Helping Salone’s MFIs remain fit for the future

Last week Sierra Leone’s microfinance institutions (MFIs) were treated to a double whammy of training aimed at ensuring they remain sustainable and continue to meet the needs of their clients.  (Photo: Alphonso Campbell (MITAF) leads the delinquency training)

The courses were designed to give board directors the skills to critically oversee their MFIs’ operations and give staff the skills to spot unreliable applicants and deal effectively with bad clients. Both sets of trainings are equally as important to ensure MFIs can continue to offer low income people access to finance.

Fifteen MFI staff and ten board directors representing more than seven MFIs from around the country converged in Freetown to take part in the courses.

Microfinance clients are mainly those in the low income segment who have the skills and the talent to grow their businesses, given access to financial services, including credit and savings. Clients invest their loans in their businesses and pay back to the MFI over a number of months. The MFI then loans the repaid money to new clients. Ensuring MFI staff are fully skilled in recognising and dealing effectively with bad clients is critical to keeping an MFI loan portfolio in circulation, not only so that it can continue to benefit new clients but also for the MFI’s financial stability.

In their course, MFI board directors developed an understanding of what is needed to govern an MFI and how to monitor financial performance. Financial understanding and the ability to ask the right questions at the right time is key to the role a board of directors of overseeing an organisation’s operations. If they lack these skills, then they cannot address crucial issues or govern the MFI effectively.

The ‘Management of Delinquency and Interest Rate Setting’ and ‘Effective Governance and Financial Performance for Board Directors’ courses are among the many offered by the Microfinance Investment and Technical Assistance Facility (MITAF) to promote the development of staff within microfinance institutions in Sierra Leone.

Gabriel Gbebay, branch manager at the Lumley branch of Finance Salone, took part in the delinquency training. He said: “Learning new techniques on how to avoid delinquency and how to deal with it if it does happen is really important. Delinquency is an issue not just for MFIs but also for defaulting clients who may end up blacklisted and heavily indebted. I’ll be passing the training on to my three branch credit officers. It has been a very timely and necessary course.”

Francis Beinpuo, Techncial Advisor at MITAF, led the Effective Governance and Financial Performance training for Board Directors. He said: “Training is the most important means of ensuring the long-term sustainability of microfinance institutions. If MFI members at either end of the spectrum are not fully aware of their role in achieving sustainability, thousands of low income households in Sierra Leone could lose out on the opportunity to access finance and expand their businesses. Our courses are here to help ensure that doesn’t happen.”

A typical microfinance client would be a female market trader, using the loan she gets to buy more stock, increase profits and to counter economic shocks. Microfinance institutions give commercial loans, and provide access for people who may not meet the lending requirements by the big banks. It appeals especially to small business people because you don’t need huge collateral (such as a house) to get a loan, and because the staff at microfinance institutions are trained to be friendly and approachable, especially with those who lack education or are nervous of the formality of big banks.

MITAF, Freetown

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