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BSB Five Years strategic Business Plan d
Strategic management (6112)
Addis Ababa University
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BSB Microfinance Five Year Strategic Business Plan (2019-2024)
“Expanding Financial Inclusion in Sierra Leone through Micro - finance Project”
Submitted by:
Brima Sana Bangura
BSB Relief S/L started its microfinance programme in 1996. These small scale microfinance projects
expanded and since 2005 the programme has been operating through an institutional microfinance
approach utilizing Sierra Leone Microfinance principles. BSB applied for its microfinance business license
to Microcredit Regulatory Authority (MRA) but the license from MRA was not possible due to gaps in BSB Micro Finance’s governance/registration status and profitability issue. However BSB Micro Finance will
reform its governance, update registration status and make an effective business plan to reach its
profitability within three years of its microfinance operations for seeking re-registration (MRA license) of
its MFI to assist in the development of the Microfinance sector in Sierra Leone and provide a
demonstration model of Microfinance through Institutional approach.
Since 2012 BSB Micro Finance has been piloting Self Help Group (SHG) an alternate approach to making
low-cost finance available to the ultra-poor. BSB Micro Finance has been strategically developing,
researching and piloting financing using the Self Help Group (SHG) model. BSB Micro Finance confidently
promotes Sierra Leoneans through SHG approach on a sustainable basis as groups manage the micro financing by themselves without any operational cost and are the possessors of the loan revolving fund,
therefore this model seems to be effective.
Over the next five years, BSB Micro Finance will establish its MFI as one of the leading among MFIs to
assist in the development of Microfinance and provide a demonstration model of Microfinance through Institutional approach; in parallel BSB Micro Finance shall build on its established relationships to
promote MF across the country amongst other established MFIs/Banks through policy engagements and
capacity building initiatives with local partners/ MFIs and also develop, strengthen SHG approach as an
additional tool for operating MF on a sustainable basis to ultra-poor target groups
Strategic Vision for BSB Microfinance Programme
BSB Micro Finance will assist in the development and expansion of Microfinance in Sierra Leone and provide a demonstration model of Microfinance through Institutional approaches and Self-Help Group model. Its objective is:
Strategic Objective: To contribute in nation building by reducing poverty rate among the rural poor in Sierra Leone through provision of Microfinance services and strengthening Microfinance systems in the country by establishing sustainable Microfinance Institution, capacity building, demonstrating and advocating for widening compliant interest-free financial access for small-scale entrepreneurs and ultra- poor households.
To achieve the strategic objective, BSB microfinance will accomplish the following over the next 5 years:
Objective: Contribute in creating a favorable environment for the expansion of Microfinance institutions in Sierra Leone through policy dialogues with policymakers, regulators, funders via awareness raising, capacity building and advocacy related activities.
Objective: Promote Microfinance across Sierra Leone by encouraging wider private banking
sector involvement, capacity building of local MFIs and NGOs, and through developing technical relationships and partnerships with selected local investors.
promote MF across the 16 Districts of Sierra Leone through policy engagements and capacity building
initiatives with local partners.
5
Five Years Business Plan:
Strategic Objective: To contribute to reduce poverty of the rural poor in Sierra Leone by providing Microfinance services and strengthening the Microfinance system in Sierra Leone by establishing sustainable Islamic Microfinance Institution, capacity building, demonstrating and advocating for widening compliant interest-free financial access for small-scale entrepreneurs and ultra-poor households.
Budget Summary:
Below table describes the summary of budget plan.
Total budget summary for the two years extension period is £ 225,000Cost Description Total GBP
Personnel Cost 39% 11,539,191. 89,544. 89,544. Direct Charitable Expenditures 54% 15,798,000. 122,593. 122,593. Assets and Non Capital. assets 1% 341,000. 2,646. 2,646. Running Cost 4% 1,316,433. 10,215. 10,215. Office Support Cost 0% - - - Total 100% 28,994,625. 225,000. 225,000. F Loan revolving fund is British Pounds £77,600, which is merged in the above mentioned row “Direct Charitable Expenditures”
Narratives of BSB Micro finance Institutional Microfinance ‘5-years Strategic Business Plan’
BSB microfinance will create a locally registered MFI to assist in the development of modern day
Microfinance institutions in Sierra Leone and provide a demonstration model of Microfinance through
Institutional approach. Modern day credit facilities are not common in the country, although Sierra
Leone is the home of microcredit, at present there is thousands of Conventional Microfinance
Institutions (MFIs) working for poverty eradication but unfortunately still poverty is a central ailment for overall development and it has not been declined significantly. The interest rate still high and this
normally creates an unnecessary pressure on the costumers.
As microfinance has a complete code for all mankind, it might be applicable in every sphere of life
whether business, service or any other parts of human life. It has also placed central focus on poverty alleviation to establish dignity and self-reliance through a consciously participatory development
agenda. But still microfinance initiatives in the country are very few. Further, these few institutions are
not integrated into the formal financial systems. Islamic microfinance initiative can display wide
variations in the models, instruments and operational mechanisms. While, in terms of reach,
penetration and financial ability, self-microfinance institutions lag far behind their conventional counterparts they certainly have potential to score better in terms of richness and variety. Microfinance
institutions similar to conventional microfinance institutions use group financing as morale collateral,
taking women beneficiaries and aiming at alleviation of poverty.
2017, Statistic Sierra Leone estimated poverty rate in north-west accounted for - 34% (lower poverty line) and 51% ( Upper Poverty Line ). Seasonal unemployment is common phenomena in this area. Consequently, unemployment creates seasonal food crisis every year during a particular period. People of these areas needs support, BSB MF project will be a good opportunity for the poor people to develop their livelihoods.
Financial products and services:
Savings product: BSB Micro Savings: we will collect compulsory savings from its members/clients
under a savings product named “ BSB Micro Savings ”. It is a contract between two parties in which one party will provide capital and other party will manage the business. Clients are capital provider -BSB and the user of this fund is customer. As per BSB Micro principles, the Customer will conduct the business independently following BSB Micro principles.
Investment products : BSB will extend investment to its members/clients who comply with set
terms & conditions relating to its investment policy. The investment product(s) of BSB is governed by the guidelines of BSB Micro Principles under the particular mode of investment. BSB Micro finance has selected three modes of investment to operate its Microfinance Scheme among which BSB Micro Savings Mode of investment will be emphasized in its day to day investment activities. However, investment under the remaining two modes may be allowed to the clients if it is deemed viable to the authority of BSB Micro Finance in the following years. Other products are i) Pikin catch box & ii) school fee savings
Profit Rate Policy for investment :
BSB will operate its Microfinance program under BSB Micro Finance mode and follow mark-up sale based products. BSB will add the mark-up profit with the cost price of goods purchased against investment amount as per guidelines of it prescribed mode of investment. Mark-up profit for one year
investment may be 12% (flat mark-up), this rate needs to be changed in times depending on the market situation. We will be operating in line with the financial regulatory framework of Sierra Leone ( Microcredit Regulatory Authority) which has fixed a policy for interest charging for conventional MFIs, as BSB Micro finance will operate under MRA license therefore our mark-up profit will not be more than MRA interest policy. The mark-up rate will be charged by BSB, is determined by calculating the market-related cost of funds, long term projected operating margin and expected loan losses. BSB changes its mark-up as its cost structure evolves to ensure profitability
Groups, methodology and delivery mechanism:
1. Group formation: BSB Microfinance Programme is group based; a group will be consisted of a minimum of 20 members and gradually be increased up to 35 members. Community Organizer/Laon officer of BSB Micro finance will facilitate to form a group with the members who live in the same village/Area. To form a group, the following process will be maintained:
Members who live in the same proximity can form a group (maximum 1 km distance of group cen- tre) Members must know one another. Must fulfil the membership criteria. The persons who are involved in small & micro business, agriculture, livestock rearing and others will be eligible to enrol in a group with an expressed aim of savings and accessing investments from BSB Relief Micro Finance. A group will be formed on the basis of self-selecting membership method who trust each other and fulfil the membership criteria A group is to be formed with persons who are in viable and legal economic activities. Distance of group members must not be more than one kilometre from the group centre. Community Organizer/loan officer will meet the target villagers individually and in group to discuss about the objectives and aim of BSB microfinance program and facilitate to form a group whereas, branch manager will declare a group after all verifications.
After formation of a group, the members of a group will confirm small groups, management committee and settle functions of management committee, The group will conduct a weekly meeting at the place and time agreed by all members of the group. Loan and savings collection will take place in the group meeting.
2. Methodology and delivery mechanism :
The group completes a short orientation on BSB’s microfinance program as well as procedure of loan and savings. At the same time, the members participate in basic business training sessions. Afterwards, members can apply for BSB Micro Savings investment. BSB’s investment committee will scrutinize all the application in a transparent manner; checks that the members will be able to successfully use and repay the loan and then approves loans. After the application is approved, clients complete a final pre-investment orientation before receiving goods. Investment is confirmed within a week of the pre-investment training. All members of the group who applied for investment support must be present at the branch office to complete required signatures, sign a promissory note. A procurement committee is form for group wise materials procurement as BSB Micro Savings investment.
Immediately following investment, Community Organizer (CO)/Loan Officer( LO) and branch staffs check to see that the goods/materials were invested in business activities are in existence and working good way, to encourage sound management of the investment, and ensure timely repayment. Group leaders collect the weekly repayment of each member and deposit it at the branch office. After confirming the amounts and issuing receipts, the branch cashier will deposit repayments at a local bank or in the branch office safe until a deposit can be made. Throughout the loan cycle, CO/LO visit borrowers to monitor repayment, provide support and advise on record keeping and business management.
3. Monitoring and Internal Controls
BSB Micro Finance will have a comprehensive system of monitoring at the field level to ensure high quality and transparent services to clients and to avoid fraud by CO/LO. Branch management will visit each group at least twice during the loan cycle and generally more often to confirm repayment data and monitor clients businesses. These operational checks are confirmed by financial monitoring by the branch cashiers (including daily cash counts and confirmations of receipts) and senior finance staff (monthly report monitoring, bank statement reconciliations, and at least semi-annual field visits).
BSB Micro Finance will begin its Institutional microfinance operation with expected funding from funding institutions, individuals, the government of Sierra Leone, and other international NGOs. This funding allowed BSB Micro Finance to establish and equip a head office and branch office, train staff and begin it different investment schemes (loan disbursements). BSB Micro Finance expects a separate fund of GDP 51,348 as operational grants- for staff salaries, training and running costs.
BSB microfinance estimates for its investment fund (loan revolving fund) to be mobilized as follows:
In US Dollars Year 1 Year 2 Year 3 Year 4 Year 5 Total Grants DFID 77,600 100, Grants from Sierra Leone Commercial Banks 22, NGOs Fundings 50,000 50, EcoBank fund 5,000 8,000 10,000 20,000 43, 100,000 55,000 8,000 10,000 20,000 193, UTB funding GTB Fund 100,000 100, BSB Funding 100,000 100000 world Bank Fund 50,000 50,000 50,000 150, 150,000 150,000 50,000 350, Commercial source Clients savings 6,000 12,500 20,000 30,700 40,000 109, World vision funding 100,000 100,000 100,000 300, Operating surplus 181 7,929 17,407 25, 6,000 112,500 20,181 138629 157,407 434, Total 106,000 167,500 178,181 298,629 227,407 977,7 17 Cumulative funding 106,000 273,500 451,681 750,129 977,717 977 ,
Operations
i. Operational Structure, legal status, ownership and governance :
BSB Micro Finance will register with JSC (Joint Stock Company) Sierra Leone as a local entity under the society registration Act, 1860 as “Sierra Leone SMEs association” to begin its operation independently on it legal status as NGO. At the beginning of the registration process BSB Micro Finance will seek legal aspects of governance structure, company’s identity and ownership of the company which will allow BSB Micro Finance to obtain MRA license to operate its Microfinance project in Sierra Leone
Legal Status: In year 1 ( 2014-2015), BSB Micro Finance registered as a local company with Joint stock company which will provides a clear legal status, transparent ownership and governance structure. These features are especially important for obtaining a MRA license to operate microfinance programme in Sierra Leone. BSB Micro Finance will apply for its business license to MRA in year 1, subject to MRA guidelines or timing to apply for a licence.
Governance : The Governing body will generally pursue and carry out the objective of the organization and will be responsible for the management administration of the organization. The Governing body will consist of at least 15 members. There will be an Executive committee with 5-7 members who will also be the members of Governing body. The executive committee will be assigned for regular operations of the organization, monitoring institutional performance, developing operational strategies and managing
CEO. The executive committee generally meets quarterly while the Governing body meeting will be once a year.
Staffing:
i. The general organogram of BSB Micro Finance is as follows:
Growth and Composition of Staffing Requirements
Staffing: IRB’s staff requirements will be as per following chart. During the years following, IR will increase staff and build capacity in its Head Office unit and expand into new branches gradually.
Designation Year 1 Year 2 Year 3 Year 4 Year 5 CEO 1 1 1 1 1 Accounts officer/FM 1 1 1 1 1 Operations manager 1 1 1 1 MIS Officer 1 1 1 1 1 Branch Manager 1 1 2 2 3 Loan officer/ supervisor 3 6 9 12 14 Cashier 1 2 3 4 5 Support staff 1 2 3 4 5 Total staffing 9 15 21 26 31
Branch offices will serve as administrative and financial support centers for loan staff as well as for conducting client training and meetings. Head Office will focus on supporting branch operations – providing assistance, monitoring, representation, and planning services.
Systems and Policies BSB Micro Finance developed systems and policies to support BSB Microfinance programme previously in CAP project. In the 1st phase of PPA PROVED project BSB’s microfinance manual was
reviewed and endorsed by Central Board for central Banks of Sierra Leone. BSB Micro Finance will
Governing Body
CEO
CEO
CO/LO
Executive Committee
Operation Manager Finance Manager Internal Audit Manager
BMs
Service Staff Cashier
Accounts Department
MIS
System Audit Cash Audit
Communication and interpersonal relationship Monitoring and Supervision Business analysis Delinquency Management and Portfolio Report development and use
b. Finance Staff Training All cashiers and financial management staff will learn to translate their financial/accounting background to the microfinance system through orientation on the BSB Micro Finance’s accounting and Management Information System and formal sessions on accounting/financial management for microfinance. In order that they understand the loan delivery process, they will also attend new Community Organizer’s/ Loan officer’s training. Finally, to improve management/accounting skills, select higher level staff may attend managerial training (see below). Some of the formal training sessions that finance staff will attend include: BSB Micro Finance Principles and Methodology Branch Office Record Keeping Accounting and Basic Financial Management Financial Projections
c. Management Training Management training will take place through a number of methods. Formal sessions on job responsibilities, roles and technical areas of supervision will be accompanied with extensive time (working directly with branch and other department staff. In addition, formal sessions on the below topics (in addition to the Community Organizer/Loan Officer training sessions) will be organized periodically to supplement/add skills in other areas relevant for their job. Finally, internal mentoring programs will be established to allow new branch managers to learn from their colleagues.
Formal training sessions : Accounting and Basic Financial Management General Management and Administration BSB Micro Finance Products and methodology Growth Management, Internal Controls Business and strategic planning Financial Projections (different tools) Management Information Systems In addition, BSB Micro Finance will organize periodic special training opportunities for staff on product development, institutional development, monitoring and evaluation, etc. These training opportunities will be held in Dhaka or when appropriate at international training institutes.
Risk and assumption Risk is an integral part of Microfinance business. When MFIs issue loans, there is a risk of borrower default. Any institution that conducts cash transactions or makes investments risks the loss of those funds, microfinance institutions (MFIs) face risks that they must manage efficiently and effectively to be successful. If the MFI does not manage its risks well, it will likely fail to meet its social and financial objectives. When poorly managed risks begin to result in financial losses, donors, investors, tend to lose confidence in the organization and funds begin to dry up. When funds dry up, an MFI quickly goes out of business. However BSB Micro Finance considers the following risk
Potential Risk level of risk Measure to mitigate risk
Governence - Governing body composition, BSB Micro Finance’s stand on selecting governing body members from BSB Micro Finance which may create problem in operation of the program
Low Strictictly comply Registration policy and procedure and let understand without complying with the country’s policy BSB Micro Finance can not operate its MF program.
MRA License may not be obtained High Register as A MFI with JSC timely. Prepare all required documents and submit to MRA in time. All requirements of MRA will try to be fulfilled so that no problen arises to get the license. Capitalization risk: If BSB Micro Finance does not ensure projected loan capital, the sustainablilty would be at risk
Medium BSB Micro Finance will prepare an action plan and make all effort to ensure proper funding in time.
Credit risk: Default risk , loan delinquncy etc
Low Staff training, strong planning, close monitoring and supervision, compulsory savings, loan size control etc. Political unrest: Unstable political situation may hamper to reach its objective in the time frame
Low Contingent plan to minimize risk and smoth operation.
As a MF, BSB Micro Finance consider the all potential risk like other MFIs encountered and prepare plan so that the institution can cope up with these risks and operate its MF program.
Efficiency and productivity
Year 1 Year 2 Year 3 Year 4 Year 5
Yield on Portfolio (annualized) 22% 22% 22% 22% 21%
Operational self-sufficiency 25% 76% 117% 130% 139%
Financial Self Sufficiency 25% 63% 100% 107% 111%
Borrowers per Credit Agent 333 417 563 588 725
Portfolio per Loan Officer in GDP 30,000 40,042 45,067 59,083 64,3 00
Portfolio at Risk 0% 1% 2% 3% 4%
% of arrears loan 0% 0% 1% 2% 2%
Financial Projection (In GDP)
**Balance Sheet Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 ASSETS *** Cash in Bank and Cash in Hand 11,496 36,826 12,692 32,274 49, Net Portfolio Outstanding 88,920 236,646 397,488 691,275 902, Short-term Inv. & other curr ass 00 40,000 40,000 40, Accounts receivable ( BSB Micro savings mark-up & Fee)
10,670 28,398 47,699 82,953 108,
SAFOLLO : Strengthening Peoples’ Actions for Food and Livelihood Security
SHG : Self Help Group
NGO : Non-Governmental Organization
MFI : Micro Finance Institution
LGI : Local Government Institutions
LO : Loan Officer
MRA : Micro-credit Regulatory Authority
MFI : Micro Finance Institutions
MF : Micro Finance
BSB : Brima Sana Bangura
MIS : Management Information System
- Strategic Vision for BSB Microfinance Programme...................................................................... Contents
- Background and present position of I BSB Micro Finance’s MF Interventions:........................
- Five Year Business Plan:.................................................................................................................
- Budget Summary:............................................................................................................................
- Narratives of BSB Microfinance’5-year Strategic Business Plan’...............................................
- Target beneficiaries/ clientele and Market.....................................................................................
- BSB’s Relief Microfinance geographical coverage:......................................................................
- Financial products and services:...................................................................................................
- Profit Rate Policy for investment:...................................................................................................
- Groups, methodology and delivery mechanism:..........................................................................
- Monitoring and Internal Controls..................................................................................................
- Strategy to grow:............................................................................................................................
- Funding:..........................................................................................................................................
- Operations......................................................................................................................................
- Staffing:...........................................................................................................................................
- Growth and Composition of Staffing Requirements...................................................................
- Systems and Policies.....................................................................................................................
- Human Resource Development Strategy.....................................................................................
- Risk and assumption.....................................................................................................................
- Efficiency and productivity...........................................................................................................
- Financial Projection (In GDP)...........................................................................................................
BSB Five Years strategic Business Plan d
Course: Strategic management (6112)
University: Addis Ababa University
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