UFI Organizational Appraisal

1
UFI Organizational Appraisal

• April 21, 2007

2
Impact Assessment Objectives

• Determine the impact of the program to primary
  stakeholders
• Identify accomplishments of program objectives
  against targets
• Assess the balance between financial
  sustainability and social responsibility of
  microfinance institutions
• Craft recommendations to make the programs more
  effective and efficient

3
Sample Size Formula
N NZ2p(1-p) Nd2Z2p(1-p)

• Where
• Z 1.96 (the value of the normal variable for a
  reliability level of 95. This means having a 95
  reliability in obtaining the sample size
• p .50 (the proportion of getting a good sample)
• 1-p .50 (the proportion of getting a poor
  sample)
• d .05 (sampling error)
• N population size
• n sample size

4
Sample Size
Ugyon
Actual of Respondents 103
Minimum Sample Required 94
Sampling error 10
Confidence level 90
5
Areas of Impact Assessment

• Household level
• Enterprise Level
• Diet and Coping with Difficult Times
• Product and Service Delivery
• Gender and Violence

6
Profile of Respondents
Sex Ugyon
Female 83.5
Male 16.5
Age
lt 25 years old 7
26-35 years old 19
36-45 years old 30
46-55 years old 32
56-65 years old 10
gt65 years old -
7
Profile of Respondents
Civil Status Progressive Ugyon
Married 85 81
Single 4 7
Widow 7 12
Separated - 1
Educational Level
Literacy 100 100
Elementary 27 41
High School 46 40
College 24 18
8
Profile of Respondents
Loan Cycle Ugyon
1st 44
2nd 16
3rd 16
4th 16
5-15th 5
gt15th -
Length of Membership
lt1 year 41
1-2 years 58
3-5 years -
gt5 years -
9
Significant Findings

• Findings that have significant correlation shall
  be given focus and emphasis
• Pearsons formula for correlation with a
  confidence level of 99 and 95 were used
• Sample size was determined using 92.5 confidence
  level

10
Correlation Coefficient
11
On Correlations

• Correlation does not establish cause and effect
  relationship.
• A positive correlation only means that the
  relationship moves toward the same direction.
• A negative correlation means that the
  relationship moves toward the opposite direction.
  
• A positive or negative correlation does not mean
  that the correlation is good or bad respectively.

12
Significant Correlations

• No significant correlation for Ugyon Foundation

13
Diet and Coping with Difficult Times
Diet Ugyon
Diet Improved -
Diet stayed the same 80
Diet worsened 20
HH ate less due to lack of money 97
Difficult Times borrowed fr
Friends and relatives w/o 26
Left area to seek employment 32
HH member got employed 13
14
Enterprise Level
15
Expenditures from Business Income
Ugyon
Food 100
School 72
Reinvest in business 6
Invested in new business
Health-related 9
Invested in new products
HH expenses/Bought HH items 76
Hired employees 5
16
Savings and Purchases
Purchases to Improve Business Ugyon
Purchased small accessories worth 2,500 92
Bought major tools 9
Bought vehicle 2
Improved business site 1
Improved storage 1
Savings and Investment
Have savings for investment 24
Increase in savings 14
Savings stayed the same 9
Decrease in savings 2
17
Savings
Ugyon
Save frequently
Where do clients save?
Commercial bank 15
Rural Bank 85
NGO -
Purpose of Savings
Emergency 88
Re-invest in business 65
Education 76
Medication
Buy new assets 15
18
Savings
Ugyon
Amount of weekly savings
PhP 5-10 12
PhP 11-20 8
PhP 21-50 70
Php 51-100 11
Desired Interest on Savings
3-4 -
5-6 12
7-8 -
gt8 88
19
Client Management Capacity
Ugyon Ugyon
Currently Perform Perform before membership
Separate business from personal finance 10 100
Record income and expenses 100 100
Identify which product is most profitable 100 100
Lack capital to do business 93 93
20
Gender and Violence
Ugyon Ugyon Ugyon
Area of Decision Making Both Wife Husband
Business 65 21 9
Household Expenditure 48 44 5
Education of Children 55 29 7
Access loans w H consent 100 100 100
Shared loan with Husband 39 39 39
H used to loan benefit HH 30 30 30
H physical strength to W 0 0 0
Feminization of Debt
Foregone exp. to pay 100 100 100
Foregone bus. Opp. 96 96 96
H vice increased 1 1 1
21
Loan Use Type of Business
Ugyon
Invested part of loan in business 99
Type of Business
Trading 66
Manufacturing 10
Service 13
Farming 3
Animal Raising 23
22
Loan Use Loan Proceeds
Ugyon
Food 99
Pay other debts 78
Clothes or HH items 27
Emergency 19
HH improvement 21
Celebration 1
Loan to Others 1
23
Income Trend
Income Trend Ugyon
Increase 4
The same 46
Decrease 51
Increase in Income
Expanded business 1
Increase in demand 3
Decrease in Income
Natural disaster
Poor agricultural season 5
Poor sales 26
24
Delinquency and Difficulties
Delinquency Ugyon
Reported at least one missed payment 0

• Reasons for delinquency
• Decrease in sales
• Self or Household Member got sick

Difficulties Ugyon
Experienced evacuation due to calamity 26
Received relief operations from MFI 0
25
Members Like Best
Features Ugyon
Benefits and other products and services 54
Low interest rate 24
Efficient and fast processing 68
Access to capital 32
Training -
Group dynamics 8
26
Members Like Least
Features Ugyon
Insurance scheme and pre-deductions 100
Forced savings
High interest rate
Dislike loan officer
27
Product Design
Loan Amount Ugyon
lt 5,000 15
5,000 10,000 57
11,000 20,000 26
21,000 30,000 -
Loan Term
1-2 months
3-4 months 15
5-6 months 84
28
Product Design
Available Collateral Ugyon
HH Assets 81
Chattel
Livestock
Co-maker 19
With resigned members 49
Other Service
Emergency loans other loans 100
29
Client Exit Interview
Ugyon
of Resigned Members 5
Decided to leave by themselves 60
LOAN USE
Helped to start up a business -
Helped keep the business 100
Helped expand the business -
IMPACT OF LOAN TO HH
Improved family diet 100
Education of children 100
Improved housing 60
Purchased furniture, appliances etc. 20
30
Reasons for Resigning
Ugyon
Center Problems
Personal problems with the member -
Disagreements with the center officers -
Not willing to attend center meetings -
Cannot follow center policies -
Problems related to policies
Loans are too small -
Problems with MFI personnel -
Found another program that is better 20
31
Reasons for Resigning
Ugyon
Business-related reasons
Seasonal business. Will apply again. -
Low sales and profit 60
Closed down business 20
Personal reasons
Used for family crisis 40
HH member left, I cannot maintain bus. -
Got pregnant -
I am moving away 20
Economic and community-related
Business was destroyed by catastrophe -
32
Repayment Experience and Change in Income
Ugyon
Experience in paying last loan
Good 100
Easy to repay 20
Difficult 20
Change in income
Increased substantially -
Increased slightly 40
Remained stable 60
33
Group Dynamics
Ugyon
How did the center help you?
Make loan payments 100
When I had personal problems 80
By providing business ideas and contacts 100
Make friends 100
Develop my leadership skills 80
Receive training 100
Center weekly meetings
Very helpful 100
Did not help very much -
Didnt like them -
34
The Future
Ugyon
Will you return to the program?
Yes 60
Maybe 40
No -
Only if there are changes made -
Encourage relative/friend to join?
Yes 100
No -
35
Organizational Assessment

• Governance
• Information System Evaluation
• Capability Needs Assessment for Top Management
  and Key Management Staff
• Organizational Development
• Financial Evaluation

36
Responsibilities of MF BOT

• Legal obligations
• Relationship between board and executive
• Setting policy and providing strategic direction
• Fiduciary obligations
• Board assessment of its own performance

37
Skills (8.09)

• 8.56 Read FS
• 7.82 Environmental Scanning
• 8.19 Leadership
• 8.55 Mktg/PR
• 7.91 Rules and Regulations

• 7.47 Knowledge in MF
• 7.98 Knowledge in banking
• 7.83 Analytical skills and decisiveness
• 8.48 Communication

38
Knowledge and Skills of MF BOT

• Business Sense
• Microfinance Experience
• Finance
• Legal and Regulatory
• Marketing
• Public Relations
• Technology
• Fundraising

39
Behavior (9.09)

• 8.08 Professional work habits/ethics
• 8.92 Moral ascendancy
• 8.87 Receptive or open minded
• 6.60 Visionary
• 8.40 Honest
• 9.21 Humble

• 9.30 Patient
• 8.88 Dedicated and committed
• 9.16 Responsible
• 9.27 God-centered
• 9.41 Good business sense
• 8.55 Resourceful and cost-effective
• 8.55 Initiative/proactive
• 8.92 Optimistic

40
Characteristics of Good Information Systems

• Timely
• Reliable
• Accurate
• Easy to Use
• Appropriately Detailed Reports with just enough
  information
• Meet needs of various user categories
• Secure
• Good internal controls built in
• Benefits of having information exceeds investment
  costs

41
Capability Needs Assessment
Respondents Ugyon
Field Staff 12
Middle Management 2
Top Management 1
Support Staff -
42
Fundamentals of Microfinance (Ugyon)

• Described microfinance as provision of financial
  services (27) for the poor (87)
• 67 provision of credit
• Benefit of MF (67) access to savings, loans
  and insurance (20) improve the quality of live
  (20) job creation (7) low interest (7)
  empowerment
• Challenges (33) client relations and
  delinquency (20) deal with different attitudes
  of clients (20) risks such as hold-up (13)
  client drop-outs (13) reach vision and targets
  (7) leadership (7) incentives (7) not viable
  products and (7) competition
• MF Clients (33) entrepreneurial poor (13)
  good payer (7) women (7) poorest of the poor
  and (7) willing to abide with the rules and
  regulation of the MFI

43
Product Design (Ugyon)

• Market Research
• 87 conducted market research
• 67 area/community survey 20 study of clients
  needs and 20 study for product innovation
• 47 market research is done before entering an
  area
• Promotion is through (33) seminars/CGT and (20)
  courtesy call
• Character-based lending
• 73 familiar with character-based lending
  however only 20 adequately described this
• Loan analysis done by 3-5 persons equated with
  CIBI

44
DQ Rating System
Score Description
35 Congratulations! Your organization has all the necessary systems, policies and procedures to prevent delinquency. You probably dont need to attend this training.
26-34 Your MFI has adequate systems, policies and procedures to prevent delinquency. Just a little improvement and you already have adequate safeguard to delinquency.
16-25 Your MFI may be exposed to delinquency problems OR you may be in the midst of a delinquency crisis.
6-15 Your MFI has serious delinquency problems. Systems, policies and procedures invite delinquency.
1-5 Re-think your MFIs presence in the microfinance program.
45
DQ Rating Scores

• Overall 29 points (Ugyon)
• Your MFI has adequate systems, policies and
  procedures to prevent delinquency. Just a little
  improvement and you already have adequate
  safeguard to delinquency.

46
Financial Analysis (Ugyon)

• Financial performance description
• Very limited elevator style of description
• 73 was not able to answer the question
• Examples of indicators
• No one was able to give financial indicators for
  quality, efficiency, profitability and financial
  structure
• 40 was able to give some standards for portfolio
  quality but none for the remaining indicators

47
Internal Control (Ugyon)

• 47 expressed that there was fraud 47 said no
  fraud occurred
• 100 of those who expressed that there was fraud
  were able to describe it
• Over riding the loans
• Not remitting collections
• Hold up
• Juggling
• Supervisors check their files (100)
• 13 daily 13 weekly and 73 no answer

• 80 said that internal control was conducted but
  was unable to provide adequate description of
  internal control function
• 67 does collection and bookkeeping at the same
  time
• 93 reported that they are covered by cash bond

48
Remuneration and Incentives (Ugyon)
49
Organizational Development
50
Organizational Development (Ugyon)

• Vision and Mission
• UFI
• Helpful and progressive
• Challenging and risky
• Important in UFI
• Relationship between clients and AO
• Uniqueness of UFI
• Ugyon means unity / cooperation
• Professionalism of AO wear right uniform with
  high heels

51
Organizational Development (Ugyon)

• Training and Development
• With limited skills to perform well
• Do not know root cause of problems encountered
  want guidance and support from supervisors
• Very few are sent to trainings identified by the
  head office
• Mostly Job-related

52
Organizational Development (Ugyon)

• Leadership
• Management style
• Lacks consultation
• Lacks consideration
• Too much pressure that causes resignation
• Top Management is easier to talk to
• Do not really know BOD
• Promotion
• Good performance in job
• Of senior status
• But not clear what the real indicators are

53
Organizational Development (Ugyon)

• Career Development and Planning
• Willingness to be OIC
• Yes to BM, AM, or unit head positions
• No to CEO position
• Lack of cross-trainings and job rotations
• Lack of knowledge about the responsibilities of
  other positions

54
Organizational Development (Ugyon)

• Performance Management
• AO evaluated by supervisors monthly and by area
  head quarterly no performance evaluation for
  support staff
• No Feedback
• All do not feel justly compensated

55
Organizational Development (Ugyon)

• Rewards Management
• Behaviors
• Performance-based
• Rewards
• Cash incentives for AO and Supervisors none for
  Support staff
• Tour to other country for mid to top-management

56
Organizational Development (Ugyon)

• Employee Relations
• Treatment like a family / friends
• Resolution of conflict during informal talks
• Open communication lines only on same level
  personnel, not so much on vertical positions
• Seeming gap between AOs and Area Head
• Coordination is being improved between areas and
  branches, and the head office

57
Organizational Development (Ugyon)

• Employee Well-being
• Reason for staying
• Relationship among co-workers
• Excitement of work
• Some were expecting different kind of work when
  they applied
• Little time for family and other interests
• Manifestations of care
• Treatment of top-management (sir Red)
• Privileges such as staff loan

58
Organizational Development

• Planning (Ugyon)
• Yearly
• For change and development
• Training and capacity building for staff
• Salary and other benefits
• Management of Area Head

59
Training and Mentoring Assistance
60
Training and Mentoring Assistance

• Customized training to management staff and board
  of directors
• readily applicable tools that could be
  implemented immediately
• recommendations to improve in policies, systems
  and procedures
• could be credited towards a diploma course with
  the Ateneo de Manila University
• On the job and real time application of learning
• Less disruption in day to day operations

61
Training and Mentoring Assistance

• Regular and intensive offsite performance
  monitoring
• Open communication lines between the executive
  director, chair of the board and SEDPI
• Affordable
• More number of staff participating
• On site
• Performance-based
• Could be credit towards a diploma course

62
TAMA

• 6-18 months program depending on the
  organizational appraisal result
• Partnership
• SEDPI recommends. SEDPI will never impose.
• UFI is free to choose

63
TAMA for UFI

• Financial Product Design and Development
• Character and Capacity Based Lending
• Delinquency Management
• Financial Analysis
• Human Resource
• Internal Control and Audit
• Strategic Planning

64
Financial Product Design and Development
1 2 3 4 5 6 7 8 9 10 11 12
Competition analysis
Developing the product prototype
Planning for pilot test
Monitoring pilot test
Developing the product manual
Developing promotion materials
Product launching
65
Character and Capacity Based Lending
1 2 3 4 5 6 7 8 9 10 11 12
Lending policy and practices review
Training for loan officers
Training for branch managers
Designing new or revising forms
Finalizing flow chart of processes
Monitoring CBL Changes
66
Delinquency Management
1 2 3 4 5 6 7 8 9 10 11 12
DQ Training
Delinquency Management Workshop
Remedial management
Monitoring progress
67
Financial Analysis
1 2 3 4 5 6 7 8 9 10 11 12
Financial analysis training for Mgt
Financial analysis for BOT
Asset Liability Mgt for Top Mgt
Monitoring performance
68
Governance and Human Resource
1 2 3 4 5 6 7 8 9 10 11 12
Designing Incentive Schemes
Strategic Planning Workshop
Organizational Architecture
Supervision Training
Strategic Plan Analysis Docu.
69
Internal Audit
1 2 3 4 5 6 7 8 9 10 11 12
Conduct of Internal Audit
Installation of Internal Audit