Jitegemea Credit Scheme

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Jitegemea Credit Scheme

• Mifos Deployment Case Study

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Agenda
Case Study

• MFI Overview
• Organizational needs and priorities
• Management Background
• Strategic 2007/2008 goals
• Why Mifos?
• Lessons learnt

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MFI Overview

• About Jitegemea Credit Scheme
• Jitegemea Credit Scheme started as a programme of
  Presbyterian Church of East Africa (PCEA) that
  operates in Nairobi eastlands. JCS was formed to
  take care of credit related projects for the
  church and started in 1998.
• With expansion of its credit operations, JCS
  delinked from the church and registered as a
  separate entity in 2003.

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MFI Overview

• Vision
• To become a reputable financial institution in
  Africa.
• Mission
• JCS promotes and empowers micro and small
  enterprises by providing requisite services which
  include credit, savings mobilization and
  technical assistance. We are committed to serve
  our esteemed customers with utmost devotion and
  diligence to enhance their direct participation
  in economic development.

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MFI Overview

• Management Background
• The Chief Executive Officer is a microfinance
  practitioner having worked in the past with Small
  and Medium Enterprise Program (SMEP) On the
  National Council of Churches of Kenya (NCCK).
• He is also one of the founders of K-Rep the
  first microfinance institution in Kenya which has
  since transformed into a Microfinance bank. He
  was as well behind the founding of Jitegemea
  Credit Scheme the current program for which he is
  responsible.
• The Operations Manager is professionally a micro
  credit practitioner having worked well in the
  past with Kenya Women Finance Trust (KWFT),K-Rep
  and Bimas for a period of nineteen years.
• The Chief Accountant is an accounting and finance
  professional with over ten years experience in
  microfinance and trading industries
• The MIS Officer- IT Expert

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Key factors in the decision making process
MFI Overview

• Portfolio growth
• Savings mobilization
• Disbursements
• Repayment rates
• Default management

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Organizational Priorities
MFI Overview

• Short term
• Improve delivery efficiency, Quick customer care
• Improve accuracy and timeliness of reporting
• Build institutional knowledge
• Ensure competitiveness and survival
• Strategic 07/08 goals is to grow from 4000 to
  7000 clients.
• Medium / long term
• Transform into deposit-taking MFI
• Offer Savings Product
• Open 2 new branches a year
• Use delivery technologies such Mobile Phones or
  POS

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Overview of legacy system (or manual processes)
Why Mifos

• -We use Excel worksheets to manage client
  information.
• -Each client is assigned a ledger card which
  shows the loans repayments and savings deposits
  of each client.
• - Each ledger card can only accommodate one
  loan product at a time.
• - If a client applies for another loan
  product, hes assigned another worksheet to
  manage that product.
• -When a loan is completed or the rows
  assigned for savings run out, the ledger card is
  printed and the details deleted and carried
  forward.

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Current System restraints
Why Mifos

• Cumbersome data entry
• Compromised data security
• Portfolio Records (Payment and Receipts) kept in
  Excel
• No performance reports for Credit Officers
• Financial reporting and reports were done in
  Excel
• Lack of integration
• Data redundancy
• No logging system
• Errors in Excel

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Cont
Why Mifos

• Delays in capturing information from the field
• Late generation of Performance Reports
• No access to information by the Operations Staff
• Operations Department have to rely on Accounting
  Department for crucial portfolio quality reports
• Management of social data
• Handwritten Collection Forms

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Decision making process
Why Mifos?

• JCS was looking for a Loan Portfolio MIS and had
  reviewed several packages
• JCS was concerned about
• Cost of software reviewed
• Complexity of banking like software
• Lack of internal IT resources
• Key factors in the decision
• Mifos was developed by Grameen Technology Centre,
  hence immense internal knowledge about
  micro-finance
• JCS was excited to be a pilot case enabling it
  to get technical assistance
• Mifos looked very easy to use and is focused to
  requirements of Loan Officers

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Project team
Deployment Project

• Role of the Mifos Specialist
• Determine gaps between MFI processes and Mifos
  application
• Determine customisation requirements
• Configure Mifos (branch structure, groups level
  and sub-levels, loan products, savings products,
  penalties and fees etc)
• Help recruit and train ICT personnel
• Brief Management for key processes changes
  required
• Determine interface requirements for Financial
  system
• Construct or customize reports

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Project team
Deployment Project

• Roles across the MFI
• Operations Dept document detailed activities
• MIS Provide infrastructure support
• Equipment orders and installation,
• Training of users, generation of reports,
• Help desk
• Data entry and verification
• troubleshooting the system and daily backups
• Senior Management provide quick approvals to
  installation needs, approve re-engineered
  processes, approve expenditure
• Communication plan
• Monthly review - consultant

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Key Phases
Deployment Project

• Phases
• Gap Analysis
• Defining project scope
• Data migration/entry
• Testing
• Training

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Data Migration
Deployment Project

• Opening the accounts-user accounts, group,
  sub-group, client, loan, savings
• Putting constraints on the flow of the processes
  in the system
• Posting balances at December 2006
• Posting balances as at the end of each month
• Finally posting transactions from the collection
  sheets.

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Resource requirement
Deployment Project

• Human resource requirement over span of project
  and into the future
• Internal Project Manager / Systems Administrator
• 2 Data-entry clerks
• Branch staff (in the future)
• Cost of hardware connectivity
• Server KShs 114,800
• Workstations KShs 63,000
• Connectivity KShs 4,050 per month
• Cost of hosting server administration
• Cost of Mifos Specialist support Kshs 3,000,000
• Ongoing maintenance costs JCS has opted for
  ad-hoc support, Kshs 3,500 per hour

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Lessons Learned

• Biggest challenges
• Techno phobia
• Resistance to change
• Lack of proper handing over procedures on the new
  system when an employee leaves the organisation.
• System cleanup.
• Data migration.

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Lessons Learned

• What worked Well
• Total commitment from senior management
• Allocation of budget towards ICT
• Harmonisation of conflicting policies (for
  example allocation of interest)
• What didnt work well
• Migration - We should have started on the project
  in the month it was introduced. Inputting
  historical data has created a backlog in the
  system
• Mifos is too strict on dates and meeting
  days,Late banking,
• No room for mistakes in Mifos-The number of
  adjustments
• There's no facility for forfeitures
• Slow feedback from the credit officers
• We still have the issue of double registry-Govnt
  ID D.O.B.
• Reversing disbursements

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Lessons Learned

• What we would have done differently
• Migrated current data (less historical data)
• Hire more data entry staff earlier
• Train Credit Officers and all the employees much
  earlier
• Recommendations for future Mifos adopters
• Review all policies in advance (for example late
  payments etc).
• Involve Operations Department from onset.
• Encourage and formalize use of computerized
  system.
• Make the computerized system an organisation
  priority (not MIS priority).