| Abstract: |
This paper endeavours to assess the viability of the FONGS FINRURAL, a nascent
network of 09 rural savings and credit cooperatives in Senegal. More
specifically it strives to measure first how the social and financial
performance and the governance vary among the network affiliated
organizations, and second to what extent all this aspects in each MFI could
affect the viability of the network. For cause of data availability, the
research was carried on 7 out of the 9 affiliated MFIs. The methodology has
consisted first in the exploitation of financial reports, financial
statements, business plans, manual of procedures, minutes, reports and any
kind of internal documents seeming useful and second in visits at basic
affiliated associations and client information. Four data collection tools
were used: the factsheet of financial assessment devised by BRS and ADA, the
ECHOS© tool of social performance assessment of Incofin, version 2012, the
aggregated index of governance grid, and specific interview grids to each MFIs
based on their financial and social performance recorded and on their
governance score as well. Financial data were collected over four years
(2008-2011), while social and governance data were a snapshot of the MFIs as
of may-august 2012. Different descriptive statistics were used for
comparisons. The coefficient of correlation rho of Spearman was used to make
links between financial performance, social performance and governance. It
comes out from the peer group analysis that the membership of the entire seven
MFIs, dominated by women (50%), is growing over years with an average of 23%
sharply higher than that of the country (8.7%). This trend presents however
some specificities pertaining to each MFI. In the same vein, the network
records an increase in savings collection which is however concentrated within
02 MFIs (29%) which contributed for 54% of the total deposit of the entire
network in 2011. If for the first MFI (CREC of Méckhé), the situation is due
to the involvement of its groups membership, the second (MEC of v Tattaguine)
owes its records to its savings policy mainly based on high rate of compulsory
savings (33%) as requirement for loan application. Regarding the credit
delivery, it appears that except ordinary loans, most of the loan products
catered for are seasonal or working capital loans and investment loans (more
than one year) with bullet repayment albeit variability in the loans maturity.
To provide such credit products, MFIs rely on three main sources: the
deposits, the borrowings and their equity. Most of the MFIs provide their
loans from the member’s deposits and tend to report improvement of their
leverage except the MEC of Dakar and that of Malicounda. Overall, all the MFIs
loan portfolios are growing with an average growth rate of 17% except the CREC
of Méckhé which faced a decrease in its portfolio of about 47% over the four
years. However this MFI still records the highest gross portfolio amount
compared to the others. Nevertheless, the growth in portfolio is facing also a
growth in portfolio at risk 180 days for all the seven surveyed MFIs meaning
some weaknesses in the loan portfolio management. In contrast to the PAR, some
improvements are reported in operating expenses ratios which were roughly
fewer than 20% except at the MEC of Dakar which mostly recorded OER over 40%
in 2011 and at the MEC of Malicounda with about 90% in 2009. As consequence,
the OSS of the entire 07 MFIs was appreciable between 2008 and 2010
(127%-148%) but dropped down to 88% in 2011 due to high operating expenses at
the MECs of Tattaguine and Pékesse. The results also reveals that albeit
claiming to be social oriented MFIs, the entire MFIs lack adequate tools,
information and indicators to track and to prove that they are putting into
practice their social mission, which often was not clearly stated. Based on
the ECHOS© scale, it appears that the MFIs recorded low social performance in
general (55%) but seemed to get better score in access and outreach and
customers services, while social mission, human resources and social
responsibility are lessened. vi Regarding the governance, the score reveals
some acceptable governance (62%) however with some differences between
institutions. The results of linkages between financial performance, social
performance and governance reveals no trade-off between financial and social
performance, rather it reveals significant synergies between governance and
social perform, and between OSS and human resources. All these results prove
that rural microfinance institutions, rather rural microfinance network can be
viable. It is just a matter of more governance, more discipline in procedure
and more reportage of required information. |
| Keywords: |
microfinance, savings, credit, financial performance, social perfomance, governance, Portfolio at Risk, Operational selfsufficiency |