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Financial Management for Microfinance Institutions

As a higher level course, the financial management course requires that participants understand financial analysis and are knowledgeable on financial performance industry standards. The course will assist microfinance institutions in improving their financial performance through effective treasury management, asset-liability management and liquidity management. Participants will also learn how to realistically project the future financial performance of the MFIs given their current financial performance level. Although the course is heavy on finance, emphasis is given to participants on the danger of mission drift or abandoning their social mission. Actual case studies gathered on field will be presented to highlight current practices of successful microfinance institutions.

Risk Management, Internal Controls and Audit

This course helps microfinance institutions develop and improve the quality of their risk management processes. It focuses on problem prevention, early problem identification and control. The course provides guidelines for establishing operational activities that assist the MFI in identifying vulnerabilities, designing and implementing controls and monitoring the effectiveness of controls. The risk management and internal control is linked with the MFI management information system. It also highlights problem resolution as a means for risk management and internal control. The course also offers how internal and external audit could be used to the advantage of the MFI.

Strategic Planning for Microfinance

The course addresses the issues of strategic and operational planning that are vital to the successful development of microfinance institutions. The right to left planning approach will be used as the framework for the strategic planning process. The course offers various methods in conducting internal and external analysis that aids an MFI in positioning itself in the microfinance industry. The strategic planning course will aid MFIs in clarifying their niche and differentiation in the competitive industry they are in. The course aims to shed light on the institutional values, vision and mission of the organization as well as generate winning strategies, programs and activities. One of the highlights of the course is the financial modeling approach. Various forecasting techniques will be used to aid participants in their financial projections.

Managing Human Resource for Microfinance Institutions

Microfinance is labor intensive. Human resource is the backbone of any microfinance institution. Creating a leading microfinance institution takes more than charging the right price and knowing how to design a financial offering. The course offers MFIs tools on how to assess knowledge and skills needed; hiring the right people; designing incentives and compensation package for staff; and creating a work environment that promotes employee commitment. The course centers on the new mandate of human resources – as strategic partner in strategy execution; as administrative expert; as employee champion; and as change agent for continuous transformation. Developing capability building programs for new hires and current employees will also be discussed in the course. One of the highlights of the course is the development of performance-based incentives schemes that rewards employees and at the same time increase the profitability of the organization.

Marketing Microfinance Products and Services

Marketing is the most neglected management function in the microfinance industry. Most MFI’s do not properly brand their products, ineffectively communicate its competitive advantage and more often than not have low customer care practices. The Marketing Microfinance Products and Services course will introduce participants to the marketing mix: Product, Price, Place, Promotion and People. Special emphasis will be given to crafting marketing communications and advertisements. It is often said that the best marketing strategy is to have satisfied clients. It is also true that it is more expensive to look for and develop new clients rather than maintaining existing ones. With these in mind, the course will highlight customer ‘delight’ (more than satisfaction) and customer protection.

Financial Planning for Small and Medium Enterprises (SME)

The owners of small and medium enterprises (SMEs) are the driving force behind their enterprise. However, it is often observed that SMEs have difficulty scaling up due to their inability to access much-needed working capital in formal financial sources. The course focuses on clarifying the personal dream of the SME owner and marrying this with tolls to come up with sound financial judgment to achieve the personal dream through his or her enterprise. The course will present different financing opportunities available in the market and will equip participants with tools on how to evaluate and take advantage of these financial opportunities. Debt management; cash management; income and asset generation and protection will be at the heart of this course.

Financial Literacy for Small and Medium Enterprise (SME) Subcontractors
The financial literacy course aims to equip microenterprises, the informal sector, with knowledge and skills on how to identify their current financial position, define their financial goal and reach their financial dream. Access to financial services is one of the hindering factors that enable microenterprises to take advantage of opportunities that would give them the means to achieve financial freedom. The course intensively focuses on the following themes: understanding personal finance; using various financial products available in the market; and chartering a financial goal that is ambitious but realistic. The end goal of the course is to facilitate the integration of microenterprises in the formal financial system, particularly in microfinance institutions.

The New Frontier: Linking Microfinance and Remittances
There is a natural strategic link between microfinance and remittances. Research data show that 40% of total remittances go to the rural areas where MFIs are present. However, most MFIs fail to recognize the opportunity in remittances as one of the means to achieve financial sustainability and social mission. Remittances as a fee-based product offers the opportunity to MFIs to achieve financial goals. At the same time, money from poor migrants in host countries send remittances to even poorer households in their countries of origin. MFIs could offer remittance receivers the opportunity to leverage remittances with pro-poor financial products, thus achieving their social mission. The course will present different remittance operations models where MFIs could participate. It will outline the advantages and disadvantages of the different remittance operations models as well as tools on how to negotiate with money transfer operators. The course will also provide guidelines for microfinance institutions on how to develop pro-poor financial products that are linked to remittances.

Financial Mainstreaming of Microinsurance and Savings
Microinsurance is defined as insurance for persons who traditionally do not have access to formal sector insurance or long-term savings. The course presents the seven basic principles of insurance and challenges that microinsurance faces. Participants will be able to know existing coping mechanisms of the poor against adversities. The course will differentiate characteristics of informal and formal insurance. Different microinsurance products will be discussed given their relative complexity to implement. Participants will likewise be taught on a framework to assess insurance needs of clients. Calculation of probability of risk occurrence; premium; and assessing financial implications is an integral part of the course. The financial product design and development process will be used as the framework for developing microinsurance products. The course also outlines strategies in implementation such as linking up with formal insurance or being dependent; and making the microinsurance mandatory or voluntary. Savings is the postponement of the pleasure of spending. It is a social service that provides benefits to the microfinance clients such as consumption smoothening and reduction of vulnerability to risks. At the same time, savings provides funds for a microfinance institution for its credit products. Participants will be able to determine whether an MFI is ready to mobilize savings. It also provides instructions on how to capture and protect savings. Design considerations are focused on what clients need most – safety, convenience and returns. Savings administration and management that ensures liquidity and improve efficiency will be provided. Marketing campaigns on savings will also be developed in class.

Financial Literacy for Remittance Receivers
The course aims to raise remittance receivers’ awareness of how remittance income may only be temporary and how dependence to remittance will most likely increase their financial vulnerability in the long term. It will build the participants’ knowledge and skills around managing remittance flow and helping the receiver to use remittance more effectively to match their own financial goals. It will also engage participants in recognizing the value in receiving remittance in a formal financial institution that will serve as entry point to the financial sector; use remittance to leverage other financial products in microfinance institutions from personal savings to loans; and making decisions about managing financial services. The course will assist microfinance institutions on how to expand its market to include remittance receivers through its existing microfinance products - savings, credit, microinsurance, payment services etc.

Governance and Managing MFI Growth
Governance plays a crucial role in microfinance since this is the key in setting the MFIs’ direction towards reaching out to more poor households and at the same time achieving financial sustainability. The course will enable participants to identify and delineate roles, duties and responsibilities of the board and management; and determine board involvement and their required knowledge and skills. Best practices in microfinance governance will also be shared in during the training. Growth is an issue that MFIs face. During the training, participants will be able to weigh institutional capacity implications of plans to expand or consolidate microfinance operations. The different facets of challenges in terms of determining institutional preparedness for growth such as developing financial product designs; preventing and arresting or preventing delinquency; achieving financial sustainability; integrity of information systems and controls; adequacy of human resource; effective marketing of financial products among others will be discussed in an institutional appraisal tool. The appraisal tool will enable participants to determine which areas an MFI should address and prioritize.

Color-coded Bookkeeping System

Most microfinance institutions turn to automation to solve their bookkeeping system problems. However, most of the time, efforts to automate lead them to frustration. A lot of software providers do not have enough background in microfinance and therefore software designs are not attuned to the ever-changing needs of most microfinance institutions. Off the shelf software, on the other hand, do not have the required flexibility to adopt to policy and changes in operations. The color-coded bookkeeping system is an alternative bookkeeping system that is manual. The system, once installed and diligently applied will enable microfinance institutions produce aging of loans on a daily basis; strengthen internal controls; measure the performance of loan officers, branches and the institution as a whole. The scheme follows a color-coded technique that guides management in crafting required reports that are necessary to arrive at well-informed decisions.

Social Entrepreneurship

Social entrepreneurship involves the promotion and building of enterprises or organizations that create wealth, with the intention of benefiting not just a person, family or clan but a defined constituency, sector or community usually involving the public at large or the marginalized sectors of society. The course aims to inspire participants to establish or participate in social enterprises. It will highlight that the social enterprise, like business enterprises, is also concerned with financial sustainability. However, the social enterprise will go beyond profits, it will provide bottom lines that will achieve its development objectives. Modules integrate the use of management practices (human resource, marketing, operations and finance) with sustainable development.

Business Planning for Microenterprises
Business planning for microenterprises is designed to address their lack of management skills. The course enables microenterprises to craft their own vision and mission; assess the external environment where they work; identify and evaluate opportunities; improve delivery of products and services; craft a personal financial plan; and techniques in marketing their products and services. The training approach employed is attuned to the capacity of most microentrepreneurs to absorb new learnings. The business planning process also render microenterprises ways and means to access cheaper suppliers; access funds; link with other markets; and negotiation. By the end of the course, each microenterprise will have their own business plans that they could readily implement.

Character and Capacity-Based Lending

Most commercial financing institutions use asset-based or project-based lending since their target clients are those that have collateral and are able to craft business plans. However, microfinance clients neither have the assets nor the skills to qualify loans from traditional commercial funding sources. Thus, microfinance use character and cash flow as the basis for extending loans to them. The course enables participants to assess current client selection processes; articulate the principles of microfinance as guide for client selection; practice the use of cash flow and credit and background investigation; modify loan application forms to capture essential information that could be used to evaluate a client’s character; and identify policy gaps to improve client selection and retention. Incentive schemes that entice clients to remain in the microfinance program are also discussed. The course hopes to improve the portfolio quality of microfinance institutions and at the same time provide better and more efficient financial services to the clients.

Information Systems for Microfinance

Information system is the foundation for all operations for an MFI. The course offers decision makers specific points in evaluating their existing systems; determining current and future information system needs; and conducting cost benefit analysis when building, modifying or buying software. A framework on developing information system for an MFI will be presented. The framework includes the following aspects – functionality, flexibility and expandability, usability, reporting capabilities, standards and compliance, administration and technical support, security, and costs. The information system training will also showcase a software (software sold separately) internally developed by SEDPI and a manual information system to strengthen internal controls.

Making Markets Work for the Poor: Beyond Business Development Services
The ‘business development services or BDS’ terminology is evolving and is increasing called business service markets, commercially viable solutions; or support markets. BDS is just one among the many interventions that development organizations to make markets work for the poor. The course will focus on the following approaches: subsector analysis, market linkages and value chain development. These approaches trace the activities from inputs to the delivery of products to end consumers. The course will also discuss market development principles; non-financial and financial interventions such as product and technology development; infrastructure; input supply; market access; management and organization; policy advocacy and alternative financing. The highlights of the course are two actual case studies on the value chain of organic rice and hand made paper. The cases will clearly demonstrate the effective ways on how to design focused, sustainable, demand-driven and cost-effective programs. The course will also present the dynamics between microfinance and microenterprise development.

Customer Care

Excellent customer care is essential to the rapidly changing landscape of the microfinance industry. Amidst the increasing number of microfinance players, providing clients with utmost care play a key role in the success of the organization. The course will start with understanding customer care and why there is a need to invest in it. The challenges of customer service and the strategic dimensions to undertake it will also be presented in this course. Participants will explore the role of the microfinance institution in crafting and sustaining delightful customer care for their operation. The course extends the process of customer care not only to the clients of the microfinance institutions but to the employees as well. In order to effectively deliver products and services to retain clients, the institution must have systematic and efficient strategies of motivating their employees. Customer care emphasizes on the sustainability of a program through a thorough measurement of customer service levels provided by an institution. In addition, this course will also discuss how to take advantage of technology in order to develop and improve customer care. To end the course, industry research and practices on customer care and product and service delivery would also be shared with the participants.