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Projects > Uganda_Dec06

During the course of this year Hofokam had met the demands of those customers that had successfully grown their businesses by expanding the MFI’s loan product range. Now loans were not only offered for large groups, village banks, but also for small solidarity groups. In addition individual business and salary based loans had been developed. Agricultural loans were still disbursed on a pilot basis.

Therefore the first version of the performance model developed earlier for Hofokam needed to be extended. A monthly loan performance report aggregated by product type and branch detailing amongst others the portfolio at risk was designed and from now on stored in form of time series. This report, all loan officer’s client visiting schedules as well as the income and detailed expense statement by branch and head office allowed to analyse the current business in form of average quantities derived per product type and branch. For example it became clear that in branch A the average number of village banks per loan officer was much higher than in branch B and that the latter one appeared low also in absolute terms.

In order to allow strategic planning across all branches and each loan product, these quantities were then set up as parameters that could be modified. The same was done with quantities that are not depended on the specifics of a

branch (and product) such as costs of fuel and maintenance for the motorbikes or interest rates and fees. Changing the current value of these parameters for a future assumed scenario would therefore result in the respective future income and cost positions.


A short workshop for all loan supervisors was held on cash flow analysis. Thereby the influence of business setbacks onto the client’s ability to pay due to likely events in this area was visualized by means of a concrete example. From this basic business rules and questions to consider before taking / providing a loan were derived. One of these rules outlined e.g. is the often very hard to be followed advise to distinguish business and household “accounts”.

The idea was that each supervisor works out little stories with his respective loan officers that they could use in turn to illustrate these basic business rules step by step to their village bank clients during the bi-weekly meetings.

Left: A cash flow analysis for a micro loan to buy a used sewing machine is worked out together. The cash flows are projected on the basis of fictive but realistic problems that could come up during the course of the repayment period. Only due to the fact that the tailor wisely accumulates the net cash flows, the financial obligations can be met also in the bad periods. At first everybody is astonished about the tiny net profit but then it becomes clear that from now on the tailor owns the asset.

Above left: Loan officers admire the work of this successful tailor who has used the loans to grow his business step by step. By now he owns a shop with all the necessary tools.


Above right: Hofokam’s loan officer specialised in agriculture discusses healthcare and other issues with her client who is maintaining her chicken farming business in an excellent shape.


Right: The next client visit takes place at a hairdresser in the village who has become popular. She manages offering her customers the service and products difficult to get otherwise.