Veronicah Namagembe_From Micro- to Small and Medium Enterprise

Veronicah Namagembe_From Micro- to Small and Medium Enterprise

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  From Micro toSmall and Medium Enterprises: Catering to the evolving needs of female clients The 2011 Global Microcredit Summit November 14 – 17 2011, Valladolid, Spain Commentary to the commissioned paper by Veronicah Gladys Namagembe Managing Director, PRIDE Microfinance Ltd (MDI) Kampala, Uganda [email protected] 1 “Your growth is our pride”
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  Need for women’sparticipation in the economy In agreement – Involving women in financial decision making increases household incomes and also better communities at large. Once escalated to the macro level further enhances economic growth. – Population statistics; 70% of the poor 1.3Bn people globally are women (UN dept of Public Information). Fertility rates too should be controlled. – Culture & beliefs; These hinder women involvement in economic activity; 2 “Your growth is our pride”
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  Need for women’sparticipation in the economy – cont’d • Submissions challenged; – Focusing on women only in the financial sense is not enough. There is need to involve them in other spheres of life such as politics with a big influence on the macro economic level enhances overall decision making which affects the economy. – Women’s participation is not undervalued; There is visible recognition of women’s contribution to the economy if their businesses are formally registered. Microfinance for decent work promotes the formalization of businesses that are owned and are managed by microfinance clients. There is therefore need to track women’s participation in the economy. – As many countries are westernized with cable TVs, women have become more educated and a few of them are no longer restricted to industries that limit their participation in global trade. Women are now moving to Dubai, Beijing and Bangkok to import items that are needed in their countries. 3 “Your growth is our pride”
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  Role of microfinancein women’s economic participation • In agreement – MFIs need to embrace women tailored products so as to attract and retain them. – Financial trainings are indeed useful especially when microfinance providers link up with other institutions of learning to train clients in savings, investments, borrowing and controlling expenditures. – Introducing a micro product for women insurance helps women to deal with indigenous shocks and coping with financial burdens associated with medical emergencies. 4 “Your growth is our pride”
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  Role of microfinancein women’s economic participation – cont’d • submissions challenged; – If we want women to participate fully in microfinance programs, we must put men into the picture. By focusing on only women in isolation will take us to the wilderness close to the promised land but not in Canaan itself, this is because women live in communities with families and with men. – The approach of serving women clients in MFIs should be customer centric rather than product based such that MFI are able to offer the particular products and services that are needed by customers rather than having several products that MFIs think are the ones needed by women customers. 5 “Your growth is our pride”
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  Challenges faced byMFIs in targeting & retaining women clients under a for profit, commercial paradigm • In agreement – Reaching out to women requires a concerted and consistent effort in organic growth models. Submissions challenged – when the commercial and profit paradigm shift takes place, the focus of many regulated MFIs moves from numbers of women served to the growth of the balance sheet without necessarily drifting from the mission. 6 “Your growth is our pride”
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  Challenges – cont’d –A number of regulated MFIs are stuck with their original mission of serving the small scale enterprises mostly dominated by women. As customers’ businesses grow from small to medium enterprises, regulated MFIs increase the loan amounts organically so as to retain their loyal customers. – Regulated MFIs need to upscale so as to enhance outreach and accessibility especially in rural areas. 7 “Your growth is our pride”
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  Case study 1:Kashf Pakistan • Good Practices – Concerted and consistent efforts to ensure that vision and mission remain consistent with initial drive. – Inculcating a savings culture of having a goal oriented savings account that allows clients to save for a specific purpose really works and yields into the expected results. 8 “Your growth is our pride”
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  Kashf cont’d • Submissionschallenged – Given the costs involved in trainings, it’s ideal to come up with plays on TV and radio to dramatize the messages such that they are able to reach many people at low cost with high impact. – Using Loans Officers to market the entire savings product to both the existing and potential clients is ideal so as to be more efficient. However, it’s ideal that the savings mobilization and inculcating a savings culture among both current and potential clients becomes the work of all staff. 9 “Your growth is our pride”
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  Kashf cont’d – Selectivelytransforming part of its portfolio especially its small business portfolio to a separate entity may have negative effects where the actual quality of the total portfolio for the MFI can be understated. – The establishment of conglomerate companies could have disadvantages of clashing objectives. Too much diversification has its inherent challenges. – A stand alone regulated MFI can indeed access low income depositors if they embrace technology in a more efficient manner; e.g. utilizing bio metric fingerprint technology, mobile phone and point of sale devices to serve the micro savers. 10 “Your growth is our pride”
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  CARD • Good practices; – Key performance indicator is good for social mission tracking so as not to lose focus. – Ensuring product optimization to client needs through intensive research and development of new products and incorporating client feedback helps in building long term relationships. 11 “Your growth is our pride”
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  CARD Cont’d • Submissionschallenged – Client representation on the Board given that they own 33.1% of CARD is a good practice which trickles down to good character when repaying loans but may also be a problem when they fail to pay. – Having a good number of Board representation with the NGO mentality may compromise sustainability given the varying goals of the institution before and after transformation. 12 “Your growth is our pride”
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  Lessons learned &to do lists cont’d • Embed the company mission and vision in the transformation processes. This should be complemented by clear value propositions. • The involvement of related parties in governance requires ultimate caution; e.g. clients with the risk of unsustainable interest undue influence, duress; rigidities in strategy dynamics, etc. • There is need to involve all stakeholders in financially empowering women; e.g. governments, regulators, lobbyists and pressure group through the various fora. 13 “Your growth is our pride”
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  Lessons learned &to do lists for female clients evolvement • There is need for regulations that foster growth and change rather than ones that stifle growth and creativity which are crucial for reaching more women clients. • There is need to put men in the picture when serving women clients because women live in communities with families and with men. • Gov’t programmes need to be tailored to support girl child empowerment even before they turn up to the MFIs for financial products and services. • Increasing scale in serving many women requires MFIs to embrace technology that will also result into cost effective operations; thus sustainability. 14 “Your growth is our pride”
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  Future concerns • Sincemodern MFIs are driven largely by the need for sustainability, Financial indicators need to be included in the case studies to better appreciate the viability of balancing social and financial motives of MFIs. Thank you & God bless 15 “Your growth is our pride”