SCOPE OF WORK
Microfinance Financial Performance Volunteer Expert
Location of Assignment: Dar es Salaam, Tanzania
Proposed Level of Effort: approximately 4 weeks
Anticipated Start Date: September 2019
Anticipated End Date: October 2019
Objectives of the Assignment
As demand for microfinance services continue to grow, MFIs continue to have challenges in delivering microfinance services, which adversely impact their future growth, systems as well as funding strategy. This assignment aims to offer critical assistance to a MFI management team and build the team’s capacity so as to re-position the institution to become more responsive to the market demands without making losses.
The volunteer expert will work closely with the MFI staff to assess the institution’s performance, go through financials and audit reports, identify and analyze the reasons for the losses and causes of under-performance. By putting together the right strategies for turnaround, the volunteer provides the institutions a way to re-position themselves (an MFI) into the trajectory of growth and profitability. Also, the volunteer will conduct training sessions to the institution’s staff to build their skills in financial management and microfinance to understand the business they are in and the risks involved.
The Tanzania Enabling Growth through Investment and Enterprise Program (ENGINE) is a USAID-funded Feed the Future activity that aims to streamline and enhance many of the regulatory, informational and financial channels that encourage domestic and foreign investment in the southern mainland agricultural regions of Mbeya, Morogoro, and Iringa, and in Zanzibar.
ENGINE works at the district level, using a broad-based approach to engage with district Local Government Authorities (LGAs), private sector associations, business development service providers, financial institutions and small and medium enterprises.
Microfinance services in Tanzania have existed for some years, yet for several reasons they are still a far cry from meeting their potential. Microfinance Institutions that emphasize alleviation of poverty and women empowerment by improving financial access and services can only be sustainable if the institutions achieve good financial performance. Failure to maintain portfolio quality and high costs make it difficult for most microfinance institutions (MFIs) in Tanzania to sustain their operations from loan revenues alone.
Extreme competition in Tanzania with oversaturated market also forces MFIs to lower their standards to gain market share, lend to riskier borrowers and issue loans beyond the capacity of their clients who are mostly uncollateralized borrowers. This leads to a mismatch in the maturity of MFIs loans and deposit books, making it difficult and risky to grow their loan books hence end up accumulating losses.
ENGINE is seeking a volunteer with microfinance expertise to work alongside a Tanzanian MFI that needs support turning things around and improving its financial performance.
The Expert Volunteer will complete the following tasks:
Prior to departure:
- After receiving confirmation to work with ENGINE, the expert will coordinate closely with the IESC office in Tanzania, review available secondary information and identify any country or institution-specific information needed to tailor the assignment to the local context.
- Develop effective workshop materials and finalize details of the assignment. The volunteer is encouraged to incorporate case studies and practical examples in the materials.
Upon arrival in Tanzania:
- Attend an orientation meeting with ENGINE Program staff in Dar es Salaam .
- Meet with the microfinance institution for introduction and start of the assignment.
- Spend time with the microfinance institution to:
- Understand operations of the institution and its clientele.
- Analyze overall institution operations with regard to efficiency and adequacy of products and processes (portfolio management, operating costs and field activities).
- Identify reasons for the Institution’s accumulated losses and deficit state for the past 2 years.
- Assessing the MFI needs and business potential in the local market and the competitive positioning of Institution’s service quality, they must be able to evaluate the institution’s cost and productivity to realize the possibilities of cutting any non-essential or wasteful expenditure.
- Analyze overall quality and skill set of human resources (inventory of available skills, required skills, training requirements, incentive schemes).
- Support the MFI to create an accounting system that allows for proper recording of its financial transactions.
- Provide the right strategies for turnaround which can be implemented for repositioning the Institution into the trajectory of growth and profitability.
- Provide strategies to help the Institution cut expenditure, check revenue leakages, recover bad loans and strategies to Increase income.
- Conduct a workshop on the necessary knowledge and skills required on best financial management and microfinance practices to improve financial performance. The workshop should incorporate case studies and global best MFI practices to cover the below topics:
- Understanding of Microfinance business and risks involved
- Importance of skilled staff
- Importance of collateral and insurance
- Use of proper accounting systems
- Computerized management system vs manual transaction recording
- Expenditure vs budgeting
- Income tax and withholding tax
- Provide recommendations to the ENGINE program staff on potential follow-up assignments with the financial institution.
- Write a final report summarizing observations and recommendations, as well as follow-up plans. The final report is discussed in the section on deliverables below.
- Attend a debriefing session with ENGINE COP and host organization staff members to provide feedback and discuss the recommended future to follow up on volunteer recommendations and capture impact.
The Expert Volunteer will submit the following deliverables:
i) To be submitted prior to delivering the workshops:
- Training materials that include practical examples, case studies and group exercises on best microfinance practices.
ii) To be submitted after concluding the workshops:
- Final Report: Volunteer must submit a Final Report and tools to the ENGINE program, which is to include the following sections:
- A summary of tasks and observations from the MFI visited
- A list of 5-7 specific and actionable recommendations for the host organization(s). These recommendations will be reviewed during the debriefing session with ENGINE staff at the end of the assignment and the volunteer may revise them in their Final Report.
- A section listing the assignment objectives above and how they were met or why they were not met.
Additionally, the Expert Volunteer will provide exit debriefings to the ENGINE staff.
- Extensive experience in financial sector development (banking, microfinance and/or MSME finance). Hands-on knowledge on financial performance
- Experience in transformation of Microfinance Institutions is highly desired;
- University level of education in banking, finance, management, economics or related field;
- Candidates with a track record of successfully executed trainings and workshops will have priority;
- Formal training or related certification is preferred.
- Excellent interpersonal, communication and training skills, including training in group settings;
- Ability to address issues, challenges, questions and concerns in a professional, respectful, logical and timely manner;
- Flexibility and adaptability to cross-cultural environments;
- Good writing and computer skills;
- Experience working in developing countries is preferred.