MICRO FINANCE SKILLS PROJECT TRANSFORMING MICRO FINANCE Richard Plant General Secretary: BANKSETA

1. MICRO FINANCE SKILLS PROJECT TRANSFORMING MICRO FINANCE Richard Plant General Secretary: BANKSETA

2. BANKSETA 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.”

3. The need for the MFSP Why a micro finance skills project? • Enhance skills & professionalism • Lack of business knowledge inhibits growth in the sector • Consumer protection and education • Development of SMME entrepreneurs

4. Micro Finance Skills Project - Overview - • 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

5. Enterprise Zone: Overview of the project

6. The project’s objectives • 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.

7. Principles of the project • 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

8. Research & Development Phase Feb 2002 – Feb 2003 Training Provider Selection Learner selection Curriculum Development Training Development Learner Support Risk Management Loan Book Management Marketing Cash Management Customer Service Staff Management Business Development Support Assessment

9. Delivery Targets PHASES TARGETS REGIONS Phase ONE – Pilot phase MFI 200 Gauteng Kwa Zulu Natal Western Cape Phase TWO – MFI 400 SMME Borrowers 500 Individual Borrowers 2200 Gauteng Kwa Zulu Natal Western Cape Eastern Cape Mpumalanga Phase THREE – MFI 600 SMME Borrowers 700 Individual Borrowers 3800 All 9 provinces

10. Accessing MFIs Newsletters Press Releases Print media Print adverts:Regional National Media Surveys Advertorials Pamphlets Website - internet Electronic media TV interviews Radio Interviews Email bulletins activities Industry stakeholders Face to Face One-on-one meetings Contact Sessions Tele-promotion

11. Accessing SMME & Individual Borrowers Media Radio Adverts Radio interviews TV Interviews TV shows Newspaper Adverts Newspaper articles Provincial Consumer Desks Advice Centres NGOs Word of mouth ITHALA SACCOL Churches Partnerships Intermediaries Pamphlets

13. Achievement for the Pilot Phase Number of Companies Number of Learners Gauteng 21 159 Kwa- Zulu Natal 12 66 Western Cape 15 52 Total 277 48 Exceeded target by 38.5%

14. Delivery Phases 2 & 3 MFI SMME Borrowers Individual Borrowers

15. Enterprise Zone: SMME Training

16. Overall phase 2: MFI Training Total: 1423 Exceeded target by 356%

17. Overall Phase 2: SMME Training Region Number workshops confirmed 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 target by 22% *Including numbers achieved by Ithala

18. Overall Phase 2 :Individual borrower training Total: 2650 Exceeded target by 20%

19. Delivery Phase 3 – to date

20. MFI 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

21. Training sessions

22. SMME modules • How do you know if your business idea will work? • What resources do you need to start your business? • What do you need to know about loans? • What do you need to know about financial management to run your business? • How can you budget your finances effectively? • How do you draw up a business plan?

23. Training sessions

24. Individual borrower modules • 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

26. MFI -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.

27. MFI - 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.

28. SMME Borrowers - 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.

29. Individual Borrowers - 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;

30. Accomplishments 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.

31. MFI Training Statistics to date- Demographic Breakdown -

32. Accomplishments 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.

33. SMME Borrower Statistics to date- Demographic 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

34. Individual Borrower Statistics to date- Demographic Breakdown -

35. Certification Ceremony

36. Interest from other parties • 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.

37. Contracts… Details % Total amount contracted 100.00% % HDI amount 52.80% % SMME 93.70% % non-HDI 47.20% % non-SMME 6.30% • 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

38. Service Provider Support 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

39. Business Networking Sessions

40. Initial thoughts & 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

41. Our approach changed… • BNS • One-on-one interactions • Networks • Coaching • BDS • Shared services • Call Centre • SMME know what they need; • Sophisticated • Access to internet Assumptions • Secondary research was inconclusive; • Market is fragmented • Differing life cycles of businesses; • Low uptake by learners • High cost infrastructure • Low cost infrastructure • Planned targets Infrastructure Progress • On track but very limited • No go

42. Number of beneficiaries participating

43. Finance Inception to 30 September 2004 Inception to end (Forecasted) Budget R Expenditure R % of budget Budget R Expenditure R % 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

44. Finance cont… Inception to 30 September 2004 Inception to end (Forecasted) Budget R Expenditure R % of budget Budget R Expenditure R % 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

45. Summary of Finances R % Micro-Finance Skills Transfer Project (VAT Inclusive) 30 September 2004 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%

46. In 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.