PARTNER Microcredit Foundation is one of the top three Microfinance Institutions (MFIs) leading the BiH market. Tuzla-based PARTNER started its microcredit operations in 1997 with support of the European branch of Mercy Corps (MC). As MCF, the organization plans to keep its non-profit status and initiate a subsidiary MCC to start operations in the third quarter of 2009. As of September 2008, PARTNER accounts for about 17% of the microfinance market both in active clients and gross portfolio.
PARTNER forecasts further market saturation and economic deceleration in the short-term and has been adjusting its 2009-2012 business plan, incorporating more conservative projections. The organization plans to strengthen its current position and provide innovative and flexible services to the existing target clientele, while incorporating unserved rural clients as mentioned. The organization has a well-positioned office network in northern, central and western BiH, covering almost all of BiH territory through 20 branches and 42 field offices administered regionally by 3 regional credit operations managers.
The main competitive advantage of PARTNER is its efficiency. As of September 2008, PARTNER’s Loan Officers hold an average of 401 active clients and 1.17 million KM, performing significantly above the industry (271 active clients on average) and main competitors (270 on average).
Between October and November 2008 and with the financial support of the European Fund for Southeast Europe, PARTNER Microcredit Foundation, one of the leading microfinance organizations in Bosnia and Herzegovina, hired the services of Perfect Point Partners - PPP, a consultancy firm based in Bolivia, to execute a project aimed at improving lending efficiency in the context of a potential economic downturn in the country and prospects of a new organizational for-profit status.
The project had the objective of developing and tailoring a costing tool of easy use and handling for the organization, which can provide reliable information on profitability per lending products. After implementing the tool and with the information collected in the field, PPP was able to formulate recommendations to functions in the organization in order to improve lending efficiency in PARTNER in the following topics:
The project was executed in five weeks between October and November of 2008, by a team comprised of PPP consultants and PARTNER’s staff and was carried out in four phases:
Once dates were defined, PARTNER delivered to PPP a detailed explanation of lending policies, and the latest quarterly financial statements, salaries, and portfolio data. The organization also defined relevant employees as local counterparts (a Product Development Professional and a Financial Professional), and products and branched to be addressed.
After analyzing this information, PPP made an initial presentation of the project, showing the advantages of the Model and what would be taken as a “base line”.
In this phase, two consultants from PPP visited the institution, carrying out internal interviews with the personnel involved in the lending process. Once adjusted a time-sheet previously developed, the measurement of times of each lending activity took place, collecting also qualitative information about the procedures. The activities were conducted within two weeks.
The information (times, financial and portfolio data, salaries and institutional policies) was purified and introduced into the Costing Model.
For one week, PPP adjusted and adapted the model to PARTNER’s lending procedures, products, branches, funding sources, remuneration policies and institutional capacity.
With the preliminary results, three weeks of consultancy work were scheduled, aimed to collect feedback from the MFI and show the most important features of the ready-to-use Model. During this period, the local counterparts were trained in handling and updating the Model.
