MICROBANKING BULLETIN - Microfinance Information Exchange

CASE STUDIEScredit training and quality service to this marketsegment. Therefore, we have only made ournewly-introduced individual loans available toclients who have progressed through our communalbanks, so as not to be tempted to go “up-market”and leave the very poor behind.Efficiency IssuesComparing Pro Mujer’s 1999 institutional efficiencyindicators with eight other leading village bankinginstitutions, we proudly rank on the edge of themost efficient third (see Woller’s article above). Butwe are constantly striving to improve our efficiencyby spending less and becoming more productive.Administrative costs as a percentage of averageloan portfolio rose from 1998 to 1999, as have costsper borrower. Notwithstanding the fact that ProMujer is an integrated program and hence ouradministrative costs are inflated (even though weattempt to segregate the direct costs of non-creditprograms from the costs of the credit program),efforts are being made to reduce costs at all levelsin order to compensate for the lack of portfoliogrowth. Also, costs were unusually high in 1999due to development of a new managementinformation system, whose benefits will be realizedin the years to come.Figure 3: Efficiency and Productivity for ProMujer (1997-1999)1997 1998 1999Total Administrative Costs /Avg. Loan Portfolio (%) 35.1 30.4 37.8Salary Expenses / Avg.Loan Portfolio (%) 22.5 19.2 21.0Cost per Borrower (US$)50 45 47Average Salary(multiple of GNP/ capita) 5.7 4.8 4.4Staff Productivity (no.)209 187 180Other Admin Costs / Avg.Loan Portfolio(%) 10.0 7.8 9.4Source: The MicroBanking Bulletin.Productivity, as measured by the ratio of borrowersto total staff, has declined as well, but productivityper loan officer shows a slight improvement in 1999over the previous year. The profitability marginsare being squeezed because the average loan sizeis smaller and costs are rising. Another challengewe face is the declining average number ofborrowers in each village bank, which is linked tothe retention rate mentioned earlier, as well as tocompetition and over-indebtedness.Strategic DirectionsAs Pro Mujer in Bolivia positions itself for the future,we have chosen a path that does not conform toindustry trends.We remain as committed to an integrated approach,combining microfinance with communal banktraining, business development services (bothtraining and technical assistance), health andhuman development training, and the provision ofbasic health services.We firmly believe that microfinance is only part ofthe solution to alleviating poverty; Pro Mujer’smission clearly addresses the economic and socialneeds of poor women. We are committed tosupporting focal centers in Bolivia, which havebecome community centers for our clients and theirfamilies. Although this approach incurs substantialcosts and deviates from the “traditional” villagebanking methodology of minimal infrastructure, itprovides a venue for invaluable training and healthservices.There are implications for organizational structure inour strategic decisions. Although we voluntarilysubmit our financial information to theSuperintendency of Banks in Bolivia, Pro Mujer hasdecided not to become a regulated financialinstitution because we believe that our mission isbest served by being a foundation. Nevertheless,we are investigating strategic alliances that wouldmake new funding options available to us.Finally, Pro Mujer’s sustainability must be achievedin harmony with our clients’ sustainability. Weintend to pass on efficiency savings to our clients,once we are sustainable on a more permanentbasis. Pro Mujer does not believe that institutionalsustainability is an end in itself, as sometimesseems the case when discussing best practices;instead, it is a means to enable our clients toachieve sustainability in their lives, so they can bemore fulfilled as individuals and as members of theirfamilies and communities.In summary, Pro Mujer Bolivia is experiencingincreased challenges to maintain and improve itssustainability. Some of the reasons are due toexternal factors beyond our control like competitionand oversupply of microcredit. But many of thereasons result from conscious decisions to serveour target market in ways we believe best meetsour clients’ needs.Nancy Natilson is Financial Advisor for ProMujer inBolivia. She also consults on financial management ofmicrofinance projects in developing countries. She can bereached at natilson@compuserve.com.22 MICROBANKING BULLETIN, SEPTEMBER 2000