MICRO FINANCE SKILLS PROJECT

TRANSFORMING MICRO FINANCE

Richard Plant

General Secretary: BANKSETA

BANKSETA MissionBANKSETA Mission

“To support and give effect to legislation by establishing an education, training and

development framework to enable stakeholders to advance the national and global

position of the banking sector.”

The need for the The need for the MFSPMFSP

Enhance skills & professionalism

Lack of business knowledge inhibits growth in the sector

Consumer protection and education

Development of SMME entrepreneurs

Micro Finance Micro Finance Skills ProjectSkills Project

MFSP was set up in 2002

Micro finance sector provides services to small, medium & micro enterprises,

and individuals

Bridges the gap between the traditional banking sector and the emerging

market

Three year, three phase project funded by the National Skills Fund

Unique approach: targets service providers & their clients

Recognizes the critical role that MFIs are playing in providing access to finance

to the larger South African population

- Overview -- Overview -

Enterprise Zone: Enterprise Zone: Overview of the projectOverview of the project

The project’s The project’s objectivesobjectives

To implement skills development initiatives for:

1200 learners in micro-finance institutions over a three-year cycle between

2002 and 2004;

1200 SMME borrower enterprises by 2004;

6000 individual borrowers/consumers;

To build capacity of:

Education and Service providers within all provinces to deliver skills

development initiatives.

Principles of the Principles of the projectproject

Governance & management

BANKSETA

Project Steering Committee (PSC)

BANKSETA, Banking Council ,Organized Labour, MLA,

MEA, & MFRC

Project Management

SDS Consortium

Guiding principles

Ensuring buy-in of stakeholders

Incorporating and supporting SMME and BEE contractors, and

Strong focus on thorough research in all phases of the project

Research & Research & Development Phase Development Phase Feb 2002 – Feb 2003Feb 2002 – Feb 2003

Training Training DevelopmentDevelopment

Curriculum Curriculum DevelopmentDevelopment

Training Training Provider Provider SelectionSelection

Risk ManagementRisk Management

Loan Book ManagementLoan Book Management

Marketing Marketing

Cash ManagementCash Management

Customer ServiceCustomer Service

Staff ManagementStaff Management

Learner Learner selectionselection

Learner Learner SupportSupport

Assessment

Business Business Development Development

SupportSupport

Delivery TargetsDelivery Targets

Phase ONE – Pilot phase

Phase TWO –

Phase THREE –

GautengKwa Zulu NatalWestern CapeEastern CapeMpumalanga

GautengKwa Zulu NatalWestern Cape

All 9 provinces

PHASES TARGETS REGIONS

MFI 200

MFI 400SMME Borrowers 500Individual Borrowers 2200

MFI 600SMME Borrowers 700Individual Borrowers 3800

Accessing MFIsAccessing MFIs

Print mediaPrint mediaPrint adverts:RegionalNational

Press Releases

Advertorials

Media Surveys

Face to FaceFace to FaceContact SessionsOne-on-one

meetings

Electronic mediaElectronic mediaRadio InterviewsTV interviews

Industry stakeholders

Website - internet

activities

Pamphlets

Newsletters

Email bulletins

Tele-promotion

Accessing SMME & Accessing SMME & Individual BorrowersIndividual Borrowers

Provincial Consumer Desks Advice Centres NGOs Word of mouth

ITHALA SACCOL Churches

Partnerships

Intermediaries

Radio Adverts Radio interviews TV Interviews TV shows

Newspaper Adverts Newspaper articles

Media

Pamphlets

Achievement for the Achievement for the Pilot PhasePilot Phase

Exceeded target by 38.5%

  Number of Companies

Number of Learners

Gauteng 21 159

Kwa- Zulu Natal 12 66

Western Cape 15 52

Total 48 277

Delivery Phases 2 & 3Delivery Phases 2 & 3

MFI SMME Borrowers

Individual Borrowers

Enterprise Zone: SMME Enterprise Zone: SMME TrainingTraining

Overall phase 2: MFI Overall phase 2: MFI TrainingTraining

364

56

527

62

178

25

301

44 5313

0

100

200

300

400

500

600

GP KZN WC EC Mpl

LearnersWorkshops

Total: 1423

Exceeded

Exceeded

target by 356%

target b

y 356%

Overall Phase 2: SMME Overall Phase 2: SMME TrainingTraining

*Including numbers achieved by Ithala

Region Number workshopsconfirmed

Number of

learners

Average learners

per workshop

GP 18 127 21

KZN 11 180 20

WC 12 110 17

EC 10 131 31

MPL 11 62 16

Total 62 *610 21

Exceeded

Exceeded

target by 22%

target b

y 22%

Overall Phase 2 :Overall Phase 2 :Individual borrower Individual borrower

trainingtraining

318

1246

474

107

505

0

200

400

600

800

1000

1200

1400

GP KZN WP EP MPL

Individual Learners

Total: 2650

Exceeded

Exceeded

target by 20%

target b

y 20%

Delivery Phase 3 – to Delivery Phase 3 – to datedate

637864

3465

0

500

1000

1500

2000

2500

3000

3500

4000

Phase 3

MFI SMME BORROWERS INDIVIDUAL BORROWERS

MFI modulesMFI modules

1. Conduct a market analysis

2. Develop repayment policies & procedures

3. Manage loan portfolios

4. Develop advanced client service skills

5. Market your product

6. Process a loan (2 days)

7. Collect & administer loans

8. Help clients understand their rights and responsibilities

9. Build relationships with clients

10. Basic business principles

Training sessions

Training sessions

SMME modulesSMME modules

1. How do you know if your business idea will work?

2. What resources do you need to start your business?

3. What do you need to know about loans?

4. What do you need to know about financial management to run your

business?

5. How can you budget your finances effectively?

6. How do you draw up a business plan?

Training sessions

Training sessions

Individual borrower Individual borrower modulesmodules

You and your accounts

You and your budget

You and your debt

You and your loan 1

You and your loan 2

You and your savings

You and your rights

MFI MFI -Lessons learned -Lessons learned

There were no existing training interventions direct to MFIs – therefore investment in

training was a new culture in the industry;

Methods of communication needed to be more targeted to MFIs:

One-on- one meetings

Telephone promotion

The project could not rely on existing industry associations to access learners – MFIs had

to be targeted directly;

To access learners business owners needed to have:

Confidence that the SETA and the training would benefit their business;

Proof of tangible benefits – word of mouth became critical;

Consultative Forums became contact sessions with active dialogue –MFIs with real

interest in the project attended.

MFI MFI - Lessons continued…- Lessons continued…

Training for MFIs had to exclude : the 1st, 15th, 25th, 30th and 31st of the

month, and Fridays;

Recognized that MFIs have different training needs and the industry is not

necessarily homogeneous –the curriculum needed to be impactful and

target different size MFIs and staff levels – front, back office and

managers;

MFIs needed support to select and register learners;

We had to innovate creative means to assess learners.

SMME Borrowers SMME Borrowers - Lessons learned - Lessons learned

Difficult to access the correct level of SMME and matching training materials to the

SMME level;

There is an “Informal approach” to learning – e.g. arriving late etc;

Word of mouth leading to big numbers at some workshops – difficulty in predicting

numbers;

Some learners refuse to give their identity numbers;

Individual follow up required rather than organizational follow up – more time

consuming;

Its better to reach SMMEs through NGOs, Advice Centres, and Consumer Affairs

offices – the market is extremely fragmented.

Individual Borrowers Individual Borrowers - Lessons learned - Lessons learned

The best way to reach communities would be through community

based organizations such as Provincial Advice Centres;

Intermediaries were identified and trained on how to deliver the

material;

Support and quality assurance structures were set up and monitored;

The project needed to incentivise intermediaries to reach more

borrowers in communities: An Intermediary incentive strategy for

Individual and SMME borrowers was introduced;

Intermediaries compete against each other in all provinces;

AccomplishmentsAccomplishments

MICRO FINANCE INDUSTRY

The number of people who have accessed training for the first time in their lives;

The project introduced a training and staff development culture;

The industry players have began to collaborate on issues of common interest;

Now there are service providers who know the industry and have focused on the

best possible ways to deliver training to the industry;

Industry training needs have been exposed and appropriate training material

developed, which can be used beyond 2004;

There are trained assessors and quality assurance measures;

The above are indications of a professional and sustainable learning culture.

MFI Training Statistics MFI Training Statistics to dateto date

- Demographic - Demographic Breakdown - Breakdown -

0

50

100

150

200

250

300

350

400

450

AfricanMale

AfricanFemale

ColouredMale

ColouredFemale

IndianMale

IndianFemale

WhiteMale

WhiteFemale

Phase 1 Phase 2 Phase 3

AccomplishmentsAccomplishments

SMME & INDIVIDUAL BORROWERS

Capacity of Consumer Affairs Offices, NGOs and Advice Centres has

been built through train the trainer programmes;

Project has built partnerships with ITHALA & SACCOL;

Appropriate training material;

Regional reach;

Quality assurance & support;

Response received has revealed the real need for this type of training

in communities.

SMME Borrower SMME Borrower Statistics to dateStatistics to date

- Demographic - Demographic Breakdown - Breakdown -   Phase 2

 Phase 3

    

 

African Male 239 

340

African Female 365 

500

Coloured Male 0 

2

Coloured Female 0 

7

Indian Male 0 

4

Indian Female 0 

0

White Male 2 

0

White Female 4 

0

Disabled Male 0 

7

Disabled Female 0 

4

Individual Borrower Individual Borrower Statistics to dateStatistics to date

- Demographic - Demographic Breakdown -Breakdown -

0

200

400

600

800

1000

1200

1400

1600

1800

2000

AfricanMale

AfricanFemale

ColouredMale

ColouredFemale

IndianMale

IndianFemale

WhiteMale

WhiteFemale

Phase 2 Phase 3

Certification CeremonyCertification Ceremony

Interest from other Interest from other partiesparties

During the research phase we consulted with micro finance institutions, donors

and industry stakeholders in Uganda and Kenya;

Micro Finance Outreach Plan in Uganda, a Uganda government initiative, have

visited the project, to learn how to roll out simultaneous training to MFIs, SMME

and Individual Borrowers;

Consumer Desks have commended the training material highly and have

expressed a strong desire to use the material developed by the project beyond

2004.

Contracts…Contracts…

A total of 71 contracts awarded

54 Contracts awarded to HDI

Organisations - 76.1% of total allocations

17 Contracts awarded to non-HDI

Organisations - 22.5% of total

allocations

8 Contracts awarded to non-SMME

Organisations - 11.3% of total allocations

63 Contracts awarded to SMME

Organisations - 88.7% of total allocations

Details %

Total amount contracted 100.00%

% HDI amount 52.80%

% SMME 93.70%

% non-HDI 47.20%

% non-SMME 6.30%

Service Provider Service Provider Support CentreSupport Centre

Comprehensive support provided:

Monthly meetings, presentations and minutes

Orientation of new providers

Support and assistance with project plans and budgets

Coaching of assessors and moderators

Venue database and checklist

Accreditation support – through all phases

Quality assurance and feedback

Training tips

Training of 52 assessors

Training of trainers in new methodology and the training modules

Initial thoughts & Initial thoughts & changes..changes..

Nation-wide incubator:

Shared services

Call Centre

We assumed that people would know what they needed;

Research results showed that we had to change our approach;

Business Development Support became Business Networking

Sessions

Our approach Our approach changed…changed…

BDS•Shared services

•Call Centre

Assumptions SMME know what they need;SophisticatedAccess to internet

BNS•One-on-one interactions

•Networks•Coaching

Secondary research was inconclusive;Market is fragmentedDiffering life cycles of businesses;Low uptake by learners

Infrastructure High cost infrastructure Low cost infrastructurePlanned targets

Progress On track but very limitedNo go

Number of Number of beneficiaries beneficiaries participatingparticipatingMFI’s SMME’s

WC 8 56

Gauteng 19 147

Eastern Cape 9 57

KZN 16 92

Mpumalanga 8 43

Totals 60 395

FinanceFinance  Inception to 30 September 2004 Inception to end (Forecasted)

  BudgetR

ExpenditureR

% of budget

BudgetR

ExpenditureR

% of budget

MFI Training Delivery 11,063,089 7,859,593 71.0 12,932,089 12,883,935 99.6

SMME & Individual Borrower Training Delivery 13,694,047 5,315,670 38.8 13,949,494 9,452,414

67.8

BDS Support Centre 21,675,847 1,357,795 6.3 23,892,407 1,961,844 8.2

Learner Assessments 1,142,400 741,349 64.9 1,058,400 760,850 71.9

Project Evaluation 1,274,517 259,765 20.4 1,374,850 794,425 57.8

SPSC Activities 1,174,949 712,903 60.7 1,262,150 1,063,303 84.2

Curriculum Revision – MFI & Borrower materials 4,208,550 3,801,376 90.3 4,208,550 3,954,780 94.0

Other Activities, Procurement, Project design review etc 2,878,950 387,128 13.4 3,338,299 387,128 11.6

Finance cont…Finance cont…

Inception to 30 September 2004 Inception to end (Forecasted)

BudgetR

ExpenditureR

% of budget

BudgetR

ExpenditureR

% of budget

Total Curriculum development, Skills Transfer & Business Development 57,112,348 20,435,579 35.8 62,016,239 31,258,679 50.4

Marketing 7,427,054 5,345,938 72.0 8,208,804 6,173,253 75.2

Project & Financial Management 5,847,515 5,831,085 99.7 6,459,735 6,446,123 99.8

External & Internal Audit Fees 106,745 Nil 0.00 145,172 98,040 67.5

Grand Total 70,493,661 31,612,602 44.8 76,829,950 43,976,095 57.2

Summary of FinancesSummary of Finances

 

Micro-Finance Skills Transfer Project (VAT Inclusive)30 September 2004

  R %

Project budget 76,829,950 100.0

Actual Expenditure 31,612,602 41.1

Balance of contracted amounts 12,265,452 16.0

Future contracts (ToRs) Nil 0.0

Audit fees 98,040 0.1

Projected total expenditure 43,976,095 57.2%

Projected saving 32,853,855 42.8%

In conclusionIn conclusion

The project has been highly successful:

High quality training material developed;

Delivery to all stakeholders has been achieved;

Industry buy in has exceeded expectation;

Intermediary and partnership strategy has paid off;

Project Management has delivered to targets, in time and under budget;

Media exposure for the project has been very good;

The procurement strategy to select and empower SMME HDI providers was

difficult but has paid huge dividends;

Most important the objectives of the skills development act have been

achieved for the micro finance industry and its customers.