1. Micro Development Fund Report 31 December 2005 Milena Gojkovic

2. About us Micro Development Fund is founded in January 2001 MDF is spin off from international organisation Danish Refugee Council. Mission Statement: MDF is microfinance focused NGO established to support improvements in the social and economic living standards of economically active and poor people in Serbia.

3. MDF programs and donors Programs: 1. Micro Loans for business, 2. Vocational Trainings, Donors: UNHCR, DANIDA, ICRC, Royal Danish Embassy, Tavolo Trentino,EAR

4. AREA OF OPERATION 20 municipalities in Central and South Serbia

5. Beneficiaries Entrepreneurs who want to start up new business or develop existing Refugees Internally Displaced People Women unemployed

6. 1. MICRO LOANS Loan purpose: - For purchase of fixed assets - For working capital Loans are aimed for: - business start up - developing of existing business Loan amount: from 200 – 10,000 EUR Loan term: 6 - 36 months Interest rate: from 1% to 1,5% Guarantees: promissory note with 2 guarantors or salary ban

7. Positioning MDF provides access to the financial services to the micro and SMEs that are marginalised by the formal banks Simple procedures Loan guarantees are simple Credits are disbursed fast MDF supports both, start up and development businesses Excellent repayment records (PAR>30 days 0.9% write off ratio 0,59%) MDF offers long term financial support through repeated borrowing schemes MDF build relationship with clients providing them other non- financial support services like: business advice, vocational trainings

8. MICRO CREDIT PROGRAM SUCCESS DATA

9. Loan Disbursement Trend

10. Active loans per years

11. Target clients Active clients -Status 27.0% 52.7% 20.3% Refugees IDP Locals.

12. Supported business activities

13. Start up businesses through self- employment and its development Active loans new/existing business Start-up Business, 18.50% Existing Business, 81.50% Start-up Business Existing Business

14. Gender structure

15. Supported business development through subsequent loans

16. Credit Portfolio (30.12.2005.) Number of loans disbursed (as of 2001) 7,476 Amount disbursed 9,254,034€ Average loan amount (2005): 1,319 € Average loan term 14 months Active clients 2.378 PAR > 30 days 0.9% Women42% Metodologyindividual

17. Portfolio at risk in 2005 Months PAR>30 days EUR Gross Portfolio Outstanding EUR January5,999,9011,693,245 February4.170,6981,724,341 March3.360,1781,823,588 April3.868,3891,799,728 May2.648,8761,879,882 June2.853,7291,918,897 July2.242,0991,913,624 August1,630,9821,936,379 September0.917,7361,970,669 October1.122.0702,006,387 November120.0992,009,910 December0.918.2862,031,838

18. Write off January- December 2005 MonthAmount in EUROLoan Loss Ratio January36- February00 % March13970.8% April1030.03% May4940.03% June3590.02% July6300.03% August4 4440.22% September2 2250.11% October00% November00% December1,3410,06% Average1,0670.10% Total10,9460.59%

19. Efficiency and Profitability Ratio Trend - positive EFFICIENCY RATIOS20042005 Operational Efficiency22%19% Personal Efficiency78%75% Administrative Efficiency17%19% PROFITABILITY RATIOS20042005 Operational Self Sufficiency 119%141% Yield on Portfolio25%27% Return on Assets21%25%

20. VOCATIONAL TRAININGS 1674 Individual Vocational Trainings (until Dec 05). In 2005 realised 207 VT in 8 municipalities in cooperation with local educational institutions and 19 Curriculum Trainings in Kragujevac in cooperation with Eurecna/EAR accredited trainers. V.T. EVALUATION RESULTS Dec 2005: 61% of trainees found employments. All of the employed realised their employments in 1-6 months after finishing VT. 31% of the VT trainees realised employments through the MDF credits.

21. Strengths MDF is operationally sustainable micro credit institution Developed networks in more than 20 municipalities of central and south Serbia Experienced, trained staff Developed and applied microfinance best practices in context of Serbia Transparency in micro credits Positive audit and institutional assessment reports Ready to grow in portfolio and client outreach Flexible Simple procedures

22. Opportunities Ready for fast growth Extend client outreach Obtain equity funds Offer more diversified loan products To contribute to local development actions in synergy Support to private sector development and market economy Counselling, advice and training of MDF clients Institutional capacity building