Centre for Microfinance

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Centre for Microfinance University of Pretoria

• Reaction to a unique market
• Gerhard Coetzee and Chiara Chiumya

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Outline

• The problem
• The challenges
• The reaction
• Resource mobilisation
• Learning and adjustments

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The problem

• Market assessment as part of original proposal
• Market training demand workshops with industry
  representatives
• Course offerings and curriculum based on workshop
  outcomes
• Thus research and training offerings in reaction
  to market challenges

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Challenges Development Finance

• Understanding of clients
• real market research
• Expansion of products, expanded options
• SMME finance attacking the self employed market
• Regulatory environment - heavy burden of red
  tape
• Registry of security interests
• Explicitly target productive uses of microfinance
• Transformation of NGO MFIs
• Business Development Services
• Commercial banks already in there, but more
  focus needed

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Challenges Asset accumulation

• Savings and investment products
• Targeted savings products
• Smooth consumption, raise repayment, minimize
  risk
• Are the banks making money, threat of
  cannibalization
• Addressing negative real interest rates on
  savings instruments
• Need for bundling lending and saving instruments.
• Housing embryonic township markets
• Other investment products

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Challenge Rules and enforcement

• National Credit Regulator impact on the market?
• Other rules and impact on access?
• Harmonisation of policy and legislation?
• Main challenge enforcement?

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Challenge Information

• Need for even better data and information
• Better credit scoring and pricing models
• Having better information on individuals,
  households and firms applying for / using credit
  for policy development
• Training and capacity building
• Major need, no recognition, not willing to pay
• Short sighted need to invest in most strategic
  asset
• Consumer education
• Need for improved outreach
• Focus on lower income strata
• Distinct lack of innovation
• Use of CE as a monitoring tool
• Pricing issues, competition, monitoring

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Challenge Management

• Depth in Management
• Numbers in Management
• Understanding the market
• Understanding reactions to the market
• Understanding banking

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Challenge - Market Profile
Market status ? ?Institutional status Developing (SMME finance) Developed (Personal finance)
Start-ups Enterprise Consumer Mixed XXX
Growth phase Enterprise Consumer Mixed XXX XXX
Mature and refocus Enterprise Consumer Mixed XXX
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Reaction Centre for Microfinance

• Creating Inclusive Financial Markets Against
  Poverty
• Integrated approach
• Stakeholder involvement
• Functional areas (products)
• Education
• Research
• Dissemination
• Support

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Head of the School of Management Science
Centre Advisory Board 4 Academics and 4 Industry
Representatives
Director Gerhard Coetzee Assistant
Director Chiara Chiumya
Admin support Katherine Blaine
Academic leader Gerhard Coetzee
Education
Research Programmes organised according in focus
areas with dedicated senior research leaders

• Dissemination
• African Microfinance Conference Series
• Round Table
• Research Publications
• Invited and other conference papers

Support to other Institutions Demand
Analysis Assessment Development Evaluation and
Monitoring
MBA Electives
M Course in Post Grad School for Rural Ag Dev
Certificate Programmes
Executive Management Programme
Masters and PhD in Entrepreneurship
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Education

• Certificate Programme in Microfinance
• Certificate Programme for Microfinance Managers
• MBA Electives
• Masters Course in Post-Graduate School for Rural
  and Agricultural Development
• Masters and PhD Course in Entrepreneurship
• Executive management course
• Project Based
• Swaziland Microfinance Sector Training (15)
• BankSeta Unemployed (30)

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Education Certificates

• Certificate Programme in Microfinance
• Fundamentals of microfinance
• Loan Officer
• Market research for microfinance (MicroSave
  material)
• Introduction to management in context
• Certificate Programme for Microfinance Managers
• Operational management
• Financial management (using Microfin)
• Strategic planning and budgeting
• Strategic marketing

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Research

• Policy, Legislation and Regulation
• National Credit Act Regulatory Impact Assessment
  study design (completed)
• National Credit Act Regulatory Impact Assessment
• Academic publication Introduction to the
  National Credit Act (Juta)
• Assessing the possible regulatory impact of the
  National Credit Act on microfinance institutions
  A case study of a small to medium size consumer
  credit provider (completed)
• The potential effect of the National Credit Act
  on the future of selected, specialised
  micro-lending institutions in South Africa
• Comments on the Financial Cooperatives Bill
  (completed)
• FAIS and FICA impact on Financial Cooperatives
• Credit information sharing Guidelines towards
  credit information market development in Africa
  (completed)
• Member based financial services
• Informal finance for middle and high income
  individuals in South Africa A case study of high
  budget "stokvels" in Pretoria (completed)
• Case study of Yebo multi-purpose cooperative
• Rural Finance
• Review of the Rural Finance Learning Centre of
  the FAO (completed)
• Enhancing livelihood strategies of rural
  communities prone to climate risk in the Caprivi
  region of Namibia

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Research (2)

• Market integration / inclusion
• Microfinance in rural and urban Africa Reality,
  Context and Challenges
• Inclusive financial sectors and market
  integration Some evidence from Africa
  (completed)
• Financial services and channels
• Social protection cash transfers Learning from
  microfinance delivery systems
• The Mzansi account A response to the access
  challenge of the financial sector charter in
  South Africa (completed)
• Demand analysis of life insurance products in LSM
  3-5 in Tembisa
• Investing behavior and product needs for the
  poor A case study based on Alexandra residents
• Agricultural finance products for small-scale
  cane growers
• Small-scale property entrepreneurs A South
  African perspective (completed)

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Dissemination

• Publications
• Roundtable
• Website
• Conferences
• Attend and speak (several)
• Organise / Support
• 2007 African Microfinance Conference Kampala
• 2007 Conference on the measurement of impact of
  microfinance
• 2005 African Microfinance Conference Cape Town
• 2003 African Microfinance Conference
  Johannesburg

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Support

• Development Phase culminating in Support
  Toolkit
• Assessment
• Context, Market demand, Human resources, Material
• Development of curricula
• Electives, Short courses
• Course development and implementation
• Provide material as input, Training of personnel
• Course Quality Assessment
• Monitoring and evaluation
• Not sure whether we can continue with this

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Resource mobilisation

• Human
• Core permanent staff
• Chiara Chiumya, Katherine Blaine, Jacob Nyambe
• Part-time staff
• Gerhard Coetzee
• Teaching (6)
• Research (4) plus the MBA, Masters and PhD
  students
• Financial
• Sponsorships
• MFMI initial financing establishment (2004
  2007)
• SA Banking Sector Education and Training
  Authority (2007 2010)
• Other private sector support (ABSA, MFSA, etc)
• Income from courses
• Income from research
• Break-even approach

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Lessons and adjustments

• Clients not eager to pay for training use
  learnership system in SA
• MBA domain vs. electives interest vs. uptake
• Integration now easier in new home
• Need adjustment for countries outside southern
  Africa
• Need good permanent human resources
• Takes time to set up the Centre
• Learned what is core need in terms of resources
  and structure base and incremental
• In general, successful structuring and operation