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SYPO Uganda Ltd. Business plan Accessible microfinance in rural Uganda

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Table of contents

Executive Summary 3

1. From our Vision to Objectives 5

2. The people we will help to become independent 7

3. The product we provide 9

4. The way in which we deliver our product 11

5. Fundraising – www.microbankieren.nl 19

6. Who we are 21

7. A sound financial plan to realize our vision 24

A. Appendix Overview Uganda 30

B. Appendix Strategy map 32

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Executive Summary

SYPO Uganda Ltd. is the Ugandan microfinance company of the Dutch NGO Stichting SYPO. The impact of our

microcredits is immense: women get the chance to start or expand their own business to increase the income of

their households significantly. Through professional, innovative and low-cost operations in a network of small

field offices, we can serve women in rural areas where essential financial services were previously not available.

Today, the company has issued over 800 loans to women in the Mukono and Buikwe districts, at a repayment

rate of 99.9%. We will continue to carefully track economic and social impact of the project in the coming years,

to ensure that we keep learning and continue to maximize the beneficial effects of the project.

The microfinance sector has shown (market data from www.cgap.com; www.kiva.org; www.mixmarket.org)

that a portfolio of at least 3,000 loans is necessary for a microfinance company to reach sustainable levels. To

grow to a solid portfolio of 3,000 microcredits, another € 400,000 is needed on top of the € 100,000 already

invested in the initial year of this project. A large part of that amount will be collected as donations, through the

innovative website www.microbankieren.nl, on which sponsors can donate money for individual business plans,

and can track the progress of their portfolio. Of the total requirement of € 400,000 in donations, € 250,000

will be attracted through www.microbankieren.nl (from both private individuals and companies), and

€150,000 will be drawn from institutional donors. On top of its donation requirements, SYPO has attracted

€125,000 in debt (at 0-2% interest), provided by a small group of individuals that are sympathetic to SYPO and

its goals. The loans, each of € 25,000, will be repaid at the end of the project period of three years. The objective

of this debt is to maintain the current growth momentum and create predictable funding.

SYPO Uganda Ltd. has over 9 years of experience with economic projects in the Mukono and Buikwe districts and over 2.5 years of experience with microfinance. SYPO started working with microfinance in 2009, through the support of a local NGO in the setup of a microfinance programme. The partner organization has successfully given out several hundreds of loans, and still maintains a portfolio of 100 loans. This first project was completed (i.e. continued independently) in 2011, upon which SYPO decided to start its own microfinance company in Uganda. Because of its success in microfinance, SYPO will continue to grow, improving more lives in Central Uganda. It is SYPO’s objective to:

“Grow the microfinance company SYPO Uganda Ltd. to a portfolio of 3000 loans by the end of 2015.’’

Uganda today is the 27th poorest country in the world with approximately 80% of the people earning less than $2.50 per day. However, with 7% annual economic growth until 2020 predicted by the IMF, and relative political stability for over 25 years, there is a strong base for substantial improvements in the near future. Rural areas do however not always benefit from this nationwide economic growth, because basic financial services are often not available in these more remote parts of the country. SYPO believes that by providing microcredits, the people of the Mukono and Buikwe districts will have the possibility to improve their lives and leverage the growth possibilities currently available in Uganda.

SYPO Uganda Ltd. focuses on groups of women in the Mukono and Buikwe districts in Uganda. Most women in rural Uganda – no matter how poor – have a plan to start or expand a simple business. The capital requirements of the women relatively small (on average ~€150,-), and the women are not registered or offer any collateral. It is for these reasons that conventional banks have chosen no to serve this segment. Microfinance around the world however has shown that, in spite of the complications associated with providing microloans to unregistered women, one can achieve cost-covering interest percentages and repayment rates by offering the right product and by maintaining solid operations.

To provide our clients with low-threshold, transparently low cost loans, SYPO Uganda Ltd. will have:

A. The right product – loans that are catered for the needs and growth of poor rural women

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B. Lean operations – a professional flat organization with zero waste, supported by innovative IT solutions

C. The right people – great recruiting and HR processes to attract and maintain strong and independent loan officers

D. Repayment discipline – by having regular interaction with all clients, and diligent screening processes for all loans

E. Solid management and transparent reporting – adhering to international standards, and keeping full visibility on operational and financial key performance indicators

F. Learning based growth – close contact with the clients and social impact measurement to ensure continuous improvement and optimal products to achieve poverty reduction

The objective of this business plan is to inform investors and sponsors of SYPO Uganda Ltd.’s growth ambitions

in the period 2013-2015. By providing full transparency and insight into implications of business plan, we

intend to raise €400,000 in donations and inform the people and institutions that collectively lent SYPO

Uganda Ltd. €125,000. Investors and sponsors can choose several tangible ways of supporting our

microfinance efforts:

1. Donate any amount of your choice to the Dutch NGO SYPO, which will then use it to give out loans in Uganda;

2. Donate €200 for one microcredit, and support an individual woman to set up or expand her business;

3. Donate €1000 for a group of women, each with individual business plans and responsible for each other’s

repayments;

4. Donate €25.000 for a ‘mobile centre’, a small village in which our loan officers meet clients weekly to extend and

collect loans, usually in a very remote rural village. With this donation we can give out 125 loans;

5. Donate €65.000 for a full zone – a village plus mobile centre, under the responsibility of one loan officer working

from a simple field office in the middle of the zone. With this donation we can extend 325 loans.

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1. From our Vision to Objectives

Vision

We believe that access to microfinance services such as business loans will improve the economic resilience, independence and freedom of choice of Ugandan women and their households.

Mission

To realize our vision we founded the organization SYPO Uganda Ltd., a 100% subsidiary of Stichting SYPO in the Netherlands that started operations in the summer of 2011. SYPO Uganda Ltd. provides structural aid in Uganda by initiating and supporting projects with a sustainable, entrepreneurial character. In the nine years that SYPO has operated economic projects in Central Uganda, microfinance has proven to be an effective approach for poverty elevation – and one that matches the expertise of SYPO’s volunteers. It is therefore our mission to:

“Contribute to economic resilience, independence and the freedom of choice of households in the Mukono and Buikwe districts in Uganda through the provision of small and fair loans to poor, female entrepreneurs that do not have access to conventional financing.”

Objectives

To realize our vision and mission, we have formulated a long-term strategic objective for SYPO Uganda Ltd. stated as following:

“To build, before the end of 2015, a portfolio of 3000 small and fair loans to poor, female entrepreneurs that do not have access to normal financing in the Mukono and Buikwe districts.”

This short-term objective is accompanied and enforced by the following growth targets for 2015:

• Proven impact (household income, client well-being, employment, and schooling);

• Cost-covering of its operations;

• Great employment possibilities for loan officers;

• Strong local management;

• Increased microfinance awareness in NL.

This document constitutes the business plan of SYPO Uganda Ltd. for the years 2013-2015, written with the guidance of PricewaterhouseCoopers Advisory. It describes in detail how the short-term objectives of 2015 and how the long-term objective are attained, ultimately realizing our mission and vision for the Mukono and Buikwe districts in Uganda.

The document starts by describing the target population, in Chapter 2. Chapter 3 describes with what value proposition (product and services) SYPO wants to help them. In Chapter 4 a description is given of the way SYPO will deliver the value proposition to the target group. Chapter 5 provides an overview of the people working in Stichting SYPO and SYPO Uganda Ltd. Chapter 6 is an overview of the financial business model.

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2. The people we will help to become independent

Poverty – Uganda today is the 27th poorest country in the world with approximately 80% of the people earning less than $2.50 per day (CIA world fact book). However, with a 7% annual economic growth until 2020 and relative political stability for over 25 years, there is a good base for economic development (IMF). The Mukono and Buikwe districts are located East of the capital Kampala, towards Kenya. The economic activity in the districts is primarily agricultural, including fishery in the bordering Lake Victoria. Investments in basic infrastructure have risen in the past few years. The agricultural potential, proximity to Kampala and Kenya, and general economic growth of the country create a sustained opportunity for strong growth in the next ten years.

SYPU Uganda Ltd. extends loans to the poorest of the poor in rural areas of the Mukono and Buikwe districts in Central Uganda. To avoid a gradual move towards more affluent clients, SYPO will use the Grameen Bank’s ‘Progress out of Poverty Index’ (PPI) to assess each client’s poverty level. In each zone, the average PPI of first loan clients will not be higher than 50, translating to an 83.7% chance of being below the $2.50 per day poverty line (2005 purchasing power parity). The PPI include questions about family composition, education levels, home construction materials, personal possessions, etc, and is with 10 questions not time consuming to administer. The PPI and other ‘well-being indices’ are also used to assess impact of the loans over time on the clients’ poverty and well-being levels.

Women – SYPO Uganda Ltd. focuses on groups of women in the Mukono and Buikwe districts in Uganda. The prime reasons for SYPO to focus its lending activities on women are that microfinance literature shows that women around the world repay at higher percentages than men (see for more background to this phenomenon www.cgap.com) and that women are more inclined to invest the profits from their businesses in ways that benefit the entire family. By providing loans SYPO enables women to start their own (small) businesses or to expand their already existing businesses. SYPO does not provide such loans as mortgages, consumer loans, school fee loans, etc. Surveys, literature and SYPO’s experience have shown that most women in Uganda do engage in some sort of entrepreneurial activity, and can define plans for expansion of existing activities or the start of new businesses.

There is an enormous demand for microcredit with women in the Mukono and Buikwe districts. The operational zones today have hundreds of applications waiting, and surveys of zones to be opened have shown similar demand in the future.

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The map shown above includes currently operational zones (Namaiba zone (ZO) with mobile (satellite) centre (MC) Nakisunga, and Kisoga with mobile centres Naluwala and Kyandaaza), and future zones Ntenjeru, Katosi, Kasubi, Lugasa and Ngogwe and their mobile centres. The current zones have ~800 loans in portfolio, and market research and pending applications suggest a further potential of ~1,200 clients. Market research in the future zones have shown a potential of ~1,000 clients per zone. This means that there is sufficient potential to sustain a portfolio of 3,000 clients.

Access to financing – SYPO’s target group (poor women in rural areas) has limited access to conventional bank financing. Most have no formal registration status (e.g., ID cards), collateral (e.g., land titles), or credit history, and the costs of transport and distance to the nearest bank branch can be prohibitive. Alternative financing does exist, but is expensive and limited to small amounts. Examples of alternative financing are local moneylenders (surveyed interest percentages >500%pa), wholesaler credit (surveyed interest percentages >500%), and “saving circles” of typically ~10 people who save together and take turns in getting money from the saved amount to invest (surveyed examples showed that the amounts are small, and the unpredictable timing makes this form of saving unsuitable for business investments).

Example business plans and returns – The clients that SYPO serves are active in a wide range of very distinct businesses. Examples drawn from our first year of operations show that some manufacture bricks, others sell chickens or eggs, dig wells to sell drinking water, run hair salons, set up small food shops, start tree plantations, buy solar panels to recharge mobile phones as a commercial service, open up small restaurants, invest in a sewing machine, buy coffee to resell in the city, and so on. Interviews with clients in our portfolio have indicated that the return on invested capital (ROIC) of the client businesses is typically between 100-400% for a first cycle loan; not taking into account the client’s time invested in the business.

Summary profile of SYPO’s clients in the period August 2011 to October 2012 (based on client administration data and interviews):

� Women (100% of clients) � Rural (100%) � With child (95%) � Average age 30-35 years � Often illiterate (~50%) � Married (~80%) � Under $2.50 per day poverty line (80%) � Relatively far from nearest bank branch (average 25km, 1hr) � No significant collateral (e.g. land title) (~90%) � No formal registration (e.g. passport, ID, birth certificate) (~60%) � Small business inventory (average ~200 Euros)

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3. The product we provide

SYPO Uganda Ltd. provides loans to groups of women in the Mukono and Buikwe districts in Uganda. The women borrow in groups of five, each person with her own business plan and responsible for each other's repayments. The loans have a one year period of validity and are paid back weekly – which ensures a regular repayment rhythm and facilitates on-going contact between SYPO and the client groups. SYPO does not require any physical collateral from its clients, which makes its loans accessible to even the poorest of women. This value proposition is tailored after the Grameen Bank model as developed in the 1980s.

To optimize the positive social impact, SYPO has tailored the loan product and operations to the clients’ average profile and needs:

• Providing a low cost product

SYPO provides a low cost product to its clients by keeping the interest rates substantially below Uganda's MFI sector average. SYPO strives to keep its interest rate within the window of 35% and inflation + 25% on declining balance per annum.

Interest percentages in microfinance are generally high. It is much more expensive to give out and collect thousands of small loans than it is to have a portfolio of only several large loans, and the transaction costs are further increased by the challenging local conditions – high inflation, transport costs, and other costs associated with the weekly interaction with every client deep down in every village.

The company will charge an interest percentage that is as low as possible, while covering all costs of the company (e.g. OpEx, inflation, reserves, financing costs). Growth of the company (majority of loan portfolio growth and major CapEx investments) will not be funded directly with interest collected from the clients. Our experience, calculations (see business model attached) and examples from other ‘lean’ microfinance institutions in and outside Uganda have shown that an interest percentage of 35% is sufficient to cover costs of the company, including financing costs and risk. However, 35% assumes a long-term inflation rate lower than 10%. If inflation is structurally higher than 10%, interest rates need to be adjusted accordingly in order to meet growing average loan sizes and increases in variable costs (e.g. employee remuneration and office rent). The company will therefore apply a 35% interest rate, or if necessary inflation plus 25%.

Market research and information from the branch organization AMFIU (Association of Micro Finance Institutions in Uganda) have shown that the real interest percentage (annualized costs of loan as percentage of average loan amount held throughout the year) at different commercially viable microfinance institutions in Uganda is in the range of 30-200%, with an average of 65%. International examples show a similar distribution (e.g. Grameen bank ~20%, Compartamos (Mexico) >125%).

• Providing loans that are suitable for our clients

Some of the poorest clients have very small businesses with relatively small capital demand. In order not to exclude those clients, SYPU Uganda Ltd. will not have a minimum loan size and will tailor each loan size to the business needs of the client. The experience from 2011 is that the average loan size is ~150 Euros, ranging from 50 Euros to 200 Euros.

The clients’ businesses vary widely, both in content and in timing of returns. Some clients operate businesses with cycles of less than 3 months, while other agricultural loans can take up to one year to generate full returns. To accommodate both types of businesses, the company will not have a minimum repayment period or penalties for early repayment. Experience in 2011-2012 has shown that ~25% of clients choose to repay significantly (>2 months) faster than in the maximum 1 year period.

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• Providing transparency and a good customer experience

It is a widespread problem in microfinance that clients in many cases do not know what the costs of their loan are. Microfinance institutions calculate interest in different ways (e.g. per day, week, month or year, flat or reclining, etc), and charge fees on top of interest percentages (insurance, loan officer transportation, administration). This lack of cost transparency is a core cause of failing market forces, in which interest percentages are not driven down by increased competition. SYPO Uganda Ltd. charges a transparently calculated annualized declining balance interest percentage (interest only over loan amount held at any point in time), does not charge fees on top of the interest percentage, and is explicit in communicating the total costs of the loan to the clients repeatedly, both before and during the loan cycle. The total costs of the loan are explained during the intake with the client, outlined in the contract presented to the client and provided again in account statements given periodically during the loan cycle. The client pays interest over the outstanding loan amount only, meaning that a client pays less interest should she choose to repay faster than the maximum period of one year.

In order to keep the time burden of repayments to a minimum, the loan officers of the company will move to the clients and make sure a client never has to walk more than 15 minutes to a repayment centre. To achieve this deep rural penetration, the company is decentralized in ‘zones’; each loan officer is responsible for one zone and operates a simple field office in that zone. For clients that live outside the 15 min radius of the field offices the loan officer visits ‘satellite’ repayment centres, which can be as simple as a bench under a tree. Satellite repayment centres will only be opened if sufficient client can be found in a 15 min walking radius around the centre. Loan officers will not accept clients that live outside of the radius of either the office or a repayment centre.

Realizing that a client can be in immediate need of capital, we adhere to a maximum of three weeks between application intake and loan disbursal.

The loan officers and field offices are all low-threshold and non-threatening in their appearance and demeanour. The offices are simple and look like local shops, and in their personal interaction with the clients the loan officers ensure an equal setting.

• Stimulating cooperative behavior between group members

Loans are given out to groups of five women, responsible for each other’s repayments. The formation of the groups is voluntary, and is the first line of selection of creditworthy clients. After initial selection, the group process can exercise peer pressure on clients in danger of default, or practical support and knowledge-sharing when a business is in jeopardy. To make full use of these mechanisms (selection, practical support, knowledge sharing and peer pressure), SYPO will stimulate the group dynamics in two ways: 1) the clients are required to make payments as a group, physically present each week, 2) clients are encouraged to share knowledge and practical support during business-specific (e.g. poultry, trade, etc) workshop sessions.

• Contributing to financial education

Financial education of the clients is beneficial for three reasons: 1) it will improve transparency by ensuring that clients fully understand the conditions and consequences of the product, 2) it will improve the client’s compliance to the company rules and avoid defaults, and 3) it will contribute to the efficacy of the loans by improving the performance of the client’s business. The company will therefore provide a short training in general bookkeeping and the company rules before disbursement of the loans, and facilitate financial literacy follow-up trainings by third-party trainers where needed.

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4. The way in which we deliver our product

The previous chapter describes the loan product that SYPO has tailored to the needs of the poorest of the poor in rural Uganda. To achieve sustainable social impact, the delivery of the product is just as important as the product itself. SYPO Uganda Ltd.’s operations need to be low-cost, accessible to the client, and financially sustainable. This chapter is to outline the innovative and diligent ways in which SYPO achieves these operations.

Ad B. Lean operations in place to support the value proposition delivery

Different specific activities and processes are in place to make sure that the value proposition is delivered to our clients and that the loans are provided to the right people in the correct fashion:

• Simple and fast application procedures

One of the benefits of microfinance is that it provides poor people with a means of insurance against strong income fluctuations. This insurance works best when a loan can be made available within a limited time span. For this reason, SYPO Uganda Ltd. aims to have a short and fast application procedure:

• The organisation aims to minimise the waiting period between loan application and loan disbursement to a maximum of three weeks.

• In order to make sure that the loan product remains accessible for the organisation’s target group, the application process is kept relatively simple: loan officers visit each of the prospective clients, and with them fill out an application form that includes elements of a business plan, such as the intended investments, calculations of the profits, and background of the clients.

• Be mobile and provide offices at the right place

Loan officers all operate within their own geographical zone. Before a new zone is started a market and area mapping is completed to ensure that there is a large enough target group within the prospective zone, and to identify optimal locations for all collection centres. Zone offices will be positioned in the zone’s largest trading centre with the minimum requirements that there are at least 300 potential clients (women between 18 and 60 years old who engage in any form of business activity) within a 15 minute walk from the office, and that there are at least 3 repayment centres with at least 200 potential clients within 15 minute walking distance each within 20 minutes travel for the loan officer.

SYPO Uganda Ltd. currently has three operational zones, combine in one ‘region’. There are two operational zones in Kisoga (with mobile centres in Naluwala, Banda Kuandaaza, and Kirondo), and one in Namaiba (with mobile centre in Nakisunga). SYPO has conducted market surveys in other villages, and will grow to the following zones in the coming three years: Ntenjeru will be added to the currently operational region (and will include mobile centre Buzungula and Nsanja), the other region will consist of zones Ngogwe, Lugasa and Kasubi (with mobile centres Nanunga and Matale). Surveys and potential client interviews have shown that together, these seven zones have the potential to sustain over 5,000 clients. There is no access to conventional finance (banks) or well-functioning microfinance/moneylenders in any of these zones.

• Minimize operational costs and overhead

In order to be able to provide our clients with a low-cost product, SYPO Uganda Ltd. aims to keep operational and overhead costs to an absolute minimum. Field offices are kept extremely basic and their initial set-up costs should not exceed 1500 Euro (corrected for inflation). Operational costs (including depreciation) for all zone offices should be kept below 125 Euro per month (inflation corrected). SYPO Uganda Ltd. will aim to minimise local management staff and

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the organisation will be kept as lean as possible. Transport will continue to be outsourced. Management will be kept minimized by leveraging Dutch volunteer Directors and other support staff, and by distributing support functions over the loan officers.

• Consistently good execution of loan officer protocols

SYPO Uganda Ltd. has financial and operational protocols in place for client recruiting, loan disbursement, repayment collections, security, and financial reporting. All newly recruited loan officers receive a one-month training period before they start operating their own zones, focusing on this protocol.

• Using IT to ensure controlled operations

SYPO Uganda Ltd. has remote management in the Netherlands, and even in Uganda the field offices are spaced some 30 minutes apart. Communication is a constant challenge, and the monitoring of the >40,000 cash transactions a year is not an easy task. SYPO Uganda Ltd. therefore sees an advanced IT environment as crucial to achieving its qualitative and quantitative goals. Its IT environment should facilitate:

• Constant communication amongst loan officers and between loan officers and Directors;

• Visibility of all client administration, loan applications and financial transactions to the company’s management/Directors

• Reliable and transparent bookkeeping and reporting

• Transparent and reliable loan appraisal with separation of loan submission by the loan officers and approval by the Directors

• Sponsoring of individual loans

• Reliable tracking of Key Performance Indicators (KPIs) regarding portfolio heath both per loan officer and on a consolidated level

• Maximum transparency to stakeholders of KPIs / portfolio health and financials

SYPO Uganda Ltd. uses SYMBA, a tailored and proprietary Oracle database in which all client administrations, loans and repayments are registered, analysed and reported, and through which loans can be submitted and appraised. SYMBA reports KPIs and facilitates bookkeeping by keeping track of all transactions in the company. SYMBA was written by volunteer Oracle developers especially for SYPO. For its financial administration SYPO uses an online syncing programme that allows both the loan officers and the Directors to always have access to the latest records. All loan officers have a company smart phone, which facilitates smooth communication between the Netherlands and Uganda through a chat application and conference call facility.

• Using IT for growth

SYPO will use www.microbankieren.nl to finance the largest part of its growth plans. All the organisation’s new loan applications will be posted on this websites for donors to make a direct donation in support of one of the micro credits. After his donation the ‘microbanker’ receives access to an account that allows him to track the repayments of ‘his’ client. The collected repayments can subsequently be re-invested into a new loan application. In this way, SYPO micro banking shows donors exactly how their money is spend while at the same time making the impact of microfinance visible. The website is linked to client administration database SYMBA and all information exchange has been fully automated, so that it hardly demands any time commitment from the loan officers. SYPO micro banking will be marketed extensively through the social media.

Ad C. The right people management to deliver the job

Key to the success of SYPU Uganda Ltd. is to be a good employer and offer a small team of local employees a good place to work. This working environment allows us to attract local people with the right set of skills required to manage, support and execute our local operations. Our view on HR includes a recruitment and

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development approach to attract the right people and develop them in a way that equips them with the right skills, and nurture a low cost culture to maximize the development impact of our operations:

• Employ great loan officers that enable our vision

Loan officers are responsible for all operations in their zone; they recruit and train clients, disburse loans, monitor client activity and collect repayments. Their weekly schedule includes three full days of repayments, one day of and taking applications, training new groups and visits to businesses, and one day of administration and meetings with other loan officers. The job of a loan officer is one that requires a lot of ownership and responsibility. We therefore require our loan officers to have a university degree and be ambitious, young people with a maximum of five years work experience. Loan officers have to be able to identify with the mission of our organization, work independently, have an on-the-ground mentality, solid IT knowledge and strong communications skills. We often hire loan officers that have one or two years’ experience with a conventional microfinance institution and are ready to move into a comparable role with relatively more responsibility. Recruitment is done through an advertisement in the largest national newspaper, followed by a round of CV selection and one or two competency-based interviews.

• Be a good employer

Being a good employer entails offering employees an environment that is safe, trusted and inspiring.

SYPO offers its loan officers a safe work environment. On Monday morning, an outsourced trusted car service picks up the loan officers from the local bank branch where they take out the money to be disbursed as loans, and transports the money and the loan officers to their field offices. The car service uses different cars every couple of weeks, and takes different routes and at different times to decrease predictability of the operations. The cash money is kept for a maximum of three days in the field offices, in built-in vaults in the field offices.

The Directors visit the local SYPO Uganda Ltd. organisation on a regular basis to remain a feel for local working conditions. Our employees are remunerated in line with market standards. At ~175 Euros per month, the loan officers are rewarded in the ~66th percentile of the microfinance industry in Uganda, but substantially lower than in the conventional Ugandan banking industry.

SYPO Uganda Ltd. invests heavily in the development of its employees, and all personnel have a substantial budget for schooling and training. Examples of training requested/received in the first year of operation are an advanced microfinance diploma, and computer training. The organisation performs semi-annual reviews of all employees to closely monitor their personal growth and job satisfaction. Approximately 20% of the loan officer’s remuneration is performance-dependent (assessed on three dimensions: downward/peer feedback, portfolio health and reporting).

Being a good employer does not just follow from our mission, but also benefits local development, counters corruption, increases our company effectiveness, and leads to innovation and improved well-being.

• Provide sufficient expertise for support functions

Support or umbrella functions of the company are distributed between the loan officers, the volunteer Directors, and volunteers in the Netherlands. Most loan officers have one or two tasks to support the operations of the company, next to the responsibility for the operations in their zone. To this end, SYPO employs loan officers with experience in support functions as well. Below is an overview of some of the main support tasks and their owners:

• Management – The Managing Director (volunteer), Finance Director (volunteer) and in the future the Operations Director (remunerated) in Uganda;

• Accounting/ financial records – Loan officers (zone bookkeeping), loan officer with accountancy experience (company bookkeeping), Financial Director (company bookkeeping, financial monitoring, reporting to the Board);

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• IT – Loan officer with IT experience for operational IT in Uganda, and volunteers (at least two at any moment, Dutch) for SYMBA (online client administration database) and SYPO websites;

• Licensing (e.g. money lending license, trading license) – Loan officer and local lawyer;

• Employer compliance (e.g. employer taxes, health insurances) – Loan officer with HR experience;

• HR (e.g. contracts) – Directors;

• Recruitment – Directors;

• Training of new loan officers – Loan officers with training experience.

• Provide development opportunities to local employees

Key to the success of SYPO Uganda Ltd. is the development of our people. We therefore provide our employees with substantial schooling and training opportunities: loan officers are offered an annual training budget of 2 million UGX (~585 Euros) for training in microfinance, IT and other areas that might complement the loan officer’s skill set and benefit the company.

We nurture a learning culture in which feedback is encouraged, across job levels and functions. We perform semi-annual reviews with personal feedback to monitor our loan officer’s personal growth and job satisfactions, and discuss feedback and improvement ideas during weekly conference calls with the Directors and all employees.

Ad D. Instil repayment discipline

• Instil good payment discipline with clients

To ensure a healthy loans portfolio, the organisation focuses on instilling good payment discipline with all its clients. The following policies are therefore put in place:

• All clients receive training in repayment discipline and time keeping before their loan is disbursed.

• Tardiness of members at the weekly repayment meeting is punished with a small fine payable by the entire group.

• All clients need to be present at every repayment – to ensure regular contact with the clients and to keep the clients in a regular repayment rhythm. Absence from a weekly meeting (even if money is sent through a group member) is not acceptable and more than ten absences during the full period of the loan will result in not being eligible for a subsequent loan. Loan officers visit clients after each occurrence of absenteeism and discuss the issue both with the client and her group.

• Two or more missed/late payments will result in not being eligible for subsequent loans. In case a client is unable to make her repayment, her group members are asked to contribute her instalment. Cases of missed repayments are followed up with a client visit during which the client is reminded of her payment obligation. This visit is also used to identify and resolve any potential problems that might be keeping the client from making proper repayments.

• Minimise loan losses

The organisation will work to keep its PAR30 (a measure of portfolio quality: loan balance of clients with payments overdue more than thirty days, but not yet written off) below 5% and the loan loss ratio (percentage of loans written off) below 2%. To achieve this, the organisation employs the following policies and procedures:

• SYPO Uganda Ltd. lends to self-formed groups that are mutually responsible for repayment of each other’s loans. The mutual responsibility requirement provides clients with a social stimulus to repay their loans, and gives the organisation additional means to recover its lent out funds. By having clients form their own groups, the organisation capitalises on the fact that the village women are better informed about each other’s creditworthiness than any outside organisation can be in the absence of proper payment history tracking;

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• A strict payment discipline is installed in all clients by requiring them to make weekly repayments on their loans;

• Clients are incentivised to repay their microcredits by giving them the prospect of a (larger) subsequent loan, conditional on successful repayment of the outstanding loan;

• Loan officers are incentivised to minimise the PAR30 and loan loss ratio of their zones by including these statistics as key performance indicators of their performance-based pay.

Ad E. Solid management and transparent reporting

Our governance structure is set up to facilitate maximal local development impact, and at the same time allow us to monitor our operations in line with our company ethics.

Legal entity – SYPO Uganda Ltd. is a Ugandan registered company, with currently 100% of shares owned by the Dutch NGO Stichting SYPO. Shares are issued and debt is accepted as majority decision of the organisation’s two Directors.

Management – The company has two Directors: Duko Hopman as Managing Director (Duko is also Director of the Dutch NGO SYPO), and Emma Kandelaars as Finance Director. SYPO aims to add an Operations Director of Ugandan nationality to the team of Directors before 2015. Appointment and removal of the Directors is by majority decision of the shareholders (currently the Dutch NGO SYPO). The reasons that SYPO has decided to start with two Dutch Directors that have a longer experience at SYPO, are:

• To accommodate full transparency and communication, and allow for diligent monitoring in the first growth phase of the company;

• To ensure that the company starts according to the microfinance philosophy that SYPO has developed over the years, with a focus on being low threshold and fully transparent towards the clients;

• To keep costs of management low (Directors are currently volunteers) and test the model of having as little management as possible in the field, with relatively high level of ownership of the loan officers. We have thoroughly explored the possibility of recruiting a local Director in 2011, but after several recruitment rounds concluded that the calibre required for the position was to expensive (>€800/month) to be justified by the company’s management needs at the time.

Employees of the company are appointed and contracts are terminated by majority decision of the Directors. Changes in the company’s product conditions, geographic focus, client target group, or company policies are made by majority decision of the Directors. Major decisions are approved or taken by the shareholders. See the RACI matrix below for more details on all levels of decision making (R= Responsible, A=Accountable, C=Consulted, I=Informed).

Loan appraisal process – All client loans are selected and subsequently presented by the loan officers to a loan appraisal committee. This appraisal committee consists of all the loan officers of a ‘region’ (three or four zones in the same geography). The loan officers have the opportunity to ask questions and probe for more information regarding the applications during this meeting, and visit clients if need be. If the committee is satisfied with the applications, they are submitted to the Directors of the company, who then approve or cancel the loans. A loan is thus appraised at several levels: first by the clients in one group, responsible for each other’s repayments; then by a loan officers, who takes the applications from the groups; then by the appraisal committee during a region meeting; and finally by the Directors, as a final check.

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Financial budgeting and reporting – An annual budget for the next year is presented to the shareholders for approval in November of each year, and a financial report over the previous year is presented for approval to the shareholders in April of each year. The Directors are responsible for the timely and complete reporting to sponsors of the company and its shareholders.

• Employ good local management

To achieve minimum costs and interest to the client, SYPO Uganda Ltd. will maintain ‘lean’ operations. This also includes as little management as possible. The loan officers are currently supervised and monitored by the volunteer Directors. Umbrella tasks of the company such as licensing, IT, tax and HR responsibilities, etc are distributed between the loan officers. SYPO expects that it is possible to operate without local management for the next two years. Before 31 December 2015, SYPO will appoint an Operations Director of Ugandan nationality, who will be in charge of daily management of the loan officers, and will have a full vote as Director of the company.

• Zero tolerance for internal corruption

The organisation will follow a zero tolerance policy regarding corruption. When head office management identifies that funds have gone missing and the involved loan officer cannot provide a satisfactory explanation, the loan officer’s contract will be terminated immediately and legal prosecution will follow.

A number of measures have been implemented to minimise the opportunity for corruption. To ensure that loan officers will not illegitimately charge (prospective) clients with additional fees or charges, contracts, posters and other communication with the client clearly explain the costs of the loan product in both English and Luganda. The existence of ghost clients is prevented by a thorough appraisal process and close monitoring of all financial transactions. Each zone / loan officers is audited by a third party every half a year, including random visits to clients to verify their existence and compliance of the loan officer with the

Shareholders (currently

board Stichting SYPO)

Board of Directors SYPO UG

Ltd

SYPO UG Ltd management

(role of Directors in absence of

mgt)

SYPO Uganda Ltd

accountants

SYPO Uganda Ltd loan officers

Apointment/ removal of Board of Directors Shareholder vote R + A I IRemuneration of Board of Directors Shareholder vote R + A I IAppointment/ removal and remuneration of management I A + RAppointment/ removal and remuneration of management I A + RAppointment/ removal and remuneration of other employees I A R

Strategy and planningLong term objectives / mission setting A R I + C C CYearly corporate business plan A R R CLong term financial planning (3 years) A R C C CAgreement with strategic alliances A R RChanges in approval procedures and authorities A R IAnnual budget A R R CApproving annual accounts A R R CAcquisitions of other entities and / or major assets / developments A R I + C

Other contractingInsurance agreements C A + R IEngaging the organisation in contracts that pose current or future obligations to third parties A R CSigning of agreements with building contractors (< 5 million UGX) A R CSigning of agreements with building contractors (> 5 million UGX) I A R C

Banking & TreasuryOpening and closing main bank accounts I A RChanges to delegation of authorised representatives for main bank accounts A + R C IOpening and closing zone sub-accounts I A + R I + CChanges to delegation of authorised representatives for zone sub-accounts I A + R I + CTransactions main bank accounts (< 500,000 UGX) A R RTransactions main bank accounts (> 500,000 UGX) A R RTransactions zone sub-accounts (< 500,000 UGX) A I I RTransactions zone sub-accounts (> 500,000 UGX) A I I RPayroll payments A R RAccess to online banking I A R

Procurement & ExpensesPurchasing OPEX items (<500 Euro equivalent) Reported weekly A + I R C RPurchasing OPEX items (>500 Euro equivalent) Prior notification of

Directors requiredA R C

Purchasing CAPEX items (<500 Euro equivalent) Reported weekly A + I R C RPurchasing CAPEX items (>500 Euro equivalent) Prior notification of

Directors requiredA R C

Expense claim approval UG Reported weekly I A RExpense claim approval NL Stichting SYPO

approves Director expenses

A + R

Appointments/ removals and remuneration

RACI matr ix

Process Comments

Mandate

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loan product costs. In addition to this, each year includes one month of ‘zone rotation’, in which the loan officers manage each other’s zones to ensure that if loan officers charge illegitimate costs to their clients or have created ghost clients, this will be known by other loan officers.

• Good, transparent finance processes and adequate internal control

As described above, SYPO has developed an online client administration database ‘SYMBA’ which registers all clients and transactions of the company. By using SYMBA, SYPO Uganda Ltd. can guarantee a transparent financial process. The financial processes in SYMBA are based on the ‘four eyes’ principle, which means that financial transactions always need approval by a second person; a second pair of eyes. Based on the ‘four eyes’ principle, each loan request is reviewed by an appraisal committee, consisting of peer loan officers and the Directors of SYPO.

The release of the loan and subsequent repayments are monitored in SYMBA and matched to the transactions on each loan officers’ zone’s bank account on a weekly basis. Loan officers enter their collected repayments into the administration system, with collections deviating from the client contract amount flagged by the system. All payments below contract amounts require an explanation and are followed up with the loan officers. Total weekly collections are matched to repayments banked using online access to each loan officer’s bank account. A similar procedure is followed for all disbursed loans; the disbursement of loans is entered into the online administration on a weekly basis, and total weekly amounts are matched to the funds taken out of the loan officer’s account.

For non-portfolio transactions loan officers use petty cash from their designated bank account. Both petty cash spending and all portfolio transactions are recorded by each loan officer individually in his / her zone’s financial administration, following standard book keeping practices. All financial records are accessible to the organisation’s Directors at all times through an online syncing programme. Loan officers provide head office management with a monthly profit and loss statement for their zone. Loan officers’ records are checked internally on a monthly basis, and semi-annually by the organisations’ external auditor.

On a yearly basis, financial statements are published on SYPO’s website. The financial statements are in line with the guidelines of the Global Reporting Initiative, recognised principles of responsible investing. The company’s finances are audited externally by a registered Ugandan auditor, both on a per-zone and on a consolidated level. The mid-year audit is mostly targeted at reviewing processes and controls, and results in a report with recommendations to improve the control framework (see appendix example audit July 2012). The end-of-year audit is a standard formal audit.

• Provide good, interactive insight into results

SYPO Uganda Ltd. provides full transparency of its finances and operational progress to all of its direct and indirect financiers and sponsors, the Supervisory board/Board of Director and Executive Board of Stichting SYPO. Reporting will include both the monthly and annual financial reports, semi-annual audit reports, social and financial impact reports, and continuous access to ‘live’ Key Performance Indicators (KPIs) of portfolio health, such as PAR30, default rate, and the arrears rate (see example of one loan officer’s KPI dashboard in SYMBA below).

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• Ad F. Learning based growth – continuous social impact assessment

SYPO believes that microfinance can be a very strong tool in the fight against poverty. Recent literature, including the findings of large randomized controlled trials of high methodological quality (http://www.sciencedirect.com/science/article/pii/S0305750X12000496) have shown that while some forms of microfinance have significant beneficial financial and social impact, others do not. SYPO has based the choice of clients, products and method of delivery on these conclusions in literature (e.g. group lending, individual business plans, flexibility of repayments, rural penetration and avoidance of multiple lending, targeting of women, etc). However, given the diversity of findings in empirical research, we feel that it is necessary to also measure our own impact on a continuous basis. Our specific client profile, geography, and other characteristics may produce other outcomes than can be expected based on literature.

As part of the loan appraisal process of every client, the client is asked to fill out the Grameen Foundation’s ‘Progress out of Poverty Index’ (PPI) for Uganda. This index is a statistical tool to estimate the chance of a client to fall into a specific income group. If for instance a client has a PPI score of <50, this client has a >80% likelihood of living under the $2.50/day poverty line. By taking the PPI with every client at different moments in time, SYPO is able to assess the movement out of poverty of this client. We intend to complement this research with assessments of control groups, to ensure that the measured effect is not just a regional increase of income due to macroeconomic factors. On top of the PPI, SYPO has designed several qualitative questions to assess each client’s wellbeing, such as “Looking back at the last year and on a scale from 1 to 10, to what extend have you been able to make the choices in life

that you like to make”. SYPO will share the outcome of its impact assessments on its website.

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5. Fundraising – www.microbankieren.nl

• Crowd-funding

Financing of the growth of the company will depend largely on donations. For this purpose, the Dutch NGO Stichting SYPO is building the website www.microbankieren.nl, on which all individual client business plans will be placed for direct sponsoring by individuals and companies. Posting of the business plans on www.microbankieren.nl is done automatically by our client administration system SYMBA, and does not increase the burden on the operations in Uganda. Based on the client’s profile and business plan, a sponsor can choose to support an individual loan application by donating money for the micro credit online. After donating, the sponsor receives a login with access to information regarding the progress of ‘his client’, can monitor the weekly repayments, and can ask questions to the client. The sponsor will have the ability to once again sponsor a business plan with the money repaid by their first client. With its full transparency in the way microfinance works (e.g. visibility of all the transactions and client profiles), www.microbankieren.nl will serve to increase awareness across society in the Netherlands.

The website www.microbankieren.nl will go online in first quarter of 2013 and will attract the majority of the financing required for the growth of the company (see appendix business model). To this end, the website will be promoted extensively to the Dutch public. A promotion plan is being drafted, which outlines the focus on social media, press releases, event promotions, and direct visits to companies, through which the business plans on the website will be promoted to sponsors. To maximize donations and awareness, SYPO aims to have at least 4,000 unique visitors per month on the website.

• Small and Medium Enterprises

SYPO has long depended on donations from Small and Medium Enterprises (SME), and will continue to draw support from this segment. The nature of our entrepreneurial operations in Uganda is close to the heart of many working in the Dutch SME market, and even direct linkages (e.g. a retailer in the Netherlands supporting microcredits for women in retail in Uganda). SYPO intends to actively approach SME in 2013, with the proposal to support all microcredits in one or more zones in our microfinance operation in Uganda. This gives a company in the Netherlands (or elsewhere) the opportunity to choose between small villages (in which the build-up of a loans portfolio would be ~€10,000) and larger villages (up to ~€80,000). Channelling the donation through www.microbankieren.nl, the company can – with company login details – follow the progress of its portfolio throughout the year, giving employees the opportunity to choose which loans they like to support. SYPO intends to raise 50% of its proceeds of www.microbankieren.nl from the SME segment.

• Institutional donors

Although the financial crisis has significantly lowered the budgets of many of the Netherlands’ institutional donors, SYPO will still draw some € 150,000 from Dutch NGOs – some of which have supported SYPO in the past. Institutional donors include those NGOs that receive government funds to redistribute to smaller NGOs, but also institutions that manage family or company wealth for charitable purposes.

• Investors

SYPO realizes that there are commercial funds available for microfinance (e.g. Blue Orchard, Oikocredit, Triodos funds, Credit Agricole). However, in this early growth phase it is not feasible to grow with these funds alone. At this stage in SYPO Uganda Ltd.’s growth, we do not yet meet the commercial funds’ requirements, or the cost of funds is prohibitively high. After the initial growth phase of the next three

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years, in which SYPO Uganda Ltd. grows its equity base, we will re-evaluate our options on the fund markets.

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6. Who we are

Background

The Dutch NGO Stichting SYPO has over 9 years of experience with economic projects in the Mukono and Buikwe districts and over 2.5 years experience with microfinance. SYPO was founded in 2003 to finance and support several social projects with an entrepreneurial character, such as a project to ensure the local adoption of HIV orphans through the start of a local yoghurt factory and dairy cooperative, and a medical project to improve primary healthcare throughout the Mukono and Buikwe districts. Other projects included SME investments and the start of a local guesthouse.

In 2010, SYPO supported a local partner organization to start a microfinance project. The project was a success, but the partner chose not to grow beyond a 100 loan portfolio. However, because of the obvious impact of microfinance, SYPO decided to focus its efforts on this form of support to Uganda. Stichting SYPO founded the company SYPO Uganda Ltd. in the summer of 2011, with the ambition to grow to a portfolio of loans of 3000 in 2015.

Legal structure

The company in Uganda is a ' Limited by shares ' (b.v. equivalent) company, of which all shares are owned by Stichting SYPO in the Netherlands. The two Directors of the company are the Dutch volunteers Duko Hopman and Emma Kandelaars. The Directors are supervised by the shareholders, currently represented by Stichting SYPO’s Board in the Netherlands, which meets at least quarterly.

Stichting SYPO, 100% shareholder of the Ugandan company SYPO Uganda Ltd., is a Dutch foundation/ NGO with a supervisory board, a Director, and volunteers.

Our people

Below an overview of all the people that help make SYPO Uganda Ltd. a success.

• Stichting SYPO

Supervisory Board / Board of Directors

• Ger van der Bruggen, Chairman – HR specialist and entrepreneur

Ger has worked as HR Director at Vredestijn for seven years and has subsequently ran his own HR consultancy company for ten years. Ger has been chairman of SYPO since its founding in 2003.

• Nico Hopman, Secretary – HR specialist

Nico has worked as HR consultant for over 15 years, specializing in the healthcare industry.

• Pieter de Hoop, Board member – Entrepreneur, agricultural specialist and Africa specialist

Pieter has been an agricultural entrepreneur and consultant, with experience working for clients in Africa.

• Arjen Laan, Treasurer – Entrepreneur, Africa specialist

Arjen has worked as HR Director for Redevco, is an entrepreneur, and has worked for Medecins Sans Frontieres, with extensive experience working in Africa.

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Executive Board

• Duko Hopman, Director – Strategy Consultant, Africa specialist

Duko is 28 years old, and has studied molecular biology and epidemiology in the Netherlands. Duko has been SYPO’s Director since its founding in 2003, and has worked for SYPO in Uganda for a year on the start of its microfinance projects and a local guesthouse. Since two years now, Duko has worked as a strategy consultant with McKinsey & Company.

Volunteers

• Emma Kandelaars, Financial manager – Econometrist, Master of Public Administration, Africa specialist

• Manolito van Ardenne, Financial volunteer – Group controller

Manolito works as group controller at Redevco and advises SYPO Uganda Ltd. with its financial planning.

• Toine Teurlings, IT – IT specialist, Oracle specialist

Toine designs and builds data warehouses for such clients as UWV, Delta Lloyd, Schiphol Airport, Essent and the Public Prosecutor. Toine helps to develop and maintain SYMBA, he also coordinates the development of www.microbankieren.nl.

• Ralph Hopman, IT – IT specialist, Oracle specialist

Ralph has worked as Oracle developer for Oracle and Bol.com, and developed the client administration system SYMBA for SYPO.

• Dik Smid, SYPO microbankieren construction and maintenance – Website builder, Drupal specialist

Dik works as a freelance Drupal specialist and supports SYPO with the development of www.microbankieren.nl.

• Kees Wagemaker, Agrarisch specialist – Farmer

Kees has worked as an agricultural entrepreneur in the Netherlands, is dairy specialist, and has spent many months in Uganda advising the dairy cooperative in SYPO’s Yoghurt project.

• Leonie van den Heuvel, Medical volunteer – Doctor / physician

Leonie is physician in the Netherlands, has worked in Uganda for SYPO to give medical trainings in SYPO’s MediStuctures project, and is still active in the promotion of the NGO in the Netherlands.

• Sonja Brouwer, Communication / promotion – Communication Consultant

Sonja works as an independent communication consultant (www.brouwerpowerrr.nl). For SYPO Uganda Ltd. she is writing a communication plan to attract and activate donors to the website www.microbankieren.nl.

• SYPO Uganda Ltd.

Executive Board

• Duko Hopman, Managing Director – Strategy Consultant, Africa specialist

• Emma Kandelaars, Finance Director – Econometrist, Master of Public Administration, Africa specialist

Emma is 25 years old, has studied econometrics in the Netherlands and holds a professional Master’s degree in Public Administration from the London School of Economics. Emma has been SYPO’s financial manager since 2007, and has worked for SYPO in Uganda to start its microfinance project. She is currently based in South Sudan where she works for the country’s largest microfinance organisation.

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Employees

• Andrew Ssozi, local Loan Officer

• Lydia Ayango, local Loan Officer

• Milly Naggayi, local Loan Officer

• Lydia Apio, local Loan Officer

All loan officers have at least a Bachelor’s degree and typically several years work experience, mostly as loan officer.

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7. A sound financial plan to realize our vision

Growth plan and financial need

To achieve its objective of growing to a portfolio of 3000 active loans, SYPO requires another € 400,000 euro of funding. The organization has already been successful in attracting € 125,000 in loans to cover immediate financial needs. SYPO will take a number of actions to achieve the remainder of its funding target. Most importantly, it will use the before mentioned website ‘www.microbankieren.nl’ to attract donations from private individuals. In addition to this, SYPO will aim to attract € 150,000 from institutional donors and where needed, donations from other sources that have proven successful in the past:

• Fund applications to Dutch foundations;

• Approach small and medium sized companies;

• Monthly direct debit donations of individuals;

• Themed activities at “service clubs” (e.g. Rotary, Lions Club). The long term debt that SYPO has attracted for Q4 2012-Q2 2013 has the following characteristics:

• Stichting SYPO in the Netherlands will be the receiving party, which will lend the funds onward to SYPO Uganda Ltd.;

• The total loan value is divided into € 10,000-€ 25,000 individual loans;

• The loan period is 3 years;

• 0-2% Interest;

• Exchange rate risk will be carried in full by SYPO Uganda Ltd., and is partially covered by the Rabobank Foundation

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Financial overview

The following pages show SYPO Uganda Ltd.’s full financial planning and a summary income statement for the coming 3 years. The organization is projected to become profitable and with that self-sustainable in the last quarter of 2013.

The planning shows the financing required for the company to be able to sustain its growth path. The attracted funding of €150,000 in loans from Dutch lenders will cover the financing need of the first part of 2013 and will allow SYPO microbankieren to get fully operational. It is anticipated that by the end of 2013 SYPO microbankieren will be able to generate the majority share of the company’s financing requirement. Because income through www.microbankieren.nl will remain slightly unpredictable, the organization aims to also attract €150,000 in grants from institutional donors. This income will help smoothen out fluctuations in SYPO microbankieren revenue and guarantee a stable financing stream for the Ugandan company.

SYPO Uganda Ltd. will receive its €150,000 debt investment spread out over the last quarter of 2012 and the first six months of 2013. The loans have a loan period of three years and will have to be paid back in full by the end of 2015 / early 2016. The Dutch lenders will make their investment in Euros and SYPO Uganda Ltd. will cover the full exchange rate risk. The company will take a reservation for loan repayment topped up with an additional 10% of the total loan amount to cover currency losses. Bloomberg predictions for the development of the Ugandan shilling show that it is unlikely that the currency will depreciate by more than 10% over the loan period.

The income statement shows that with the organization’s efforts to keep costs at a minimum, the company will be robustly profitable in 2015 – even with an interest rate as low as 35%. It is very promising that while keeping the costs for clients low and the loan product accessible to the poorest of women, SYPO Uganda Ltd. is still well on its way to become a sustainable and financially independent organization. As long as Stichting SYPO is the company’s sole shareholder, all profits will be channelled back into the organization and used for portfolio expansion.

With an initial debt investment of €150,000, institutional subsidies of €150,000 and SYPO microbankieren donaties worth €250,000, SYPO Uganda Ltd. will have grown to a loan portfolio of almost half a million Euros by the end of 2015 that serves 3000 Ugandan women with affordable business loans, while at the same time being a self-sustainable organization.

N.B. The ‘net earnings’ in this table include ‘gifts’ – donations to the Dutch NGO SYPO. For an overview of results of the operations themselves, please refer to the row ‘operating income’.

2012 2013 2014 201511,415 36,541 79,568 282,852

-716 -2,333 -5,351 -20,172-12,002 -24,117 -45,254 -127,736-4,367 -4,760 -5,188 -6,225-1,950 -3,826 -6,024 -14,778

-613 -1,202 -2,882 -9,1530 0 0 0

-8,233 304 14,869 104,787-566 -6,794 -7,868 -7,606

0 38,056 209,369 201,328-8,799 31,566 216,370 298,5102,470 -91 -4,461 -31,436

-6,329 31,475 211,910 267,073-14.5% -4.8% 0.9% 13.5%

Income statementInterest incomeLoan lossSalary expensesOverhead expensesRent & utilities zone officeDepreciationInterest expensesOperating incomeCurrencyGiftsEarnings before taxTaxNet earningsNet earning (excl gifts) % of portfolio

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Financial statements

Income statement 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4Interest income 1,616 2,454 3,255 4,090 5,680 7,963 10,289 12,608 15,294 18,534 21,480 24,260 27,128 30,409 32,914 34,896 36,827 39,104 40,467 41,108Loan loss -88 -149 -209 -270 -363 -495 -648 -827 -1,019 -1,228 -1,442 -1,663 -1,883 -2,102 -2,304 -2,486 -2,652 -2,800 -2,924 -3,021Salary expenses -2,328 -2,452 -3,611 -3,611 -5,278 -5,379 -6,654 -6,805 -8,808 -8,973 -13,655 -13,819 -15,063 -15,197 -15,257 -15,257 -16,630 -16,647 -16,842 -16,842Overhead expenses -1,608 -575 -1,608 -575 -1,753 -627 -1,753 -627 -1,911 -683 -1,911 -683 -745 -745 -745 -745 -812 -812 -812 -812Rent & utilities zone office -390 -390 -585 -585 -850 -850 -1,063 -1,063 -1,390 -1,390 -1,622 -1,622 -1,768 -1,768 -1,768 -1,768 -1,927 -1,927 -1,927 -1,927Depreciation -123 -123 -184 -184 -267 -267 -334 -334 -437 -437 -1,004 -1,004 -1,095 -1,095 -1,095 -1,095 -1,193 -1,193 -1,193 -1,193Interest expenses 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Operating income -2,921 -1,235 -2,942 -1,135 -2,831 345 -163 2,953 1,730 5,824 1,847 5,469 6,576 9,502 11,745 13,545 13,612 15,725 16,768 17,313Currency 0 0 0 -566 -1,187 -1,815 -1,885 -1,908 -1,931 -1,955 -1,979 -2,003 -2,028 -2,053 -2,078 -1,448 0 0 0 0Gifts 0 0 0 0 0 0 4,261 33,795 65,236 42,087 65,572 36,476 61,363 40,689 39,251 17,307 30,793 11,925 0 0Earnings before tax -2,921 -1,235 -2,942 -1,701 -4,018 -1,470 2,214 34,840 65,034 45,956 65,439 39,941 65,910 48,139 48,919 29,404 44,406 27,650 16,768 17,313Tax 876 371 883 340 849 -104 49 -886 -519 -1,747 -554 -1,641 -1,973 -2,851 -3,524 -4,064 -4,084 -4,718 -5,030 -5,194Net earnings -2,044 -865 -2,060 -1,361 -3,169 -1,573 2,263 33,954 64,515 44,209 64,885 38,301 63,938 45,288 45,395 25,341 40,322 22,932 11,738 12,119Net earning (excl gifts) % of portfolio -7.1% -2.3% -4.1% -2.3% -3.4% -1.3% -1.3% 0.1% -0.3% 0.8% -0.2% 0.5% 0.7% 1.1% 1.3% 1.7% 1.9% 2.1% 2.1% 2.2%

Cash flow statement 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4Cash flow from operating activitiesInterest income 1,616 2,454 3,255 4,090 5,680 7,963 10,289 12,608 15,294 18,534 21,480 24,260 27,128 30,409 32,914 34,896 36,827 39,104 40,467 41,108Salary expenses -2,328 -2,452 -3,611 -3,611 -5,278 -5,379 -6,654 -6,805 -8,808 -8,973 -13,655 -13,819 -15,063 -15,197 -15,257 -15,257 -16,630 -16,647 -16,842 -16,842Overhead expenses -1,608 -575 -1,608 -575 -1,753 -627 -1,753 -627 -1,911 -683 -1,911 -683 -745 -745 -745 -745 -812 -812 -812 -812Rent & utilities zone office -390 -390 -585 -585 -850 -850 -1,063 -1,063 -1,390 -1,390 -1,622 -1,622 -1,768 -1,768 -1,768 -1,768 -1,927 -1,927 -1,927 -1,927Tax 0 0 0 0 0 0 0 0 0 0 -441 -1,641 -1,973 -2,851 -3,524 -4,064 -4,084 -4,718 -5,030 -5,194Total cash flow from operating activities -2,710 -964 -2,549 -681 -2,201 1,107 819 4,113 3,185 7,488 3,852 6,495 7,581 9,849 11,621 13,063 13,374 15,001 15,856 16,333Cash flow from investment activitiesIncrease in loans -20,833 -20,833 -31,250 -31,250 -66,233 -66,233 -92,726 -92,726 -138,117 -138,117 -168,809 -168,809 -213,680 -213,680 -231,486 -231,486 -264,672 -264,672 -264,672 -264,672Decrease in loans 7,132 12,281 17,465 22,617 30,269 41,031 53,880 69,225 85,583 102,997 121,261 140,342 159,264 177,695 195,192 211,219 225,746 238,120 249,047 257,941Capital expenditures -1,225 0 -1,225 0 -1,335 0 -1,335 0 -1,455 0 -7,396 0 0 0 0 0 0 0 0 0Total cash flow from investment activities -14,926 -8,553 -15,010 -8,633 -37,299 -25,201 -40,180 -23,501 -53,990 -35,120 -54,944 -28,468 -54,415 -35,985 -36,294 -20,268 -38,925 -26,551 -15,624 -6,730Cash flow from financing activitiesProceeds from gifts 0 0 0 0 0 0 4,261 33,795 65,236 42,087 65,572 36,476 61,363 40,689 39,251 17,307 30,793 11,925 0 0Proceeds from issuing debt 0 0 0 50,000 50,000 50,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0Proceeds from issuing equity 17,636 9,516 17,559 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Repayment of debt principal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -57,881 -57,881 -57,881 0 0Repayment of equity 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Interest expenses 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Dividend distributions 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Total cash flow from financing activities 17,636 9,516 17,559 50,000 50,000 50,000 4,261 33,795 65,236 42,087 65,572 36,476 61,363 40,689 39,251 -40,574 -27,088 -45,956 0 0Net cash flow 0 0 0 40,685 10,500 25,905 -35,100 14,408 14,431 14,455 14,479 14,503 14,528 14,553 14,578 -47,779 -52,639 -57,506 231 9,603

Balance sheet Opening 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4AssetsLoan portfolio 15,000 28,613 37,016 50,592 58,956 94,556 119,262 157,460 180,134 231,649 265,541 311,648 338,453 390,985 424,868 458,858 476,640 512,913 536,664 549,364 553,074Fixed tangible assets 0 1,103 980 2,021 1,838 2,906 2,639 3,640 3,306 4,325 3,888 10,280 9,275 8,181 7,086 5,991 4,896 3,703 2,509 1,316 123Deferred tax asset 876 1,247 2,129 2,470 3,319 3,216 3,265 2,379 1,860 113 0 0 0 0 0 0 0 0 0 0Cash 0 0 0 0 40,685 51,185 77,091 41,991 56,399 70,830 85,285 99,763 114,267 128,794 143,347 157,925 110,145 57,506 0 231 9,834Total assets 30,591 39,243 54,743 103,948 151,966 202,208 206,355 242,217 308,663 354,827 421,691 461,995 527,960 575,301 622,774 591,682 574,122 539,174 550,911 563,030Equity and debtEquity 15,000 30,591 39,243 54,743 53,382 50,213 48,640 50,903 84,857 149,372 193,581 258,466 296,767 360,704 405,993 451,388 476,729 517,051 539,983 551,721 563,840Debt 0 0 0 0 50,566 101,753 153,568 155,452 157,360 159,291 161,246 163,225 165,228 167,256 169,308 171,386 114,953 57,072 -810 -810 -810Total equity and debt 30,591 39,243 54,743 103,948 151,966 202,208 206,355 242,217 308,663 354,827 421,691 461,995 527,960 575,301 622,774 591,682 574,122 539,174 550,911 563,030Check 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Financing

Financing and repayment 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4Reservation repaym.

Financing needed Yes 17,636 9,516 17,559 13,727 12,426 515 4,261 33,795 65,236 42,087 65,572 36,476 61,363 40,689 39,251 17,307 30,793 11,925 0 0% Gifts 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%% Equity 100.00% 100.00% 100.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%% Debt Type Interest Duration- Basket 3 year Bullet 0.00% 3 50,000 50,000 50,000- Basket year Linear- Basket year Linear- Basket year Linear- Basket year Linear- Basket year Linear- Basket year Linear- Basket year Linear- Basket year Linear- Basket year Linear

Proceeds from gifts 0 0 0 0 0 0 4,261 33,795 65,236 42,087 65,572 36,476 61,363 40,689 39,251 17,307 30,793 11,925 0 0Proceeds from issuing equity 17,636 9,516 17,559 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

PwC of 32

Proceeds from issuing debt 0 0 0 50,000 50,000 50,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0Total 17,636 9,516 17,559 50,000 50,000 50,000 4,261 33,795 65,236 42,087 65,572 36,476 61,363 40,689 39,251 17,307 30,793 11,925 0 0

Proceeds from issuing debt- Basket 3 year 0 0 0 50,000 50,000 50,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Proceeds from issuing debt 0 0 0 50,000 50,000 50,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Repayment of debt principal Duration- Basket 3 year 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 57,881 57,881 57,881 0 0- Basket year N/A 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year N/A 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year N/A 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year N/A 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year N/A 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year N/A 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year N/A 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year N/A 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year N/A 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Repayment of debt principal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 57,881 57,881 57,881 0 0

Interest and dividend distributions 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4

Interest- Basket 3 year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0- Basket year 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Interest 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Dividend distributionsShare capital 17,636 27,152 44,711 44,711 44,711 44,711 44,711 44,711 44,711 44,711 44,711 44,711 44,711 44,711 44,711 44,711 44,711 44,711 44,711 44,711Target dividend yield 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%Target dividend distributions 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Available cash reserves 0 0 0 40,685 51,185 77,091 41,991 56,399 70,830 85,285 99,763 114,267 128,794 143,347 157,925 110,145 57,506 0 231 9,834Dividend distributions 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Other

Tax 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4Tax dueEBT (exc. gifts) -2,921 -1,235 -2,942 -1,701 -4,018 -1,470 -2,047 1,045 -202 3,869 -132 3,466 4,548 7,450 9,667 12,097 13,612 15,725 16,768 17,313Adjustments (exc. gifts) 0 0 0 566 1,187 1,815 1,885 1,908 1,931 1,955 1,979 2,003 2,028 2,053 2,078 1,448 0 0 0 0Taxable income -2,921 -1,235 -2,942 -1,135 -2,831 345 -163 2,953 1,730 5,824 1,847 5,469 6,576 9,502 11,745 13,545 13,612 15,725 16,768 17,313Tax loss carry forward 0 0 0 0 0 -345 0 -2,953 -1,730 -5,824 -375 0 0 0 0 0 0 0 0 0Taxable amount 0 0 0 0 0 0 0 0 0 0 1,471 5,469 6,576 9,502 11,745 13,545 13,612 15,725 16,768 17,313Tax due 30.00% 0 0 0 0 0 0 0 0 0 0 441 1,641 1,973 2,851 3,524 4,064 4,084 4,718 5,030 5,194

Tax loss carry forwardOpening balance 0 2,921 4,156 7,098 8,233 11,064 10,719 10,882 7,929 6,199 375 0 0 0 0 0 0 0 0 0Losses created 2,921 1,235 2,942 1,135 2,831 0 163 0 0 0 0 0 0 0 0 0 0 0 0 0Losses utilised 0 0 0 0 0 -345 0 -2,953 -1,730 -5,824 -375 0 0 0 0 0 0 0 0 0Closing balance 2,921 4,156 7,098 8,233 11,064 10,719 10,882 7,929 6,199 375 0 0 0 0 0 0 0 0 0 0

Other 12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4Loan portfolioOpening balance 15,000 28,613 37,016 50,592 58,956 94,556 119,262 157,460 180,134 231,649 265,541 311,648 338,453 390,985 424,868 458,858 476,640 512,913 536,664 549,364Increase in loans 20,833 20,833 31,250 31,250 66,233 66,233 92,726 92,726 138,117 138,117 168,809 168,809 213,680 213,680 231,486 231,486 264,672 264,672 264,672 264,672Decrease in loans -7,132 -12,281 -17,465 -22,617 -30,269 -41,031 -53,880 -69,225 -85,583 -102,997 -121,261 -140,342 -159,264 -177,695 -195,192 -211,219 -225,746 -238,120 -249,047 -257,941Loan loss -88 -149 -209 -270 -363 -495 -648 -827 -1,019 -1,228 -1,442 -1,663 -1,883 -2,102 -2,304 -2,486 -2,652 -2,800 -2,924 -3,021Closing balance 28,613 37,016 50,592 58,956 94,556 119,262 157,460 180,134 231,649 265,541 311,648 338,453 390,985 424,868 458,858 476,640 512,913 536,664 549,364 553,074

Equity

PwC of 32

Opening balance 15,000 30,591 39,243 54,743 53,382 50,213 48,640 50,903 84,857 149,372 193,581 258,466 296,767 360,704 405,993 451,388 476,729 517,051 539,983 551,721Proceeds from issuing equity 17,636 9,516 17,559 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Redemption share capitalNet earnings -2,044 -865 -2,060 -1,361 -3,169 -1,573 2,263 33,954 64,515 44,209 64,885 38,301 63,938 45,288 45,395 25,341 40,322 22,932 11,738 12,119Dividend distributions 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Closing balance 30,591 39,243 54,743 53,382 50,213 48,640 50,903 84,857 149,372 193,581 258,466 296,767 360,704 405,993 451,388 476,729 517,051 539,983 551,721 563,840

Fixed tangible assetsOpening balance 0 1,103 980 2,021 1,838 2,906 2,639 3,640 3,306 4,325 3,888 10,280 9,275 8,181 7,086 5,991 4,896 3,703 2,509 1,316Capital expenditures 1,225 0 1,225 0 1,335 0 1,335 0 1,455 0 7,396 0 0 0 0 0 0 0 0 0Depreciation -123 -123 -184 -184 -267 -267 -334 -334 -437 -437 -1,004 -1,004 -1,095 -1,095 -1,095 -1,095 -1,193 -1,193 -1,193 -1,193Closing balance 1,103 980 2,021 1,838 2,906 2,639 3,640 3,306 4,325 3,888 10,280 9,275 8,181 7,086 5,991 4,896 3,703 2,509 1,316 123

DebtOpening balance 0 0 0 0 50,566 101,753 153,568 155,452 157,360 159,291 161,246 163,225 165,228 167,256 169,308 171,386 114,953 57,072 -810 -810Proceeds from issuing debt 0 0 0 50,000 50,000 50,000 0 0 0 0 0 0 0 0 0 0 0 0 0 0Repayment of debt principal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 -57,881 -57,881 -57,881 0 0Currency 0 0 0 566 1,187 1,815 1,885 1,908 1,931 1,955 1,979 2,003 2,028 2,053 2,078 1,448 0 0 0 0Closing balance 0 0 0 50,566 101,753 153,568 155,452 157,360 159,291 161,246 163,225 165,228 167,256 169,308 171,386 114,953 57,072 -810 -810 -810

Zone officesNew zone offices 1 0 1 0 1 0 1 0 1 0 1 0 0 0 0 0 0 0 0 0Total zone offices 1 2 2 3 3 4 4 5 5 6 6 7 7 7 7 7 7 7 7 7 7

Charts

Loan portfolio

Zone offices

Debt as % of loan portfolio

0

100

200

300

400

500

600

-300

-200

-100

0

100

200

300

12Q1

12Q2

12Q3

12Q4

13Q1

13Q2

13Q3

13Q4

14Q1

14Q2

14Q3

14Q4

15Q1

15Q2

15Q3

15Q4

16Q1

16Q2

16Q3

16Q4

Loan loss

Decrease in loans

Increase in loans

Closing balance (RH scale)

0

1

2

3

4

5

6

7

8

0

0

0

1

1

1

1

12Q1

12Q2

12Q3

12Q4

13Q1

13Q2

13Q3

13Q4

14Q1

14Q2

14Q3

14Q4

15Q1

15Q2

15Q3

15Q4

16Q1

16Q2

16Q3

16Q4

New zone offices

Total zone offices (RH scale)

0.0% 0.0% 0.0%

85.8%

107.6%

128.8%

98.7% 87.4%

68.8% 60.7%

52.4% 48.8% 42.8% 39.8% 37.4%

24.1% 11.1%

-0.2% -0.1% -0.1% 20%

40%

60%

80%

100%

120%

140%

100

200

300

400

500

600 Debt

Loan portfolio

PwC of 32

Interest expense as % of interest income

Sensitivity analysis exchange rate effects

Annual increase EUR/UGX (12Q1-14Q2)Optimistic case 0.00%Base case 5.00%Pessimistic case 0.00%

5.00%

Movement debt (Base case) EUR/UGX (average per quarter)

Debt as % of loan portfolio Interest expense as % of interest income

Base case

-100

-50

0

50

100

150

200

12Q

1 12

Q2

12Q

3 12

Q4

13Q

1 13

Q2

13Q

3 13

Q4

14Q

1 14

Q2

14Q

3 14

Q4

15Q

1 15

Q2

15Q

3 15

Q4

16Q

1 16

Q2

16Q

3 16

Q4

17Q

1 17

Q2

17Q

3 17

Q4

18Q

1 18

Q2

18Q

3 18

Q4

19Q

1 19

Q2

19Q

3 19

Q4

20Q

1 20

Q2

20Q

3 20

Q4

21Q

1 21

Q2

21Q

3 21

Q4

Currency Decrease Increase Closing

0.0% 0.0% 0.0% -0.2% -0.1% -0.1%

-20%

0%

20%

-100

0 12Q1

12Q2

12Q3

12Q4

13Q1

13Q2

13Q3

13Q4

14Q1

14Q2

14Q3

14Q4

15Q1

15Q2

15Q3

15Q4

16Q1

16Q2

16Q3

16Q4

0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0

5

10

15

20

25

30

35

40

45

12Q1

12Q2

12Q3

12Q4

13Q1

13Q2

13Q3

13Q4

14Q1

14Q2

14Q3

14Q4

15Q1

15Q2

15Q3

15Q4

16Q1

16Q2

16Q3

16Q4

Interest income

Interest expenses

Interest expense as % of interest income

0%

20%

40%

60%

80%

100%

120%

140%

12Q

1

12Q

2

12Q

3

12Q

4

13Q

1

13Q

2

13Q

3

13Q

4

14Q

1

14Q

2

14Q

3

14Q

4

15Q

1

15Q

2

15Q

3

15Q

4

16Q

1

16Q

2

16Q

3

16Q

4

OC BC PC

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

12Q

1

12Q

2

12Q

3

12Q

4

13Q

1

13Q

2

13Q

3

13Q

4

14Q

1

14Q

2

14Q

3

14Q

4

15Q

1

15Q

2

15Q

3

15Q

4

16Q

1

16Q

2

16Q

3

16Q

4

OC BC PC

2,800

2,900

3,000

3,100

3,200

3,300

3,400

3,500

12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4

PwC of 32

A. Appendix Overview Uganda

Summary

Uganda’s economic freedom score is 61.9, making it the 78th freest economy in the 2012 index. Its score is 0.2 point higher than last year due to improvements in monetary policy and the control of government spending.

The Ugandan economy has weathered the impact of the global economic turmoil well, achieving an average growth rate above 8 percent over the past five years. Continued economic expansion has been facilitated by open-market policies related to global commerce. The financial sector is relatively well developed for the region.

Despite some progress, institutional shortcomings continue to undermine prospects for dynamic long-term economic expansion. Uganda has attempted to update various commercial laws to reduce administrative delays and the cost of conducting business, but the overall regulatory framework remains poor. An inefficient judicial system and pervasive corruption are even more serious problems, eroding the effectiveness of government.

Risk assessment

• Sustained growth but held back by infrastructure deficiencies

Growth will remain strong in 2012. The start of oil exploitation in the Ugandan part of the Lake Albert basin in the north-west of the country by Total, Cnooc and Tullow Oil will considerably offset the slowing of agricultural exports to Europe. Agriculture, which employs 70% of the working population, is nevertheless expected to benefit from better weather conditions than in 2011, which was marked by drought. Construction will be spurred by works in the energy and oil sectors: oil installations, power stations, dams and pipelines. Re-exportation to the Congo and South Sudan will grow. However, growth will be restrained by serious infrastructure deficiencies, in spite of the operational start-up of a hydroelectric dam on the White Nile intended to reduce the energy deficit by a third.

• Economic policy tightening

The year up to the February 2011 elections saw a relaxation of economic policy. The structural public account deficit deepened with the rise in current spending. Despite fiscal revenues from oil exploration licenses, the authorities had to resort to advances from the Central Bank. This episode seems to have ended, so current spending is expected to fall. Fiscal revenues, which represent only 14% of GDP, are expected to increase thanks to the removal of various exemptions benefitting both businesses and households. These measures are proving all the more necessary with the launch of Uganda’s five-year National Development Plan in 2010 aimed at better exploitation of the country’s potential.

Despite the new resources expected from the launch of oil exploitation, domestic financing will be insufficient. Foreign government aid will be more indispensable than in the past. One third of this aid paid into the state’s budget is unallocated, but most of it is for infrastructure projects.

• Persistent current account deficit

The external deficit arises from the substantial trading imbalances. The traditional agricultural exports of coffee, cotton, tea, tobacco, fish and organic vegetables, though growing, are outweighed by imports of oil products, equipment for oil exploitation and infrastructure construction. Part of the deficit (30%) is covered by substantial remittances from Ugandans abroad but most financing is supplied by international government aid and foreign direct investment. In the future the country is expected to have to resort to ordinary foreign financing to fund investments to stimulate growth.

PwC of 32

• Weakened political and security context

President Museveni and his party, the National Resistance Movement, in power since 1986, won the February 2011 elections with a convincing majority against an opposition weakened by division. The opposition is made up of dissidents from the governing party, which makes for a difficult succession. The surge of inflation in 2011, due to increased food and fuel prices exacerbated latent social tensions. Demonstrations, sometimes bloodily suppressed, and strikes multiplied. Urban populations, mostly the young, complain that they are not benefitting from the modernisation of the economy and suffer under inequality and corruption. Abroad, the Ugandan army’s intervention in Somalia within the UNO forces, in Central Africa and South Sudan in pursuit of the Lord’ Resistance Army (LRA), enabled restoration of calm in the North.

PwC of 32

B. Appendix Strategy map

Below depicted framework describes how the different elements of ‘The way in which we deliver our services’ will help service our stakeholders. The black arrows show a relationship, one element influences the other.

‘Best practice’ microfinance will ensure a financia lly healthy company with large social impact – the right product for the righ t clients

Sta

keho

lder

Fin

ance

& R

isk

Pro

cess

Peo

ple

man

agem

ent

Maximize target client lending

Be close to clients and do business with the right clients

Provide loans to as many clients as possible

Create additional impact

Stimulate cooperative behavior with clients

Contribute to financial education

Provide a low cost product

Provide transparency and a good customer experience

Provide loans that are suitable for our clients

Provide relevant products to our clients

Maximize low cost fundraising

Be mobile and provide offices at the right place

Ensure healthy loans portfolio

Instill good payment discipline with clients

Thorough loan approval process

Loan process excellence

Simple and fast application procedures

Consistently good execution of loan officer protocols

Employ great loan officers that enable our vision

Employ good local management

Great Local staff

Provide adequate training to local employees

Perform thorough local recruitment

Be a good employer

Great Head office staff

Provide sufficient expertise for support functions

Provide good governance

Nurture a low cost culture

Minimize internal corruption

Minimize operational costs and overhead

Minimize loan losses

Cost Management

Have a compelling fundraising proposition

Provide good, interactive insight into results

Have great sponsoring and marketing processes

Good, transparent finance processes

Have an adequate internal control framework

Advanced IT environment

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