ufi organizational appraisal

UFI Organizational Appraisal

April 21, 2007

Impact Assessment Objectives

• Determine the impact of the program to primary stakeholders

• Identify accomplishments of program objectives against targets

• Assess the balance between financial sustainability and social responsibility of microfinance institutions

• Craft recommendations to make the programs more effective and efficient

Sample Size Formula

Where:• Z = 1.96 (the value of the normal variable for a reliability level of

95%. This means having a 95% reliability in obtaining the sample size

• p = .50 (the proportion of getting a good sample)• 1-p =.50 (the proportion of getting a poor sample)• d = .05 (sampling error)• N = population size• n = sample size

N = NZ2p(1-p) Nd2+Z2p(1-p)

Sample Size

Ugyon

Actual # of Respondents 103

Minimum Sample Required 94

Sampling error 10%

Confidence level 90%

Areas of Impact Assessment

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

Profile of RespondentsSex Ugyon

Female 83.5%

Male 16.5%

Age

< 25 years old 7%

26-35 years old 19%

36-45 years old 30%

46-55 years old 32%

56-65 years old 10%

>65 years old -

Profile of Respondents

Civil Status Progressive Ugyon

Married 85% 81%

Single 4% 7%

Widow 7% 12%

Separated - 1%

Educational Level

Literacy 100% 100%

Elementary 27% 41%

High School 46% 40%

College 24% 18%

Profile of Respondents

Loan Cycle Ugyon

1st 44%

2nd 16%

3rd 16%

4th 16%

5-15th 5%

>15th -

Length of Membership

<1 year 41%

1-2 years 58%

3-5 years -

>5 years -

Significant Findings

• Findings that have significant correlation shall be given focus and emphasis

• Pearson’s formula for correlation with a confidence level of 99% and 95% were used

• Sample size was determined using 92.5% confidence level

Correlation CoefficientCorrelation Coefficient Interpretation

1.00 Perfect positive correlation

0.75 – 0.99 Very high positive correlation

0.50 – 0.74 High positive correlation

0.25 – 0.49 Moderately small positive correlation

0.01 – 0.24 Very small positive correlation

0.00 No correlation

-0.25 – -0.01 Very small negative correlation

-0.50 – -0.26 Moderately small negative correlation

-0.75 – -0.49 High negative correlation

-0.99 – -0.74 Very high negative correlation

-1.00 Perfect negative correlation

On Correlations

• Correlation does not establish cause and effect relationship.

• A positive correlation only means that the relationship moves toward the same direction.

• A negative correlation means that the relationship moves toward the opposite direction.

• A positive or negative correlation does not mean that the correlation is good or bad respectively.

Significant Correlations

• No significant correlation for Ugyon Foundation

Diet and Coping with Difficult Times

Diet Ugyon

Diet Improved -

Diet stayed the same 80%

Diet worsened 20%

HH ate less due to lack of money 97%

Difficult Times – borrowed fr:

Friends and relatives w/o % 26%

Left area to seek employment 32%

HH member got employed 13%

Enterprise Level

Expenditures from Business Income

Ugyon

Food 100%

School 72%

Reinvest in business 6%

Invested in new business

Health-related 9%

Invested in new products

HH expenses/Bought HH items 76%

Hired employees 5%

Savings and PurchasesPurchases to Improve Business Ugyon

Purchased small accessories worth 2,500 92%

Bought major tools 9%

Bought vehicle 2%

Improved business site 1%

Improved storage 1%

Savings and Investment

Have savings for investment 24%

Increase in savings 14%

Savings stayed the same 9%

Decrease in savings 2%

SavingsUgyon

Save frequently

Where do clients save?

Commercial bank 15%

Rural Bank 85%

NGO -

Purpose of Savings

Emergency 88%

Re-invest in business 65%

Education 76%

Medication

Buy new assets 15%

Savings

Ugyon

Amount of weekly savings

PhP 5-10 12%

PhP 11-20 8%

PhP 21-50 70%

Php 51-100 11%

Desired Interest on Savings

3-4% -

5-6% 12%

7-8% -

>8% 88%

Client Management Capacity

Ugyon

Currently Perform

Perform before membership

Separate business from personal finance 10% 100%

Record income and expenses 100% 100%

Identify which product is most profitable 100% 100%

Lack capital to do business 93%

Gender and ViolenceUgyon

Area of Decision Making Both Wife Husband

Business 65% 21% 9%

Household Expenditure 48% 44% 5%

Education of Children 55% 29% 7%

Access loans w H consent 100%

Shared loan with Husband 39%

H used to loan benefit HH 30%

H physical strength to W 0%

Feminization of Debt

Foregone exp. to pay 100%

Foregone bus. Opp. 96%

H vice increased 1%

Loan Use: Type of BusinessUgyon

Invested part of loan in business 99%

Type of Business

Trading 66%

Manufacturing 10%

Service 13%

Farming 3%

Animal Raising 23%

Loan Use: Loan Proceeds

Ugyon

Food 99%

Pay other debts 78%

Clothes or HH items 27%

Emergency 19%

HH improvement 21%

Celebration 1%

Loan to Others 1%

Income TrendIncome Trend Ugyon

Increase 4%

The same 46%

Decrease 51%

Increase in Income

Expanded business 1%

Increase in demand 3%

Decrease in Income

Natural disaster

Poor agricultural season 5%

Poor sales 26%

Delinquency and Difficulties

• Reasons for delinquency– Decrease in sales

– Self or Household Member got sick

Delinquency Ugyon

Reported at least one missed payment 0%

Difficulties Ugyon

Experienced evacuation due to calamity 26%

Received relief operations from MFI 0%

Members Like Best

Features Ugyon

Benefits and other products and services 54%

Low interest rate 24%

Efficient and fast processing 68%

Access to capital 32%

Training -

Group dynamics 8%

Members Like Least

Features Ugyon

Insurance scheme and pre-deductions 100%

Forced savings

High interest rate

Dislike loan officer

Product Design

Loan Amount Ugyon

< 5,000 15%

5,000 – 10,000 57%

11,000 – 20,000 26%

21,000 – 30,000 -

Loan Term

1-2 months

3-4 months 15%

5-6 months 84%

Product DesignAvailable Collateral Ugyon

HH Assets 81%

Chattel

Livestock

Co-maker 19%

With resigned members 49%

Other Service

Emergency loans other loans 100%

Client Exit InterviewUgyon

# of Resigned Members 5

Decided to leave by themselves 60%

LOAN USE

Helped to start up a business -

Helped keep the business 100%

Helped expand the business -

IMPACT OF LOAN TO HH

Improved family diet 100%

Education of children 100%

Improved housing 60%

Purchased furniture, appliances etc. 20%

Reasons for Resigning

Ugyon

Center Problems

Personal problems with the member -

Disagreements with the center officers -

Not willing to attend center meetings -

Cannot follow center policies -

Problems related to policies

Loans are too small -

Problems with MFI personnel -

Found another program that is better 20%

Reasons for Resigning

Ugyon

Business-related reasons

Seasonal business. Will apply again. -

Low sales and profit 60%

Closed down business 20%

Personal reasons

Used for family crisis 40%

HH member left, I cannot maintain bus. -

Got pregnant -

I am moving away 20%

Economic and community-related

Business was destroyed by catastrophe -

Repayment Experience and Change in Income

Ugyon

Experience in paying last loan

Good 100%

Easy to repay 20%

Difficult 20%

Change in income

Increased substantially -

Increased slightly 40%

Remained stable 60%

Group Dynamics

Ugyon

How did the center help you?

Make loan payments 100%

When I had personal problems 80%

By providing business ideas and contacts 100%

Make friends 100%

Develop my leadership skills 80%

Receive training 100%

Center weekly meetings

Very helpful 100%

Did not help very much -

Didn’t like them -

The Future

Ugyon

Will you return to the program?

Yes 60%

Maybe 40%

No -

Only if there are changes made -

Encourage relative/friend to join?

Yes 100%

No -

Organizational Assessment

• Governance• Information System Evaluation• Capability Needs Assessment for Top

Management and Key Management Staff• Organizational Development• Financial Evaluation

Responsibilities of MF BOT

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

Skills (8.09)

8.56 Read FS

7.82 Environmental Scanning

8.19 Leadership

8.55 Mktg/PR

7.91 Rules and Regulations

7.47 Knowledge in MF

7.98 Knowledge in banking

7.83 Analytical skills and decisiveness

8.48 Communication

Knowledge and Skills of MF BOT

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

Behavior (9.09)

8.08 Professional work habits/ethics

8.92 Moral ascendancy

8.87 Receptive or open minded

6.60 Visionary

8.40 Honest

9.21 Humble

9.30 Patient

8.88 Dedicated and committed

9.16 Responsible

9.27 God-centered

9.41 Good business sense

8.55 Resourceful and cost-effective

8.55 Initiative/proactive

8.92 Optimistic

Characteristics of Good Information Systems

• Timely• Reliable• Accurate• Easy to Use• Appropriately Detailed Reports with just ‘enough’

information• Meet needs of various user categories• Secure• Good internal controls built in• Benefits of having information exceeds investment costs

Capability Needs Assessment

Respondents Ugyon

Field Staff 12

Middle Management 2

Top Management 1

Support Staff -

Fundamentals of Microfinance (Ugyon)

• Described microfinance as provision of financial services (27%) for the poor (87%)

• 67% provision of credit

• Benefit of MF – (67%) access to savings, loans and insurance; (20%) improve the quality of live; (20%) job creation; (7%) low interest; (7%) empowerment

• Challenges – (33%) client relations and delinquency; (20%) deal with different attitudes of clients; (20%) risks such as hold-up; (13%) client drop-outs; (13%) reach vision and targets; (7%) leadership; (7%) incentives; (7%) not viable products; and (7%) competition

• MF Clients – (33%) entrepreneurial poor; (13%) good payer; (7%) women; (7%) poorest of the poor; and (7%) willing to abide with the rules and regulation of the MFI

Product Design (Ugyon)• Market Research

– 87% conducted market research

– 67% area/community survey; 20% study of clients’ needs; and 20% study for product innovation

– 47% market research is done before entering an area

– Promotion is through (33%) seminars/CGT and (20%) courtesy call

• Character-based lending– 73% familiar with character-based lending; however

only 20% adequately described this

– Loan analysis done by 3-5 persons; equated with CIBI

DQ Rating SystemScore Description

35 Congratulations! Your organization has all the necessary systems, policies and procedures to prevent delinquency. You probably don’t need to attend this training.

26-34 Your MFI has adequate systems, policies and procedures to prevent delinquency. Just a little improvement and you already have adequate safeguard to delinquency.

16-25 Your MFI may be exposed to delinquency problems OR you may be in the midst of a delinquency crisis.

6-15 Your MFI has serious delinquency problems. Systems, policies and procedures invite delinquency.

1-5 Re-think your MFI’s presence in the microfinance program.

DQ Rating Scores

• Overall – 29 points (Ugyon)Your MFI has adequate systems, policies and procedures to

prevent delinquency. Just a little improvement and you already have adequate safeguard to delinquency.

Financial Analysis (Ugyon)

• Financial performance description– Very limited ‘elevator’ style of description

– 73% was not able to answer the question

• Examples of indicators– No one was able to give financial indicators for

quality, efficiency, profitability and financial structure

– 40% was able to give some standards for portfolio quality but none for the remaining indicators

Internal Control (Ugyon)• 47% expressed that there was

fraud; 47% said no fraud occurred

• 100% of those who expressed that there was fraud were able to describe it

– Over riding the loans– Not remitting

collections– Hold up– Juggling

• Supervisors check their files (100%)

– 13% daily; 13% weekly and 73% no answer

• 80% said that internal control was conducted but was unable to provide adequate description of internal control function

• 67% does collection and bookkeeping at the same time

• 93% reported that they are covered by cash bond

Remuneration and Incentives (Ugyon)Remuneration

20%13%

7%13%

53%

33% 27%33%

0%

10%

20%

30%

40%

50%

60%

<4K 4-6K 7-9K 10-12K 13-15K 16-18K

Actual Desired

Desired Monthly Incentives

7%13%

7%13%

47%

-0000000001

1K 1.5K 2.5K 3K 4.5K 5K >5

Organizational Development

Organizational Development (Ugyon)

• Vision and Mission– UFI

• Helpful and progressive

• Challenging and risky

– Important in UFI• Relationship between clients and AO

– Uniqueness of UFI• Ugyon means “unity / cooperation”

• Professionalism of AO – wear right uniform with high heels


• Training and Development– With limited skills to perform well

– Do not know root cause of problems encountered – want guidance and support from supervisors

– Very few are sent to trainings identified by the head office

• Mostly Job-related


• Leadership– Management style

• Lacks consultation

• Lacks consideration

• Too much pressure that causes resignation

• Top Management is easier to talk to

• Do not really know BOD

– Promotion• Good performance in job

• Of senior status

• But not clear what the real indicators are


• Career Development and Planning– Willingness to be OIC

• Yes to BM, AM, or unit head positions

• No to CEO position

– Lack of cross-trainings and job rotations

– Lack of knowledge about the responsibilities of other positions


• Performance Management– AO evaluated by supervisors monthly and by area

head quarterly; no performance evaluation for support staff

– No Feedback

– All do not feel justly compensated


• Rewards Management– Behaviors

• Performance-based

– Rewards• Cash incentives for AO and Supervisors; none for

Support staff

• Tour to other country for mid to top-management


• Employee Relations – Treatment like a family / friends

– Resolution of conflict during informal talks

– Open communication lines only on same level personnel, not so much on vertical positions

– Seeming gap between AOs and Area Head

– Coordination is being improved between areas and branches, and the head office


• Employee Well-being – Reason for staying

• Relationship among co-workers

• Excitement of work

• Some were expecting different kind of work when they applied

– Little time for family and other interests

– Manifestations of care• Treatment of top-management (sir Red)

• Privileges such as staff loan

Organizational Development

• Planning (Ugyon)– Yearly

– For change and development• Training and capacity building for staff

• Salary and other benefits

• Management of Area Head

Training and Mentoring Assistance


• Customized training to management staff and board of directors– readily applicable tools that could be implemented

immediately

– recommendations to improve in policies, systems and procedures

– could be credited towards a diploma course with the Ateneo de Manila University

• On the job and real time application of learning• Less disruption in day to day operations


• Regular and intensive offsite performance monitoring– Open communication lines between the executive

director, chair of the board and SEDPI

• Affordable– More number of staff participating

– On site

– Performance-based

• Could be credit towards a diploma course

TAMA

• 6-18 months program depending on the organizational appraisal result

• Partnership– SEDPI recommends. SEDPI will never impose.

– UFI is free to choose

TAMA for UFI

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

Financial Product Design and Development

1 2 3 4 5 6 7 8 9 10 11 12

Competition analysis

Developing the product prototype

Planning for pilot test

Monitoring pilot test

Developing the product manual

Developing promotion materials

Product launching

Character and Capacity Based Lending

1 2 3 4 5 6 7 8 9 10

11

12

Lending policy and practices review

Training for loan officers

Training for branch managers

Designing new or revising forms

Finalizing flow chart of processes

Monitoring CBL Changes

Delinquency Management

1 2 3 4 5 6 7 8 9 10

11

12

DQ Training

Delinquency Management Workshop

Remedial management

Monitoring progress

Financial Analysis

1 2 3 4 5 6 7 8 9 10

11

12

Financial analysis training for Mgt

Financial analysis for BOT

Asset Liability Mgt for Top Mgt

Monitoring performance

Governance and Human Resource

1 2 3 4 5 6 7 8 9 10

11

12

Designing Incentive Schemes

Strategic Planning Workshop

Organizational Architecture

Supervision Training

Strategic Plan Analysis & Docu.

Internal Audit

1 2 3 4 5 6 7 8 9 10

11

12

Conduct of Internal Audit

Installation of Internal Audit

ufi organizational appraisal

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