Capacity Building Initiatives for Improved Outreach

2. Capacity Building Initiatives for Improved Outreach A case of Strømme Microfinance East Africa Limited May 2010

3. Presentation Outline • Overview of Stromme Foundation • How Stromme Foundation Operates • Overview of Stromme Microfinance East Africa • Our Capacity Building Interventions • Community Managed Microfinance(CMMF) • Evolution of our Capacity Building Approach • Our Current Outreach • Constraints, Challenges • Lessons Learned and way forward • Conclusion

4. Overview of Stromme Foundation Strømme Foundation (SF) is based on Christian values emanating from the life and teachings of Jesus Christ. Strømme Foundation, based on this identity, is a value based development organization. SF has two thematic areas of intervention: Education; and Microfinance

5. Education • We use Community Based Education Interventions (CBEIs) in partnership with local NGOs to reach out to poor communities. • The purposes is to provide opportunities for schooling to marginalised groups to access quality education. • Ultimate goal is to build long term human resource capacities in poor communities.

6. Microfinance (MF) MF activities are handled by Stromme Microfinance East Africa Ltd (SMF EA Ltd), a shareholding company incorporated in 2004 and owned by SF Norway, SF in East Africa and SolidariteInternationale pour le Developemment et I’Investissement (SIDI). SMF EA Ltd works with partners, by enhancing their capacity to deliver quality financial services, expand and deepen outreach to poorer people.

7. Overview of SMF EA LTD • Company Limited by shares, incorporated in 2004 • Vision: “A world without poverty”. • Mission: “To provide, on a sustainable basis, market responsive, financial services and capacity building support to financial and business service providers to enhance access to financial services by the enterprising poor in the East African region”. • Areas of Operation: Uganda, Kenya, Tanzania and Sudan

8. SMF EA Ltd’s Overview (Cont’d) SMF EA Ltd implements through partner organisations that include: • Registered MFIs, that provide credit, savings, transfer services and other related services to the enterprising poor i.e. MDIs, MFIs, SACCOs, Financial NGOs, Trusts and Community Banks • Legally recognised Community Based Organisations engaged in Mobilising Self Help Groups to manage savings and loans within their communities

9. SMF EA Ltd’s Overview (cont’d) SMF EA Ltd’s goals are to:- • Enhance the capacity of our partners to deliver quality financial services and increase outreach. • Strengthen our capacity to serve our partners in the region. • Build the capacity of our partners at 2 levels: i.e. Financial and Non-Financial interventions.

10. 1. Financial Interventions Financial interventions are essential for MFIs for purposes of meeting their loan disbursements and thus increasing outreach. Financial Products offered: • Institutional loans • Consortium funding • Guarantees • Equity placements • Agricultural financing • Housing Microfinance

11. SMF EA Regional Context • Uganda • Kenya • Tanzania • Sudan • Currently, Stromme has a loan portfolio of approximately USD 10 million in 4 countries. • The Eastern Africa Region currently manages an active portfolio of 24 Partner institutions. • Our current Outreach through our partners is 533,877 clients.

12. 2. Non Financial Interventions / Capacity Building Non-financial interventions, through capacity building is primarily focused on building institutional and human resources capacity of an MFI – • We support our partners to improve on the institutional weaknesses that impede them from improving their outreach. • We support networks and partnership for acquisition of skills and training. • We support lobbying, advocacy and promotion of use of best practices. • Promote and support financial and social ratings in partner institutions.

13. Non Financial / CB (Cont’d) • We offer Technical Assistance to our partners to better serve the clients and scale up their outreach. • We support MFI practitioner networks and linkages (AMFIU, TAMFI, MASS) • Support Business Development Services. • Community Managed Microfinance (CMMF) • Institutional reviews and evaluations. • Institutional design, business and strategic planning.

14. CB interventions Cont’d • Exchange visits and tours to mature MFIs • Basic equipment and technical infrastructure acquistion e.g., furniture, computers, safes, etc.

15. Community Managed Microfinance (CMMF) These are Self Help Groups that are being promoted in communities where there is limited access to financial services. They mobilise savings and on-lend to the members within the groups. • We offer training to Partner Organisations to promote CMMF methodology. • Funds are given towards mobilizing CMMF groups and training. • Acquisition of toolkits and other program equipments (motorcycles, MIS, etc.) • CMMF groups monitoring and evaluation

16. CMMF contd. • Development of business plans • Payment of CMMF program administration costs for project staff and activities. • Fund Audits Outreach to communities • Partners – 10 • Outreach – 19,378 members • Savings USD 545,548 • Loans USD 479,493

17. Evolution of our capacity building approach MFI MFI Projects Integration Small CBO, NGOs Projects MFI Church Based Projects Viability Outreach Linkages Sustainability (participation, Interest Rate) 1990’s Heavily subsidized Centralized Systems (Top-down approach) 2000’s Reduced subsidies Funding of institutions that demonstrate growth 2010’s – to – date Cost-sharing arrangement

18. Our Outreach in the Region

19. Current Constraints and Challenges • Limited access by MFIs microfinance clients to support services. • Low retail capacity of some microfinance institutions. • Weak MFI institutions • Weak or lack of support networks for microfinance institutions. • Limited capacity building funding despite the huge demand. • Limited competent service providers

20. Lessons learnt Credit provision within a project setup • Serious problems encountered when projects directly administer credit programmes or in the auspices of the Church. • Too much capacity building funding to small or start up MFIs can be counter productive. Strong MFI networks A prerequisite to the speedy growth of MFIs and outreach. And the risk of lending is also lower.

21. OUR WAY FORWARD • Increasing support to emerging and sustainable MFIs: as a long term effort to achieve greater outreach. • Increasing our support to strengthen MFI practitioner networks to speed up the growth of outreach. • Increasing Partnership and synergies among partner institutions, and funding agencies eg. Cordaid, Larcamissionen.

22. Conclusion • Capacity building interventions are needed at different levels in the industry to bolster growth of the MFIs, networks and support structures in the Microfinance industry. • Access to capacity building funds is a very big challenge to MFIs. • Capacity building assistance is as important a need than subsidized credit funds. • The need for capacity and institutional building far exceeds the need for capital.

23. Our Contacts Stromme Microfinance East Africa Limited Plot 25, Block LRV 235, Bukoto Street. P.O. Box 27200, Kampala, Uganda Tel (256) 41 532844 Email: sfeastsfrica@stromme.org

24. END THANK YOU