MFI Report

BACKGROUND OF THE ORGANIZATION Silver Upholders is a Christian based Micro Loans company limited by shares. The company was registered in Uganda under Ministry of Justice and Constitutional Affairs registration certificate No. 102872 on the 31st day of October, 2008 and licensed to provide financial services by the Judiciary under chapter 273 of the laws of Uganda and Statutory Instrument No. 273 – 1. Since February 2008, we have been working relentlessly to reduce poverty by providing microbusiness loans to women at the bottom of the socio economic pyramid . We started operations with one branch. We have since opened two more branches in Kampala, the second in June 2009 and the third in April 2010. Silver Upholders has a professional management team with good local microfinance knowledge. We are affiliated to Microfinance apex associations (such as Association of Microfinance Institutions of Uganda and the Micro Finance Support Centre). Our Loans portfolio is UGX 199,000,000/= (One hundred and ninety nine million shillings only) and we have 822 borrowers in our portfolio. We have an excellent portfolio quality with PAR>60 at 2.0% as of 31st July, 2010. We also have a prudent debt and equity ratio as well as sound internal control systems with a scalable procedure (grameen based). These systems have been strengthened by the introduction of periodical internal auditors before the end of the accounting year and the implementation of a MIS software. Silver Upholders operating performance is restricted due to persisting high operational costs and inadequate capitalization. We have however maintained good performance on profitability and sustainability with a good Return on Assets (RoA) and Operational Self – Sufficiency (OSS) of 49.9% as of September, 30th 2010.SWOT ANALYSIS STRENGTH 1. Professional management and board, Silver Upholders has qualified and experienced top management coupled with constant technical support from ‘The association of Micro Finance Institutions of Uganda’ (AMFIU) 2. Profitable and sustainable operations, Silver Upholders has consistently maintained its profitability and has had healthy Return on Assets (RoA) of 4.8% over the past years together with comfortable Operational Self Sufficiency (OSS) of 149.9% and Financial Self Sufficiency (FSS) ratios. 3. Most financial service providers do not go down to the grassroots to identify the needs of the poor, yet at Silver Upholders we are dedicated to start there. 4. Excellent understanding of the Ugandan micro- business market 5. Excellent customer care and quality product/ service delivery WEAKNESSES 1. High operational costs. 2. High competition in group based microfinance, competition in Silver Upholders operational areas has increased with entry of Pride Micro Finance, Brac Uganda, Opportunity Uganda, Finca and Equity Bank. 3. Relatively new player with limited name recognition in the Ugandan market OPPORTUNITIES 1. Growing micro business people because of the economic growth. 2. There is a high demand for financial services by the low income earners because the banking sector in Uganda concentrates on the middle class and wealthy people. 3. To introduce new products and more innovative delivery channels/ processes 4. Creative use of technology (software, internet, mobile telephony, etc) to grow market and service customers Threats 1. Political instability in the lead up to the 2011 national general elections in Uganda 2. Global economic instability which could reduce access to external finance STRATEGIES FOR ATTAINING THE OBJECTIVES Silver Upholders competitive edge is the provision of loans without requiring additional security apart from the group scheme (Group Guarantee) Market segmentation Silver Upholders has identified and segmented the target market into women of ages between 20 to 50 years, self employed entrepreneurs with a demand for micro loans ranging between 100,000/= (One hundred Uganda Shillings) up to 800,000/= (Eight hundred Uganda Shillings) with similar interests, characteristics, demands and willing to guarantee each other. This segment of the population constitute the biggest percentage of the total Ugandan economically active population (approx 70%). Previous experience and lessons from past mistakes has shown this group to be the least risky and the most loyal and dependable base for a micro business success. Marketing Strategy Because there is so much competition in the industry, we must get better at focusing on the specific market segments whose needs match our offerings. Focusing on targeted segments is the key to our future. Therefore, we need to focus our marketing message and our offered services. We need to develop our message, communicate it, and make good on it. Building Awareness: We will build awareness through word of mouth. Satisfied customers have been recommending other women to our company. We intend however to increase the coverage of this strategy. This will be done by requiring that in addition to the group guarantee bond, every single client should bring one outside the group guarantor. Therefore if we have, say ten thousand women borrowers, we will have another ten thousand guarantors who know about us and are knowledgeable about our operations, ready to either borrow for themselves or recommend others. Educating clients: We will educate clients about the services we provide through usage of the ready and willing apex bodies such as the Micro Finance Support Centre and the local village leadership (but without engaging ourselves in politics) Activate clients to access our loans: We will motivate clients to access our loans by striving to make timely disbursements and improving customer care continuously. We will go an extra mile by carrying out a house hold survey to identify potential clients and maintain contact with existing clients. Retaining customers: We will retain customers by carrying visitations after disbursements and repayments to see if their business have grown and where we find growth we would be willing to give them a bigger loan in the next loan cycle. In addition we intend to introduce incentives such as provision of other services apart from loans. For instance we are carrying out research into provision of the basic health items like sanitary pads at marginal costs. We are looking into introducing the micro insurance scheme. Hide