%) and household 
assets (80%) and or guarantors. The guarantor could be a spouse, daughters and 
sons, relative or friend. The 80% of household assets has been put into practice and 
ISWFT admits it has not been easy. Also recently the law has been on to them that 
they need to follow certain procedures to confiscate people’s assets. In response I 
ISWFT has contracted the services of a debtor collector. 
It was not possible to establish how many assets were collected and sold and 
whether they did offset the amount owing. 
Comments and Issues to address 
Considering the characteristics of ISWFT members/clients who have few assets, 
asking for 80% of the loan to be secured by household assets might not be best way 
and this might drive the desirable clientele away and attract more of the middle 
income. This again is ISWFT’s decision as to whom they wish to service, particularly 
for the loan product. 
One of the most common collateral substitutes is peer pressure either on its own or 
jointly with group guarantees. However over time many MFIs have resorted to group 
guarantees. This involves the MFI facilitating group formation and then members 
jointly guaranteeing each others loans. This implies that when one person defaults 
the whole group defaults. Experience has shown that well formed and developed 
groups have potential to maintain 100% repayments. ISWFT could consider using 
this lending methodology in rural settings as the urban is currently dominated by 
consumer individual loans. 
On the issue of guarantor, this defeats the whole concept of empowering women. 
One reason why microfinance came into being is that women continue to be 
regarded as minors requiring the assurance of the husband. How would ISWFT 
wish to deal with this one? 
4.3.2 Loan Processing 
Loan processing is putting loan policies into practice and is one of the key activities 
of any MFI. 
Figure 1 show the steps from the time a member joins ISWFT, applies for a loan up 
to when she makes repayments. 
22 
a) Loan application 
The ISWFT loan application is in local language, easy to read and follow, captures 
critical personal and business information and all is contained in 4 pages. This form 
is accessible soon after the business training at a cost of E30.00 and should be 
submitted either at the head office or through the FCOs during their monitoring 
visits. Once it’s received at the head office the tellers input data into the Loan 
Performer (management information system – MIS). Figure 1, demonstrates the 
whole process up to the stage of making payments. 
b) Loan Appraisal 
The FCO receives the form after it has been input into LP and start the process of 
appraising the loan for viability. This includes visiting the members’ business and 
the house, discussing the business income, marketing opportunities, loan sizes and 
terms. Based on this the FCO decides whether to approve or reject the application. 
Rejected applicants are always informed of the reasons for rejection. 
 The FCO prepares applications for the Management Credit Committee to approve 
loans below E5000.00. Above that they will go to the Board Credit Committee which 
meets once a month. 
c) Loan disbursement 
Once approved the forms are lodged with the accounts unit for disbursements. All 
disbursements are done either through members own account or by cheque for 
those without bank accounts. All recipients sign a loan contract which costs E50.00 
for first time borrowers and E20.00 for subsequent loans. Cheques are cashed at 
one of the ISWFT banks (FNB, Standard Bank, Swazi and Nedbank) 
d) Loan Repayments 
Similarly, repayments are made through the same banks, which ever is nearer to 
the member. The deposit slips are brought to the head office or to the next meeting 
and the teller records the amount deposited (loan, savings, and funeral scheme) 
and issues a receipt. For clients without bank accounts, they bring cash to the next 
meeting and receive a receipt as well. The teller brings the money to the head office 
for depositing into the bank the following day. 
Table 2: Repayment 2005-2007 
Category 2005 2006 2007 
 % % % 
Group 100 100 97 
Individual 89 80 79 
Business 86 76 75 
Consumption 94 86 86 
Overall 89 80 79 
Table 2 indicates the repayment rates for the past three years for the different 
categories. It appears as if the capacity to repay loans is high among the group 
23 
category and low with business and individual loans. What could not be established 
were the performance of different business sectors as well as different uses of the 
consumption loans. The MIS is not configured to produce this report. Also it appears 
as if the overall report is the same as the individual category. This could be the way 
the MIS is configured. 
It was also not possible to establish the number of groups for the group lending 
methodology and enterprise groups. The distinction and tracking performance of the 
two would make an interesting assessment. 
It should also be noted that members pay E1.00 towards bank charges. 
The whole process from application to disbursements takes an average of 6-8 
weeks (excluding the 3 months for saving). However, this to a large extent depends 
on how fast the member has read and understood what is required in the application 
form and to get the appropriate information, particularly for the business loans. 
Comments and Issues to address 
a) In general the whole process appears to be taking too long particularly for 
the old clients/members. The length of time taken actually affects both the 
member and ISWFT. For members it is starving the business of the much 
wanted capital. Anything can happen during that time, such as further 
borrowing from other sources thereby creating a string of debts. By 
prolonging the time in disbursing loans ISWFT is also starving itself of 
earnings from interest and other fees. For example, 25 members with an 
average loan size of E5000 @30%pa would have earned ISWFT a total of 
E5125 (interest E3125 and fees E2000) This could have financed either 1 
business of an average loan size of E5000 or 5 businesses with an average 
of loan size of E1000. 
It would be advisable to streamline the process particularly for subsequent 
loans by taking out business training/orientation for older members. 
b) Most MFIs include members’ representatives (group management team) in 
the loan processing activities particularly in business assessments. This has 
been found to be much easier for MFIs that use group lending methodology. 
Table 2 is indicative of the capacity of groups to meet their debt obligations. 
However, the current Local Management Committees (LMC) need further 
training and developed to take this role. 
c) ISWFT should monitor and analyze performance of each group category to 
be able to strategize for better performance. 
4.3.3 Monitoring 
The effective financial management of an MFI requires an understanding of how 
various operational issues affect financial performance, thus, monitoring becomes 
one of the key and important activities of microfinance programs. It is therefore 
fundamental to understand all about defaulters and the dynamics in defaulting i.e. 
the effect that delinquency has on productivity and efficiency and ultimately on the 
sustainability of the MFI. 
24 
In ISWFT, after the disbursement the FCO make a follow up visit to verify loan 
utilization, by checking receipts and stock levels. This is done within 2-3 weeks 
following disbursement. Thereafter the FCO will visit the business to monitor 
progress and to follow up on defaulters, at least once a month. 
It is also the FCO to assess the quality of her/his portfolio by printing the status 
reports mainly the aging analysis report, which highlights loans due at 30-60-90-120 
days. This helps the FCO to know where to put follow up efforts. At 120 days before 
writing off the loan efforts are made to take the assets that would have been 
pledged during the loan assessment. 
Comments and Issues to address 
a) Given the current quality of the portfolio it is evident that ISWFT has a problem 
of delinquency. One of the major aspects of successful MFI has been the 
inclusion of clients/members in the monitoring process. The advantages are 
that: 
i) Groups take responsibility of monitoring each other and have a lot to lose if 
one member defaults. Therefore it is in their interest to ensure that payments 
are 100%. Members live in the same community and they are most likely to 
know when and why a member is defaulting than the FCO 
ii) It cuts down on monitoring expenses of ISWFT. For example it is much 
easier to visit a group of 10 groups of 10-15 members in a week than 10-150 
individuals 
iii) it also fosters the spirit of solidarity 
b) The time taken to do loan utilization inspection is far too long. In a period of 2-3 
weeks a lot can happen. It would be advisable to aim for ad hoc visits within 3-
5 days after disbursement. 
4.4 Lending Methodologies 
Lending methodologies play a vital role in the way financial services are delivered 
and influence the overall financial performance of the MFI. There are two broad 
categories of methods used in the industry based on how the MFI delivers and 
guarantees its loans. These are: 
o individual loans are delivered to an individual based on ability to provide 
assurances of repayment and some level of security, and 
o group loans approach make loans to the groups i.e. either to individuals who 
are members of the group and guarantee each other’s loans or to groups 
that then sub-loan(on-lend) to their members 
ISWFT currently employs three lending methodologies and these are described as 
follows: 
Individual lending - The individual lending methodology was the initial 
methodology used since inception. This simply means an individual applies for a 
loan and the loan is granted based on the 20% savings and 80% guarantor or 
household assets. 
25 
Group enterprise lending - The group that is involved in the same business 
applies for a loan and loan is granted in the name of the group. If a group of 5 
members who are in the business of rearing chickens apply for a loan the loan is 
considered as one loan and disbursed in the name of the group. 
Group Lending - The group applies for a loan but each individual receives what her 
business requires. However the loan is written in the name of the individual. This is 
a recent methodology. ISWFT does not facilitate the formation of the groups; 
instead it adopts already existing groups in the area in which ISWFT is operating. 
These groups could have been formed for different purposes such as agricultural, 
water and sanitation program, food programs etcetera. Their coming to ISWFT is 
specifically to access financial services. 
Comments and issues to address 
These lending methodologies are common in most microfinance programs. 
However, there is a striking difference with the way ISWFT is implementing them, 
which I think would be important to unpack. 
a) It is not that common to start operating a microfinance program using an 
individual lending methodology. The main reasons for using group lending 
methodology are: 
• to promote solidarity among participants, 
• to lay the ground for an effective mutual guarantee system7
, 
• to replace collateral requirements which for individual lending tend to be 
household assets 
• to reduce costs of delivering financial services as group will perform many 
of the administrative duties 
• for group members to benefit from each others guidance and support 
Individual lending is normally used as a graduation from group solidarity lending. For 
example members start with a small initial loan of E500, and when they reach the 
E5000 level can now graduate to an individual program or another group with lesser 
members. This could be after 5-6 loan cycles during which time the MFI builds 
confidence in the client and the client build her creditworthiness. When the member 
graduates the MFI does not need to maintain close monitoring. 
The influence of formal financial institutions lending methodology decisions is very 
evident in the ISWFT‘s individual lending. This includes assessment of client 
characteristics, cash flow, debt capacity and collateral/guarantors to motivate 
members to repay loans. However, given the current status it would appear that 
individual methodology for consumer loans is working well in urban areas. 
Although ISWFT has a small portfolio of groups (464 members) the groups are not 
operating to assume the responsibilities needed for a mutual guarantee system to 
be effective. Staff would like to implement a group lending methodology, but they do 
not seem convinced about its effectiveness. The initial reaction was that Swazi 
people do not like working in groups, but examples were given of cooperatives, 
informal burial schemes, and informal savings. What seems to be lacking is 
 
7 Details of group lending methodology are covered in the one day workshop 
26 
empowering the groups to assume many of the tasks that FCO is undertaking, instill 
and foster the understanding that members own the processes thereof. 
b) Group enterprise lending is very common and is encouraged for ISWFT to 
continue. 
Group lending methodology is the most common lending methodology used by 
many microfinance programs targeting the poor. ISWFT’s approach is slightly 
different in that ISWFT is adopting already formed groups. These groups are formed 
by other NGOs and programs focusing on agricultural and other non financial 
activities. 
ISWFT is already facilitating the formation of LMCs. An LMC is formed when at least 
15 people indicate interest in ISWFT’s services. They set a meeting and the FCO 
visits them to explain how ISWFT operates. The current approach does not include 
developing that LMC to take responsibilities and understand their role particularly in 
monitoring loan repayments. An observation made during field visits indicates that 
LMCs do not perform roles and responsibilities that compliment ISWFT’s efforts in 
the assessment and monitoring of loans. For example in one meeting during 
discussions of defaulters, one member stood up and said “if we knew where these 
members are we would go and talk to them”. 
4.5 Impact Analysis 
Analyzing the impact of microfinance interventions is especially important if the 
interventions are ultimately aimed at reducing poverty incidences. If microfinance 
programs do not make efforts to determine who is being reached by microfinance 
services and how these services are affecting their lives, it becomes difficult to 
justify microfinance as a tool for poverty reduction (one of the strategies adopted for 
achieving millennium development goals). Decisions about the degree, frequency, 
and depth of impact analysis involve considerations of the following factors: 
o The time and cost 
o The disruption to institution and its clients 
o The way the results will be used 
Impact measurements are at two levels i.e. at household and individual levels and a 
number of tools are available to carry such assessments. 
The vision and mission statements of ISWFT indicate the need to improve the lives 
of the Swazi poor women. ISWFT envisages making an impact in the lives of its 
members by providing both financial and non financial services. The system used in 
measuring this impact is by testimonies given during the business training session 
by members who have participated in the program and have improved their lives as 
well as expanded their businesses. The testimonies are, however, not documented 
in any form. 
The main challenge is lack of follow up mechanisms, impact assessment indicators 
or institutional performance measurements in place to determine the operations and 
how close in achieving the mission and vision. 
27 
The current business plan – strategic objective 4 indicates the need for collecting 
feedback from members on a regular basis as a way of improving on member 
retention as well as enhancing performance and quality of services, impact, 
outreach and visibility. This has not been accomplished due to lack of expertise in 
designing the relevant feedback mechanisms. 
Comments and Issues to address 
Impact can be viewed differently, for example there is impact of outreach, quality 
portfolio, efficiency and sustainability. These are at financial aspect of the institution, 
whereas to improve the lives of the members goes beyond financial level. It includes 
social aspects of the member and these have to be measured to ensure impact 
thereof. 
Important as it is to measuring impact, it is an expensive exercise to do as an 
individual organization. Many MFIs collaborate with institutions such as universities 
or other expert organizations. However there are some tools which MFIs use in 
selecting their clientele. They use the same tool after a period of accessing loans 
and assess whether any changes have taken place (negative and positive): Such 
tools include: 
o Wealth Ranking – used mostly by programs targeting the very poor like the 
SHG. Small Enterprise Foundation of South Africa also uses this tool. 
o Housing Index – also commonly used. It assesses the housing status of the 
prospective member and is widely used in Asia and some parts of Africa 
including South Africa and Angola 
o Means Test – also commonly used to assess the socio-economic status of 
the member and is widely used by Opportunity International microfinance 
network. 
These tools are used when the prospective client joins the MFI and are periodically 
used to assess any differences in the initial indicators. They do not need an outsider 
or a special unity to administer. They can be administered quite easily during the 
group/LMC meetings 
ISWFT is encouraged to design and develop a selection tool for members accessing 
loans. It does not have to be used for selection of members to participate in the 
program since ISWFT is membership organization, every member expects to 
access services. The tool can be used to take stock of members’ status when 
joining. The reverse of same tool would be used periodically to assess any changes 
that might have taken place. 
There are also other tools to measure the level of satisfaction and why members 
leave the program and therefore help to get to know clients needs better. These 
help to improve on service delivery, enhance performance and the quality of 
services, impact, outreach and visibility. 
5.0 Management Information System 
The management information system (MIS) of MFIs includes all systems used to 
generate information that guides management in its decisions and actions. The MIS 
can be seen as a map of the activities that are carried out by the MFI. It monitors the 
28 
operations and provides reports that reflect the information that management 
considers the most significant to track. Staff, management, board, donors, clients, 
and other stakeholders rely on the reports produced by the MIS. 
ISWFT acquired a management information system called Loan Performer (LP) two 
years ago. LP is one of the MIS systems for microfinance programs recommended 
by CGAP. It has been on the market for over 10 years and has the capacity to 
integrate the loan tracking system and the institutional accounts. 
Comments and Issues to address 
It has already been established that the current MIS system has some bugs that 
need to be sorted out through the assistance of the service provider. It would be 
advisable at this stage to re-assess the MIS needs by ISWFT so that when 
communicating with the LP service provider all the queries are dealt with at one time 
to avoid communication costs. 
i) Data efficiency and credibility 
It was observed that there are some discrepancies in the production and information 
contained in some reports. ISWFT is currently experiencing problems with 
suspected bugs in the LP that are affecting the integrity of the reports being 
produced. For example when you print an outstanding report as of 30th March 2007 
and request the same report for the same period at a later date the data produced is 
different Some reports cannot be generated and this could be due to the initial 
configuration of the LP. For example FCO does not know how many savers and or 
number of members on funeral schemes there are because this information is not 
readily available for them. Yet this is important information for an FCO to manage 
his/her constituent efficiently. 
ii) Report generation capabilities. 
The LP generates a number of reports that inform ISWFT of its outreach and quality 
of its portfolio. Although the LP is capable of generating more reports such as 
efficiency and sustainability levels, it is currently not configured to do that. This 
results in lack of critical information for subsequent actions. The LP is, however, 
capable of producing reports which can be used by management, board and clients. 
iii) Reports recommended. 
Some of the important management reports that are needed for the operation will 
include: 
a. LMC - Management information system (LMCMIS) 
b. FCO information system (FCOMIS) and 
c. Branch Management information system (BMIS) 
o The LMCMIS is a demand-driven management information system that 
shows the outreach and disbursements at LMC level. This will help the 
FCOs to know at what capacity they are operating with all their LMCs 
and then to strategize and develop an action plan on how together with 
the LMC leaders they can fulfill their planned outreach targets. The 
29 
LMCMIS will constitute the overall perspective for each a FCO 
Management Information System. 
o FCOMIS will assist the Branch Manager to see at what level each FCO 
is operating both on outreach and disbursement. This will assist the 
Branch Manager/CEO to manage each FCO accordingly with regard to 
each of their portfolios. Workshops and other management interventions 
can be initiated to try and assist those who are struggling to perform at 
the required level. The summary of all the FCO Management Information 
System will constitute a branch level Management Information System. 
o With the BMIS senior management can monitor all the Branches 
performance on a weekly basis and also on a monthly basis to allow 
management to act in time if there is any discrepancy. 
All of the above reports will be reconciled to the LP report to ensure that there is no 
discrepancy that would allow faking of the information in their favor. 
iv) Challenges 
Another challenging problem is the interface of LP and the accounting system. This 
problem is not unique to ISWFT many MFIs experience it particularly when scaling 
up operations. The need for the interface lies in integrating the performance of the 
financial products with the accounting system. This becomes cumbersome (to 
integrate manually) if the financial products continue to grow beyond current levels. 
However the LP has an accounting system which only needs to be activated8
. 
6.0 Finance and Accounts 
Although the standards guiding accounting and auditing procedures vary greatly 
from country to country, there are almost always basic principles that determine the 
underlying logic of the accounting side of management information systems. The 
evaluation was limited to processes affecting credit operations specifically how 
disbursements, repayments, deposits and monitoring of expenses are done. 
6.1 Structure and responsibilities 
 
The administrative structure of the MFI affects the performance of an MFI in terms 
of costs and efficiency. Management and support staff create fixed overheads. It is 
also important to understand the policies that assist to manage and monitor 
finances, distribution of authority and responsibilities within the MFI. 
Currently, the finance and accounting unit is comprised of 4 tellers, 1 finance clerk, 
1 finance and admin officer, 2 guards and 3 cleaners. There was a Finance 
Manager but she left the organization at end of June, 2007. 
The units’ responsibilities include: 
o Making payments to creditors (including loan disbursements) 
 
8 The consultant got in touch with the LP service provider and confirmed that the LP has an accounting system which needs 
to be activated. Communication has been initialized between ISWFT and LP service provider 
30 
o Bank reconciliation (including members repayments, savings and funeral 
scheme deposits) 
o Managing the staff, tellers and cleaners 
o Reconcile pastel (the accounting system) and the LP (MIS interface) 
o Posting all receivables (savings, funeral scheme, loan repayments, and all 
related fees) 
o Reconciling payables (transport, petty cash, newspapers, teas cleaning 
materials etc) 
All of the above have a bearing on the credit operations. 
6.2 Disbursements and Repayments 
When the loan applications status has been determined they go to the finance and 
accounting unit for disbursements. Currently for all members with bank accounts 
their disbursement is done through their bank. A cheque is written in their name to 
deposit in their account. For non account holders a cheque is written in their name 
and told which bank to go and cash it, (some cheques are written in the name of the 
supplier, depending on the use of the money) 
With regards to repayments members can deposit them in any of ISWFT bank 
accounts, namely Nedbank, Swazi Bank, FNB or Standard Bank. 
The finance and accounts unit is facing some challenges and these are detailed as 
follows: 
a) The unit is finding it very cumbersome to reconcile with all the deposits made 
by the members through the various 4 banks that ISWFT does business 
with. For example a member may deposit with FNB this month and next 
month with Swazi Bank and so on. This takes longer to track all deposits 
made and in some cases delays the loan disbursement process, since it is a 
policy to verify all payments of the previous loan. 
b) The banks sometimes do not put reference numbers on the deposits made 
by members and it becomes difficult to trace which member has made that 
deposit 
c) IMBITA charges its members E1.00 for bank charges. This is however not 
sufficient to off set the actual bank charges. FNB is more expensive 
compared to other ISWFT accounts. 
Two of the issues are internal and the other is external. With regards to the external 
issue ISWFT needs to discuss with the respective banks and come to some 
agreement as to how to alleviate such problems9
. It appears as if the banking 
personnel are not doing their job properly as this, I would think, is a standard 
procedure. 
As for the internal problem ISWFT should consider to consolidating the accounts 
according to use. For example: 
a) To have separate accounts for separate use, 
FNB- 01 Savings 
FNB -02 Loan Fund 
 
9 FNB agreed this should not be happening and promised to look into it seriously. 
31 
FNB -03 Repayments 
FNB-04 SHG 
FNB-05 General Admin 
FNB-06 Funeral Scheme 
FNB-07 ISWFT staff scheme 
b) To have a separate bank for a particular activity, which ever way ISWFT 
decides. All it means, is that, there is need for consolidation, to make it 
easier to track and trace financial activities. 
Although IMBITA charges E1.00 for bank charges the actual expense is far too high. 
This however is something most MFIs battle with. Negotiating for a better rate is 
how most MFIs have gotten out this challenge. 
6.3 Monitoring expenses
Other aspects of financial management that impact on the credit operations include 
administrative expenses related to credit operations. The 2006/7 fiscal year 
expenditure shows the top five categories of high expenses as salaries, bank 
charges, communication, technical support and transport. The evaluation examined 
transport expenses in detail, even though it is only 3% of total expenses. The 
reason is that transport needs close monitoring, otherwise expenses are more likely 
to escalaet as the fleet gets older. 
 
Transport 
ISWFT has a fleet of 6 pick up vehicles. Given the semi-centralized operative 
structure of ISWFT in the four regions of Swaziland transport expenses are 
expected to be high and therefore need close monitoring. ISWFT operates a central 
filling station where each vehicle fuels. Each vehicle has a log book to monitor 
mileage, fuel and oil. 
However the log books are not monitored and analyzed at all. Therefore, it is difficult 
to assess usage and this is evidenced by the fact that none of the FCO knows the 
exact distances between head office and their field destinations. 
With regards to bank charges ISWFT has negotiated and got a better rate with FNB. 
The same should be done with other banks 
Salaries are dependent on the country salary structures for the sector. However, the 
other way of controlling salary expenses is to have FCOs on a basic salary and use 
an incentive system to boost their income. 
6.4 Budgeting process and Financial Planning 
The current budgeting process is informed by previous performance. The basis to 
set targets is not well articulated. For example if the FCO managed to handle a 
workload of 200 active loans this year it may be decided that she can handle 50 or 
60. It is important to use the capacity of the FCO but more so of the area in which 
she is operating. The weakness with this projection is that there is no consideration 
given to the capital in hand as well as the financial costs incurred on a yearly basis. 
ISWFT is aware of the cross-section of the member’s potential. This should be 
32 
capitalized to enable more revenue to be earned. Coordination is needed here 
between the finance unit, credit operations and the CEO to ensure that the 
forecasting cover all the areas. 
The whole budgeting and financial planning should be informed by the following: 
o Number of groups, new and old, number of cycles before moving into the 
next tier, etc. 
o average loan sizes for the above 
o Outstanding amount at beginning of the period 
o Planned disbursements new and old loans 
o Repayments etcetera 
Comments and Issues to address 
There are tools in the microfinance industry that ISWFT can use to assist in 
budgeting and financial planning. Microfin is a widely used tool. This tool provides 
the following: 
o Business Planning – This incorporates both strategic and operational 
planning for achieving outreach and sustainability 
o Strategic planning – This articulates broad institutional goals for the future 
based on an assessment of the current situation 
o Operational Planning – This projects how to pursue the goals outlined during 
strategic planning 
o Financial modelling – This process expresses the plan in financial terms 
The budgeting and financial planning becomes more important particularly now that 
ISWFT is decentralizing. It is now more important than before to treat each 
region/branch as a cost centre. This means that each branch will have its budget 
and manage its own expenses. This will also assist in understanding areas that are 
performing well and areas that need assistance. 
7.0 Financial Performance 
Financial strength is the primary indicator of the overall efficiency and long term 
viability of an MFI. An MFI is financially sound and sustainable when it generates 
sufficient income from its investment activities to cover operational and financial 
costs and main the real value of its equity base. There are therefore a number of 
indicators that informs the MFI of its financial performance. What is of significance 
here is the ability to interpret the financial reports. What is important to remember in 
using indicators, is that numbers alone do not tell everything about the MFI. 
Indicators need to be complemented by discussions with staff, board and clients 
with close attention to morale and perceptions. 
The evaluation focused on the productivity and profitability indicator. 
7.1 Productivity and efficiency ratios 
The productivity and efficiency ratios provide information about the rate at which 
ISWFT generates revenue to cover its expenses. Calculating and comparing these 
33 
ratios over time helps management to determine whether they are maximizing their 
use of resources. These ratios are of more interest to management and board, 
particularly in understanding the best use of resources and providing services at 
least cost, as well as checking on possibilities of mission drift. 
Productivity ratios measure how productive the field staff is and efficiency ratios 
measure the cost of providing services (loans) to generate income. There are a 
number of efficiency ratios including, operating cost, cost per unit of currency lent 
and cost per loan made. The evaluation looked at the performance of FCOs and 
cost per loan made. 
Table 4: FCO’s Performance 
 Lubombo Manzini Hhohho Shiselweni Total 
No of active 
loans 
197 332 202 109 840 
No of CFO 1 1 1 1 4 
MFI avg 400 400 400 400 1600 
Shortfall 203 68 198 291 720 
% capacity 49% 83% 51% 27% 53% 
Table 4 shows that the FCOs have not reached their maximum workload. Given the 
industry average of 400 per FCO, the current average of active clients, per FCO 
shows that the present capacity is only high for Manzini (83%), with a shortfall of 68 
loans. The lowest capacity is in Shiselweni with a shortfall of 291 loans. Overall 
there is a shortfall of 360, which indicates that ISWFT is operating below capacity 
and contributes to a low operating efficiency. 
The standard used has been proven in other countries such as South Africa, 
Zimbabwe and Zambia and other African states. However it is noted that these 
countries have bigger MFIs, and have been in the industry for sometime and have 
different socio-economic situations from that of Swaziland. No known studies of this 
nature have been made on similar MFIs in Lesotho, Namibia or Botswana which 
appear to share the same socio-economic and demographic status. 
Table 5: Cost per loan 
Year Operating 
costs 
Total # of 
loan 
disbursed 
Amnt 
disbursed
Avg 
loan 
size 
Cost 
per 
loan 
2004 - 1165 4,749,489 4077 0 
2005 673,110 894 3,926,352 4391 753 
2006 702,542 840 3,894,309 4636 836 
Cost per loan measure assesses credit operating cost relative to the number of 
loans disbursed. Table 5 indicates that in 2005 it cost ISWFT E753 to disburse a 
loan, where as in 2006 it was E.836. Trend is on the upward move indicating that 
efficiency is going down. 
34 
Cost per loan is also measured in the context of average loan size. If the cost of the 
loan is near the average size of the loan then the MFI is spending as much as the 
loan amount to disburse the loan, which would indicate that operations are too 
expensive. Although there are no industry absolute standards the trend over time 
should be downwards as staff becomes more skilled and as management 
information systems are developed10. 
Comments and Issues to address 
Tables 4 and 5 indicate that there is room to improve on current productivity and 
efficiency. Section 4.3.2 above shows that ISWFT is taking too long to release 
subsequent loans. Therefore, one way of improving productivity and efficiency is to 
streamline the loan processing system, increase productivity and cut down on 
expenses. For example, to increase productivity by 2 groups (10clients) per month 
will take Manzini 7 months, Hhohho 20, Shiselweni 29 and Lumbobo 20 months. 
This will improve cost per loan. Another way is to implement a group lending 
methodology as opposed to individual lending. This will increase the number of 
active clients per FCO 
7.2 Profitability ratios 
Profitability ratios measure ISWFT’s net income in relation to the structure of its 
balance sheet. This helps management to determine whether they are earning 
adequate return on funds invested, i.e. profit is stated as a % return on assets. If an 
MFI is to serve its clients over the long term, then achieving self sufficiency needs to 
be a key objective. 
There are three ratios commonly used in calculating profitability and self sufficiency. 
These include, return on assets and equity, financial sustainability (operational and 
institutional) and portfolio at risk. 
Table 6: Breakdown of income from 2005 to 2007 
 
 
Year 
 Total 
Income 
earned 
Interest from 
Loans 
Interest from 
Bank 
investments 
Other 
sources 
2004 - - - 
2005 1,867,506, 1,245,321 
(67%) 
265,113 357,072 
2006 1,840,527 1,179,479 
(64%) 
178,000 483,048 
Total 3,708,033 2,424,800 
(65%) 
443,113 840,120 
Note: other sources of income include: membership fees, renewal fees, transaction fees, application 
and contract fees, rent income and sale of assets11
 
10 Principles and Practices of financial Management for microenterprise lenders, Women World Banking, 1994 
11 IMBITA income and expenditure statement 2006 and 2007
35 
Table 6 indicates the sources of income for ISWFT. For the two years ISWFT 
generated 65% of its income from interest from the loan portfolio, with least 
generated from bank investments. 
Table 7: Operational Expenses 2004 to 2007 
 Year Salary Admin Total Sufficiency 
% 
 2004 - - 
 2005 424,465 548,645 973,110 128% 
 2006 541,789 512,533 1,054,322 112% 
Total 
Table 7 shows all the expenses related to credit operations (training expenses not 
included). There has been an increase in total expenses in 2006, particularly on 
salaries. This can be attributed to the hiring of two new FCOs. 
The table also indicates that credit operations are self sustaining, even though the 
rate dropped by 16% in 2006. The increase in salaries could have had an effect on 
this ratio. 
Table 8: Institutional Expenses 2004 to 2007 
 Year Salary Admin Total Sufficiency 
 2004 - - 
 2005 1,437,645 1,009,345 2,446,990 76% 
 2006 1,391,454 852,899 2,244,353 82% 
Total 
Table 8 shows the institutional expenses, this includes all the head office and the 
branch offices. The self sufficiency rate is on the upward trend, at 82% in 2006, 
compared to 76% in 2005.
Table 9: Portfolio at Risk 
Year Outstanding portfolio 
with arrears 
Outstanding 
Portfolio 
% of 
PAR 
2005 2,512,734 4,198,454 60% 
2006 1,934,590 4,017,558 48% 
2007 2,328,476 3,670,398 63% 
Table 9 demonstrates the portfolio that is at risk of more than 30 days. The portfolio 
at risk has been fluctuating over the years and as end of March 2007 was 63%. This 
means more than half of the portfolio is at risk. The industry best practice is 2-5% 
Comments and Issues to address 
Expenses 
Comparing the two expenses (operational and institutional) it appears that the credit 
operations are almost a third of the total institutional costs. It is generally accepted 
36 
that the general admin expenses should be at least between 20-25% of the total 
institutions expenses. 
Second largest expense are the write offs followed by the bank charges. The write 
offs can be improved by improving the quality of the portfolio. For the bank charges 
ISWFT has already negotiated for better rates, but control can be realized by 
rationalizing writing of cheques and other transactions. 
Portfolio at risk 
While previous evaluations attributed the high rate of portfolio at risk to ISWFT’s 
inability to accurately account for repayments made by members as this was done 
manually, it is not the same as of now because the reconciliation system by Pastel 
with banks has improved a lot and a tracking system has been installed which helps 
quite significantly. The current situation indicates a problem of delinquency. This 
situation can not continue as it will erode the loan book sooner than later. The issue 
of delinquency will be addressed during the one day workshop prepared as part of 
this assignment. There is need to revisit the monitoring strategies as indicated in 
section 4.3.3 above 
ISWFT should consider holding disbursements particularly to the business loans 
which have been performing badly over the years, and recoup what is owed. At the 
same time it should assess the type of businesses which are badly affected and find 
strategies of how to deal with them. 
Productivity and Sufficiency levels 
The following growth scenarios are for new loans only. 
Low growth Assumptions 
a) FCOs 
b) groups per month per FCO(10 clients) 
c) Average new loan size E.1000 
d) Maintain current levels of expenses and income 
Low 
growth Groups Clients Disbursement
Shortfall 
income Total income Expenses 
 152 760 760,000 228,000 2,068,527 2,244,353 
Self 
Sufficiency 92% 
Increase production by 10% will require E.760,000 for disbursement. 
Medium growth Assumptions 
a) 4 FCOs 
b) 3 groups for old FCOs and 4 groups for new FCOs per month per FCO(15 
and 20 clients) 
c) Average new loan size E.1000 
d) Increased expenses and maintain current levels of income 
37 
Medium 
growth Groups clients Disbursements
Shortfall 
income Total income Expenses 
 336 1,680 1,680,000 504,000 2,344,527 2,660,353 
Self 
Sufficiency 88% 
The 88% for the medium growth is for new loans only and will require E.1, 680,000. 
This will be in addition to current planned disbursements. 
7.3 Capital Available 
It is important to establish the capital available for ISWFT for its operations for the 
rest of the fiscal year 
Table 10: Donor Funds 2004-2007
Table 11: ISWFT Capital available 
Amount Type Where the money is? 
3,670,398 Outstanding 
loans 
With members 
6,809,493 Savings Investment account 
34,985 Funeral scheme Investment account 
10,514,876 Total
Table 10 indicates the funding partners of ISWFT. KNH and Geneva Global have 
been funding ISWFT for the past two and three years respectively. IFAD is new and 
the funding is ear-marked start from September 2007. 
The total capital available for loans in 2007/08 is E.5, 406, 072. 
Comments and issues to address 
ISWFT need to identify a funding partner interested in microfinance activities and 
develops a proposal for the next three years. This requires an in-depth planning 
exercise particularly on the loan portfolio. 
8.0 Human Resource and Technical Assistance
Providing financial services to the poor is a complex process that requires many 
different kinds of skills and functions. 
Over the years ISWFT received training and technical assistance through 
collaborations with a number of organizations notably: 
Year Donor Loan Fund Admin Training Total 
 IFAD 1,000,000 150,000 250,000 1,400,000 
 KNH 180,000 
 Geneva Global 100,00 55,674 
Total 1,280,000 205,674 250,000 1,735,674 
38 
a) Skills Share who provided assistance in building systems and best practices 
from 1991 – 1997. 
b) Loan Performer who installed the MIS and provided training to staff on how 
to use it 
c) Opportunity International who provided assistance in developing the 
business plan for 2002-2005 and 2005-2007 
The above technical assistance has helped ISWFT to progress to where it is now. 
Systems and procedures are well documented and the business plans have been 
used as the operating management tool. 
In terms of staff development programs, ISWFT participated in a number of training 
workshops, which included: 
o Credit rating by techno-serve, attended by 2 FCOs 
o Microfinance for Loan Officers – University of Pretoria, South Africa, attended 
by 1 member of staff. 
While ISWFT confirms that the training was helpful, it also stressed that it is too 
costly to be sending its personnel outside the country. 
Comments and issues to address 
a) Although ISWFT has shown capacity to mobilize staff training resources, 
training and technical assistance continue to be a challenge. ISWFT lacks skills 
and expertise in the following areas: 
• delinquency management 
• portfolio management and analysis 
• financial management for MFIs 
• strategic planning and financial modeling 
• Board members long term strategic planning and sustainability 
b) ISWFT’s business plan for 2005-07 indicated the need for training in order to 
improve on performance and organizational development. The training that 
ISWFT personnel received so far has not been as part of a staff development 
plan. Instead it was more of reaction to invitations to participate. The previous 
evaluation 2000-2001 and the business plan indicated that the board would 
benefit from an exposure to microfinance good governance, experiences and 
best practices. No board member has had any training apart from attending 
conferences, which in itself is also good exposure. The lack of participation can 
be attributed to a shortage of financial resources restricting ISWFT from 
building the capacity for its personnel. 
c) There is need to focus on internal human and intellectual capacity and this 
entails hiring, mentoring and training the necessary personnel including board 
members. There is a challenge however on hiring as there is generally a 
shortage of experienced microfinance people in Swaziland and indeed in the 
region. Therefore ISWFT will have to invest into mentorship and to train on the 
job so as to build the required capacity. 
d) ISWFT needs to fill in the position of the finance manager as a matter of 
urgency. 
39 
e) ISWFT also has to have one officer specifically to manage MIS. 
f) To get trained on how to use the Microfin – a financial modeling tool for 
microfinance. It would be helpful to assess the need for microfin training by 
other MFIs in Swaziland and pull resources together for a joint training12. 
9.0 Stakeholders analysis 
Stakeholders’ analysis in this report refers to the analysis of key service providers in 
the microfinance sector of Swaziland. The analysis helps to assess what products 
and services are being provided, how they provided the provisions and most 
importantly the capacity within the sector are. The analysis was informed by 
meetings which were held with some of the stakeholders and literature review. 
Annex 4, shows some of the key players in the microfinance sector. In Swaziland, 
there are several types of institutions that provide financial and non financial 
services to the poor. These are commercial microfinance, savings and credit 
cooperatives, government financial programmes, NGO-lenders of financial and 
training programmes (where ISWFT falls under), and informal lenders often referred 
to as “shylocks”. 
Both commercial banks admitted that they are not reaching to the same level of 
microentrepreneurs as do the NGO-MFIs. The reasons given for not scaling down to 
that level included the high risk associated with micro-entrepreneurs, lack of tangible 
collateral and that the average loan sizes are too small for the banks. FINCORP on 
the other hand did provide financial and non financial services for the 
microentrepreneurs targeting the same clientele as the NGO-MFIs. However over 
the time it has moved to the top of the ladder. Currently the initial average loan size 
is E.10, 000 and it does not provide training anymore. 
As far as training and technical assistance most of these stakeholders do benefit 
from their networks. For instance World Vision sends its staff for training organized 
for World Vision microfinance staff. Most of the training is held outside the country. 
World Vision confirms, it does not have the capacity to provide microfinance training 
internally. It does not provide BDS. 
Section 2.3 above, indicates that the sector is dominated by SACOOs, micro￾lenders and a few NGO-MFIs. The snap survey done by UNDP in 2000-2001 
identified well over 50 SACOOS in Swaziland. However observations made during 
the evaluation indicate that not many are still in existence. Reasons for closing shop 
included, delinquency problems, bad management and lack of funds. 
Given the situation above three main issues emerge. These are: 
• Firstly, ISWFT remains relevant to the sector and 
• Secondly its services are in demand 
• Thirdly, there does not seem to be any viable opportunities for 
collaboration particularly on microfinance training and BDS for clients. 
 
12 This training is usually held in South Africa - CapeTown for the SADC region
40 
10.0 Emerging issues 
 
The above analysis has shown that ISWFT is growing and becoming more 
sophisticated. With growth there are some challenges that it has to address. The 
following are some of the challenges and opportunities observed: 
10.1 Decentralization and MIS network 
Decentralization is very important particularly in increasing outreach efforts, making 
impact and moving towards financial sufficiency. Decentralization in the 
microfinance industry is associated with the horizontal expansion which entails 
opening up of branches where the desired clientele are. This means going where 
the clients are and it helps the MFI to: 
o Build up relationships 
o Acquire information 
o Speed up transactions, 
o Enforce compliance, and most importantly to know its clients better 
Opening up a branch comes with related costs and MFI should consider whether 
opening up a branch is more cost effective than before. This means there should be 
a resource plan. A typical branch structure that has potential to be sustainable has 
the following features: 
o Branch manager 
o Credit officers (6-8) 
o Teller 
o Finance Clerk 
o Clear/guard 
ISWFT has now two regional offices - Siteki and Pigg’s Peak (which are being 
treated as branches) but they are not yet functional as staff members are still based 
at the head office. 
Comments and Issues to address 
There are a number of challenges that ISWFT needs to address. 
Firstly, is the challenge of the branch structure as given above. Given the 
demographic situation of Swaziland ISWFT can plan to gradually add on an FCO as 
and when needed, because operating a branch with 1 FCO is not viable. This 
means that ISWFT has to develop an expansion plan that takes cognizance of this 
situation, thus addressing issues of recruitment, training and financial plan. The 
challenge is the capacity of the credit officers to generate enough business to offset 
the portfolio short falls as identified in section 9 above. 
Secondly, ISWFT needs to treat each region/branch as a cost centre as indicated in 
section 7 of this report. Each region/branch should now be responsible for its 
member mobilization, loan processing, income and expenditure. To do this, it means 
the board, management and staff require sensitization and good understanding and 
appreciation of the new roles and responsibilities. This can be done by 
strengthening the knowledge base in microfinance operations, particularly in: 
41 
o Financial management 
o Portfolio management 
o Budgeting process and financial planning 
o Group lending fundamentals 
o Marketing 
o Resource mobilization 
Thirdly, for decentralization to be effective and improve on efficiency there is need to 
put MIS on a network system. 
10.2 Self Help Groups 
ISWFT is collaborating with the Kinder Not Hilfe13 development program in 
Swaziland. KNH works through local NGOs and in Africa its presence are in 
Swaziland, Ethiopia, South Africa, Uganda and Rwanda. In Swaziland the program 
is focusing on self help groups (SHG), the passive poor with the aim to assist them 
to develop their lives. to ensure homogeneity 
KNH-SHG does not provide welfare assistance. The thrust of the KNH-SHG is in 
group formation and to use these groups to realize each others potentials. 
The KNH-SHGs is currently working in the remote areas in all the regions of 
Swaziland. The process starts with the understanding of how groups work and how 
effective they are. The KNH-SHG work through a number of levels as follows: 
• first level is the SHG groups of 15-20, dealing mainly with micro issues 
• the second level is the Cluster Level Association (CLA) formed by 8-10 SHGs, 
dealing mainly with meso issues 
Role of ISWFT 
Since 2005 when the program started operating in Swaziland it has been housed in 
ISWFT. The program has a manager (seconded by KNH) and a coordinator (a 
Swazi). 
Comments and Issues to address 
The KNH-SHG is providing all the training required to strengthen groups and to 
ensure group mutual guarantees. This entails ensuring that all the necessary 
resources are planned for so that when the program with KNH ends the IISWFT – 
SHG program will continue operating in Swaziland. This is an opportunity for ISWFT 
needs to capitalize on particularly to adopt expertise in working with groups. 
Experience has shown how SHGs contribute to the empowerment of individuals, 
communities and the nation as a whole. 
 
13 KNH is a Germany based organization operating in 27 countries supporting the development of children and youth and the 
poor.
42 
10.3 Good Governance 
During the exercise two observations were made on issues pertaining to good 
governance. These are: 
a) It is ISWFT’s practice that the serving board can also access loans. While it 
is good practice to have a board from within membership it is equally 
important to consider policies which are not in conflict with individual 
interest14. For example accessing a loan especially when the same board is 
also a credit committee for loans beyond E5000, this creates conflict of 
interest. It would be encouraging to stipulate that serving board members 
cannot access loans. 
b) The current board is comprised of banker, training manager and three 
entrepreneurs. The main concern is lack of microfinance skills and expertise 
in the composition of the current board. This is also evidenced by lack of 
long term strategies to achieve sustainability. One of the recommended 
policies for microfinance serving boards is to have a mixture of experiences 
and expertise to ensure an intelligent direction of the organization towards 
achieving its mission and vision in a sustainable manner. It would therefore 
be desirable to incorporate at least two microfinance experts to serve on the 
board. This means opening up participation to include outside experts. 
11.0 Conclusions and Recommendations 
ISWFT has remained a small organization, growing steadily, and has doubled its 
staff from 7 in 2000 to the current 14. Its mission is to improve the lives of low 
income women and indeed over the past 16 years has build a track record of 
providing financial services to the low income households of Swazi women. ISWFT 
elects its board of directors from its membership and has a well documented 
constitution which governs its activities. 
Management of the ISWFT is under the directorship of a CEO with the support of 13 
members of staff. ISWFT has three main operative units i.e. credit operations, 
general administration and finance, and training. 
ISWFT’s program is characterized by: 
o Provision of multiple financial services 
o Individual lending methodology 
o Access to repeat and larger loans (E500 to E160000) based on repayment 
performance 
o Presence in both urban and rural areas 
o Meeting 112% of its operational and 82% of its institutional cost 
ISWFT has staff that are committed and motivated to see ISWFT move on to the 
next level. It’s lean and thin organizational structure has potential to make effective 
and efficient use of its management and staff members. Since its inception ISWFT 
has enjoyed financial and technical assistance from several organizations and this 
indicates that it is strong at networking and developing relationships with key 
 
14 This issue was not delved into because the SOW excluded such a topic 
43 
stakeholders who have a deep seated interest in poverty alleviation through 
economic development. 
However, ISWFT has some weaknesses which threaten its sustainability efforts. 
Even though it has good networking abilities the lack of adequate financial 
resources restricts the institution from building capacity of its staff, board members 
and members. A skills gap exists among the staff and the board to be able to move 
ISWFT to the next developmental level. In addition to that the outreach mechanism 
of LMCs is weak to assume some responsibilities that would improve the quality of 
the portfolio. 
There are three common stages of growth i.e. start up, expansion and sustainable 
stage. The scaling up or expansion stage is defined in terms of outreach, portfolio 
quality, cost recovery and the sustainability stage means an MFI demonstrated 
capacity in all of the other two stages. 
Given the indicative time tables guiding principles for achieving sustainability ISWFT 
should be sustainable since it has been in operation since 1991. However the 
analysis above shows ISWFT to have moved from start up stage and is somewhere 
in the scaling up stage. The analysis indicates some of the challenges that ISWFT 
has been facing over the years. These include capacity building, innovation, 
funding, outreach and sustainability. One of the reasons cited for this state of affairs 
include, high cost structures, shortages of experts, low population density and 
remoteness, and difficulties in achieving high repayment rates. 
ISWFT has potential to be a leading player in the microfinance sector. It still has to 
battle with developing a viable operative and strategic plan and implement it 
accordingly. 
The recommendations provided below are meant to address some of the 
weaknesses identified in the credit operations of ISWFT and contribute to move a 
step further towards sustainability. 
11.1 Recommendations 
For microfinance programs to be sustainable, they require technical assistance in a 
variety of areas. These include training staff and clients, improving lending policies 
and procedures, developing effective means tests to target the poor, developing 
strategies for improving self-sufficiency, improving financial management, 
developing effective financial and management information systems, and 
establishing effective and independent governance structures. ISWFT has 
accomplished in some of these areas and would require assistance to move 
towards sustainability. 
The above analysis highlighted a number of areas that ISWFT needs to consider. 
The recommendations below follow in more detail on those aspects that ISWFT has 
to address to improve on current operations and to plan and project beyond 2007. 
44 
a) Products and services 
Financial products 
The current loan products are sufficient and are in demand. There is no need to 
develop a new product other than to consolidate by updating processes and 
procedures involved in accessing. However, HIV/AIDS is a concern. 
Recommendation: 
As a long term plan, ISWFT needs to develop an insurance scheme to safe guard 
against the consequences of HIV/AIDS. The design and development include 
assessing key factors, such as market, product and institution. ISWFT will require 
an expert in product development to assist in the development of an insurance 
scheme. 
Training 
The pending funding from IFAD (for both credit and training programs) gives ISWFT 
an opportunity to rationalize the training program. 
Recommendations: 
1. Immediate term plan is to refine current training arrangement. This 
includes: 
a. leaving the orientation of the new members to FCOs 
b. Designing and developing the training plan of the training unit. 
c. The training plan focusing on the provision of business development 
services (BDS) and leadership skills to the women entrepreneurs 
d. Program to be demand driven 
e. Charging a nominal fee 
f. Designing and developing a needs assessment instrument 
2. Long term plan 
Success in delivering BDS will inform the need to further develop training 
programs to include training for staff and board members and MFI sector 
b) Loan Processing 
Recommendations: 
a. To streamline the loan disbursement process particularly for members 
applying for a subsequent loan 
b. To design and structure loan terms so that it is easier to track 
performance and assist with financial planning and targeting. Such a 
structure include 3 months, 6 months, 9months and 12 months 
c. To include the LMC structure in loan appraisal and monitoring 
processes15. 
d. To restructure the group lending methodology by training the LMCs on 
group lending fundamentals. 
 
15 Training already provided 
45 
e. To maintain the individual lending for consumer loans only 
f. To design and develop a graduate tier for those reaching a E5,000 
g. To design and implement a group lending methodology16
h. To pilot group lending methodology starting with 1 group per branch. 
c) Management information system 
Recommendations: 
a. To make a list of all the problems that ISWFT is having with the Loan 
Performer and communicate with the service provider. 
b. To communicate with the service provider with regards to the integration 
of the loan tracking system and the accounts as this is possible with LP 
system. 
c. To put MIS on a network system 
d) Financial Management and performance 
Recommendations 
a. To identify a funding partner who can fund for at least 3 years ona 
continuous basis 
b. To develop a funding proposal that encompasses all that is required to 
move ISWFT towards sustainability 
c. To implement a group lending methodology 
d. To focus on getting the arrears on loans reduced 
e. To control expenditure by monitoring and analyzing the expenses 
periodically 
f. To use Microfin for budgeting and financial planning purposes. 
g. To implement one of the following growth scenarios 
e) Human resource and technical assistance 
Although ISWFT has shown the capacity to mobilize resources for staff and client 
development through training and technical assistance, there are still some 
challenges being faced as indicated above. 
Recommendations: 
1. To build capacity through mentorship particularly for management. It would be 
ideal if the mentor is an all rounder so that on job training takes place. An all rounder 
would be someone conversant with all areas of institutional development particularly 
in microfinance. Ideally it should be someone with hands on experience in 
implementing scaling up of microfinance programs and has implemented a 
successful group lending methodology. Expert areas to be included are: 
• MIS, interpretation and analysis of quality portfolio 
• Financial planning, modeling and management at both branch 
and institutional level 
• Strategic planning and 
• Budgeting processes 
 
16 ibid
46 
• Human resource management 
• Funding proposal writing 
• Marketing of products and services 
2. To get trained on how to use Microfin financial modeling 
3. There is need to diversify skills set of board members. Industry professionals 
are needed to strengthen internal capacity 
Emerging issues 
Self help Groups 
Recommendation 
ISWFT to capitalize on this opportunity 
Good governance 
Recommendation 
To develop a policy that stipulates that any serving member on the board is not to 
access loans. 
47 
Annex 1: Eligibility criteria 
Business Loans Consumption loans 
Eligibility 
• Must be a member of IMBITA for a period 
of three months 
• Must save regularly with IMBITA beyond 
the initial three months 
• Must have saved 20% of the loan 
• Must have a viable business 
• Must fill in a business application form 
• Must be over 18 years of age 
• 
Eligibility 
• Must be a member of IMBITA for a period of 
three months 
• Must save regularly with IMBITA beyond the 
initial three months 
• Must have salaried employment and produce 
proof of monthly amount earned 
• Must fill in a consumptive loan application 
• Must have a current bank account and set up a 
stop order for loan repayments to coincide with 
salary date 
• Must be over 18 years of age 
• Must have a guarantor (includes either a 
husband, father, sister, son, daughter, friend) 
Criteria
• Only one loan at a time 
• Initial loan size not to exceed E.5000 
Criteria
• The loan repayment must not exceed 30% of the 
net monthly income 
• The maximum loan term for all consumptive 
loans is 24 months 
• Maximum consumptive loan amount is 
E.25,000.00 
• The loan cheque is made to the supplier of the 
goods, where possible 
48 
Annex 2: Loan Policies 
Policy Description 
Loan Sizes a) Consumption loans up to E25,000.00 depending of amount saved 
b) Business loan initial loan up to E5,000.00. 
c) Agricultural loans 
a) Agricultural loans 
Repayment periods = lump sum as follows 
Grains = 6-7 months 
Vegetables = 3 months 
Poultry = 6-8months 
Cotton = 8 months 
Legumes = 5 months 
Loan Terms
b) Business and Consumption loans 
up to 24 months 
Collateral 20% savings 
80% household assets 
Business Loans 
Flat rate 
Consumption Loans 
Flat rate 
Interest rate 
E.1000-E10000 = 30% yr 
E.10001-E15000 = 25% yr 
E.15001-E20000 =20% yr 
E.20001-E25000 = 15% 
2.5% per month regardless of 
amount. 
Write Offs A loan is written if its more than 120 days in arrears 
49
Figure 1: Loan Application Process
2. RECEIVING OFFICER
interviews client & checks documents against
applicable checklist
4. LA not accepted (client has to 
resubmit with all required documents 
and data)
5. RECEIVING OFFICER 
forwards LA to MZ Teller
6. TLR /AA 
registers LA in LPF
ABBREVIATIONS
LA = LOAN APPLICATION
TLR = TELLER
AA = ADMIN ASSISTANT
FCO = FIELD CREDIT OFFICER
AC = ACCOUNTS CLERK
OM = OPERATIONS MANAGER
FAM = FINANCE & ADMIN MANAGER
FAO = FINANCE & ADMIN OFFICER
CO = CO-ORDINATOR
7. TLR/AA 
Loan out￾standing?
8. TLR/AA: Repaid 
but not updated in 
LPF?
10. TELLER/AA 
Confirms "Refinancing"
/21. TLR/AA / 
holds LA until C 
client pays and \ 
brings receipt?
13. TLR/AA:
Savings balance
sufficient?
20. TLR/AA: 
Application fee 
paid?
updates savings in LPF
15. TLR/AA: 
balances LPF & 
card match?
22. TLR/AA
Enters remaining loan details in LPF, writes
loan # on LA
23. TLR/AA
Gives loan * to diem
16. Savings 
balance suffic￾ient now?
24. TLR/AA
forwards LA to back office
25. AA
17. WHO? Informs binds & labels file, forwards to FCO
client of option
26. FCO:
What loan
type?