Innovating in the PAMIGA network – the story of Buusaa Gonofaa in Ethiopia

Foto 1Buusaa Gonofaa is one of 14 Pamiga network members which I visited during the networks CEO meeting in November 2014. Just to list a few characteristics, Buusaa Gonofaa

  • was licenced as a non-bank financial institution in 1999 and started operating in 2000. There are currently 16 shareholders, with 94% of share capital being held by HUNDEE NGO, plus 15 individuals.
  • provides microcredit and savings services to joint liability groups of around 15-20 members. On June 30 2014, the institution had 90,643 clients (of which 6%% female) and 80,189 borrowers;
  • loans are most often short-term (8-24 months) and are taken for income generating activities, investment in productive assets (ox, cows), housing improvements, and other farming activities;
  • has 29 branches, 372 staff, a total loan portfolio of EUR 8,4 million and savings deposits of EUR 3,6 million;
  • The PAR30 reached 0,6% mid 2014 and operational self-sufficiency reaches 157%;

With the support of Pamiga ADVISORY, Buusaa Gonofaa (BG) developed a Client Assessment Poverty Scorecard (or “Social Ledger”) to better understand what clients they are reaching, how poor these clients are, how clients´ livelihoods are changing due to having access to a loan, and what type of clients benefit most of the loans. Buusaa Gonofaa developed a scorecard with indicators like “number of rooms/huts”, “# of ox/cows/sheep/goats/bed (plus type)”. The collection of data from each client is done by the loan officer as part of the loan application on every cycle. With regards to the initial characteristics, 30% of BG´s client are very poor, 36% are poor, and 34% are not so poor.

BGIt was clearly to see from the provided data, that over 4 loan cycles (from July 2011 to August 2014, same set of clients), the very poor clients decreased by 32% since they moved to the other 2 categories.

BG also started to use biometric handheld devices, POS to collect data in the field on their groups. Today, they have implemented 80 POS in 1o branches primarily for automated cash receipt issuance and collection. The earls experience showed:

  • lower transaction times
  • no errors in amount, account numbers, customer name
  • reduced risk of fraud
  • more customer confidence and prestige
  • high cost with USD750 per device.

I will continue to follow Buusaa Gonofaa, i.e., there will be more blogs with more exciting information. Stay tuned.

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