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1 Organizational Appraisal ASA Philippines. 2 Presentation Impact assessment of the microfinance program Financial performance assessment of microfinance.

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Presentation on theme: "1 Organizational Appraisal ASA Philippines. 2 Presentation Impact assessment of the microfinance program Financial performance assessment of microfinance."— Presentation transcript:

1 1 Organizational Appraisal ASA Philippines

2 2 Presentation Impact assessment of the microfinance program Financial performance assessment of microfinance operations Capacity building needs of the management staff to achieve its strategic goals Recommendations to improve the microfinance operations

3 3 Impact Assessment Impact assessment to existing clients used 95% sampling error Sample SegmentTarget Sample(n)Actual Sample(n) Existing clients383527 Dropouts100149

4 4 Demographics ASA clients closely resemble clients of other MFIs in terms of sex, age, civil status and educational level ASA clients are generally younger in the microfinance program compared to other MFIs Almost 9 out of 10 ASA clients are involved in petty trading A significant number of respondents were able to finish tertiary education. This implies that many ASA Phils clients are those who were able to finish schooling, but are unable to find employment.

5 5 Income Trend ASA PhilsOther MFIs Increased greatly 1.2%1.3% Increased 38.5%35.6% Stayed the same 41.5%43.2% Decreased 12.5%14.5% Decreased greatly 6.3%5.4% Total 100% Main reasons for increase in income were increase in sales and expanding existing business Decrease in income caused by poor sales; natural disaster and economic reasons

6 6 Use of Loan Proceeds Loan Use ASA PhilsOther MFIs Income generating activity 96.7%90.0% Food 70.7%67.4% Kept for emergency 46.9%45.6% School 43.1%45.4% Clothes/HH items 21.1%22.9% Pay other debts 20.7%19.5% Extend credit 16.3%15.7% HH improvement 13.1%21.6% Celebration 4.6%

7 7 Economic Well Being: Rating ASA rating from 3.36 to 3.72 Other MFI rating from 2.75 to 3.18 RatingDescription 1Unable to provide basic needs of the family 2Unable to consistently provide basic needs of the family 3Able to provide basic needs of the family 4Able to provide basic needs and spend for recreation 5Able to provide basic needs, spend for recreation, and save

8 8 House Improvement Changes ASA PhilsOther MFIs Repairs 28.0%43.0% Expansion 13.1%22.1% Water / Sanitation System 14.0%18.3% Lighting and Electricity 5.1%13.0%

9 9 Diet Improvement Diet improvement: Able to eat more meat, rice and vegetables Diet ASA PhilsOther MFIs Improved 25.8%25.6% The Same 68.9%66.6% Worsened 5.2%7.8%

10 10 Impact on Education 11% of ASA clients have at least one child not in school 85.7% expressed that the microfinance program helped them in sending their children to school. The program helped them to provide daily allowance; pay tuition fees; provide for projects, assignments and other school requirements

11 11 Gender BehaviorASA Phils Other MFIs Discussed loan access with spouse 93.8%80.4% Foregone household expenditure 47.1%49.1% Shared part of loan with spouse 42.5%37.9% Forgone bus. opportunity 30.2%38.3% Spouse used loan to benefit household 45.7%31.2% Spouse got insecure 4.2%2.8%

12 12 Cash Savings Trend 89.5% have cash savings that could be withdrawn anytime Main purpose for saving: prepare for emergency; education of children; and pay for loan Majority of clients save at home Savings TrendASA PhilsOther MFIs Increased greatly 1.7%1.1% Increased 43.0%36.8% The Same 45.9%43.7% Decreased 8.1%12.2% Decreased greatly 1.3%3.2%

13 13 Business Improvement ASA clients have better business improvement compared to other MFIs: expanded business; and added new product or service ASA clients purchased more equipment for their business compared to clients of other MFIs There is a significant decrease in the number of clients without business after joining the program. Better business condition rating compared to other MFIs from 5.78 to 7.09 versus 5.03 to 6.09 ASA clients spent for food, utilities and schooling from their business income

14 14 Client Satisfaction Features that clients like best: accommodating staff; other financial services such as insurance and savings; faster and efficient service Features that clients like least: loan amount is too small; no other loan window; guarantee policies Client satisfaction rating of 9.24 compared to 8.92 of other MFIs Other services that clients want: better insurance; access to health services and scholarship ASA clients have higher multiple membership (27%) compared to other MFIs (20%)

15 15 Delinquency ASA has lower percentage of clients with one missed payment (17% versus 23%) Causes of delinquency include: selling on credit; sickness; unprofitable business; used for consumption; and disaster

16 16 Client Resignation ASA has higher group/center retention rate (51%) compared to other MFIs (16%) Existing clients say that other clients resign because they are no longer able to pay and they migrate

17 17 Microinsurance 7% of clients have 1 household member who died in the last 12 months 7% of clients have 1 household member not in good health 35% of clients have 1 household member who got sick in the last 12 months Major risks identified: economic downturn; health; calamity; theft and accident Coping mechanisms: look for other sources of income; access loan; and withdraw savings Desired accidental death benefit PhP250,000

18 18 Management Capabilities Most management staff interviewed were able to define microfinance and majority were able to describe microfinance clients Most loan officers and branch managers and a significant number of area monitors are not knowledgeable on financial indicators for microfinance. Most of the loan officers; majority of branch managers; and a significant number of area monitors have low knowledge on ASA Philippines’ guidebook Most of the area monitors were only able to identify one or two (out of five) objectives of ASA’s loan program and objectives of the CBU. The same is true when asked what the areas of work of the internal auditor are.

19 19 Management Capabilities Most of the area monitors have no knowledge on the financial standards of the microfinance industry. Majority of the branch managers were only able to identify one or two criteria for opening a branch. Most of them were only able to answer one or two reasons for client termination. Majority of the loan officers were only able to identify one or two standards in choosing clients. Most of them were not able to identify errors in group formation. Division coordinators said that ASA Philippines will finance its strategic plan through accessing loans from commercial sources and retained earnings. Some of them even stressed that they will not depend on grants to finance their expansion.

20 20 Organizational Development A significant number (26%) of management staff were not aware of incentives given by ASA Philippines The overall job satisfaction rating of the management staff is 3.56 (5 as very satisfied and 1 as very dissatisfied). Other MFIs have an average rating of 4 and above. Knowledge and skills enhancement and economic satisfaction were the lowest areas rated. A significant number of the management staff (36%) know of or have experienced fraud. Half of them said that this involved PhP5,000 to PhP100,000. The management staff were able to identify and connect with the vision, mission and goals of ASA Philippines

21 21 Organizational Development There is high staff turnover. Terminations due to violation of policies; immorality issues; poor performance; fraud; misappropriation of records. Resignations due to too much workload; pressure from work; homesickness; issues with clients; shell out money for repayments Almost all staff think that they have the skills needed to do their job well and majority of the staff think that no other assistance is needed. These findings are inconsistent with the assessment of management staff capabilities. Some division coordinators think that no further areas of improvement is needed. Majority of the staff have not attended trainings (in-house and external). Branch manager and area monitor conferences are conducted but focus mainly on ASA policies and guidelines.

22 22 Organizational Development For almost all the loan officers, their last training attended was the 2-week training before deployment or the pre-service orientation Coaching or mentoring is the main strategy used in capacity building. Job rotations are done monthly Majority of division coordinators said that maybe someday they will be able to lead ASA with proper training and skills development. On the other hand, a few mentioned that they do not dream of it. Currently everyone cannot imagine ASA without Kamrul. But maybe it could be done in 5-20 years.

23 23 Financial Performance Overall, ASA Philippines is financially sound Portfolio quality is better than industry standard with loan loss reserves level seven times higher than what the industry recommends The financial performance remains to be profitable even if adjustments for inflation and subsidies are included. This could be further improved if the administrative efficiency ratio is lowered to 10% from its 39% current level. ASA is growing fast, therefore there is a compelling reason to undergo capacity building for the staff to maintain its financial performance given the findings above

24 24 Summary ASA MF program shows sign of positive impact to clients –Perceived improvement in economic well being and business condition –Positive impact on house repairs, diet and sending children to school –Increase in savings ASA clients are very satisfied with financial service delivery but demands for product improvement and more products offered Capacity building for staff is needed to maintain or further improve financial and organizational sustainability

25 25 Recommendations: Product Development Sickness (Health) is a major area that needs attention – opportunity to develop microinsurance product and at the same time good tool for delinquency prevention Microinsurance against disasters could also be explored Opportunity to improve savings product – most clients save at home ASA should review its policy on having clients take a loan, place this loan as savings to ASA, to retain membership

26 26 Recommendations: Capacity Building for Staff Majority of field staff need orientation on microfinance in general, not just ASA method. The staff, especially the loan officers and branch managers, need re-orientation on ASA’s guidebook. Middle managers and up – area monitors to division coordinators – need to know more about financial analysis and financial planning. Top management should be given the opportunity for further studies since they are largely expected to play a great role in ASA’s future.

27 27 Recommendations: Human Resources A thorough review of the human resource policies should be reviewed due to high staff turnover – salary level; orientation on incentives etc. Top management (regional monitors and up) need to be more involved in strategic planning – fund sourcing, fund management, human resource development etc. Complement mentoring and coaching with formal training Institutionalize continuous internal training programs

28 28 Recommendations: Systems Explore mobile applications to send and consolidate reports from the branches to the head office to increase efficiency A task force on internal control/audit should be established to strengthen internal controls. –They should generate a list of misappropriation or fraudulent activities and identify risk exposures. –The task force will then prioritize the risks to be addressed and recommend mitigating or preventive measured. –Together with the middle managers, these measures shall be implemented and closely monitored.

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