Micro-Credit Program in Tunisia
Mohammed Ali Khaled, Consultant
September 2003
IntermÒ n
O xfam
Appraisal of ENDA-Inter-Arabe
October 8, 2003
ACKNOWLEDGEMENTS
This institutional appraisal was carried out in September 2003. The purpose of the mission was to review
ENDA-IA’s micro-finance operations for two of it's major donors: a final evaluation for Intermon
(Spain), and a mid-term evaluation for ICCO (Netherlands). The appraisal was carried out using the
CGAP appraisal format. An extra Annex was added to look specifically at the objectives/issues of the
Intermon grant which are not included in CGAP's format like the Business Development Services and
impact on clients. Also, the appraisal focused on the effectiveness of ENDA-IA’s management strategies
and their plans to move from the sustainability phase which they've just completed to the massive growth
phase and to look at the obstacles facing them on that road and to provide general recommendations on
how to deal with these obstacles.
I would like to thank the ENDA-IA staff and its management for their generous support during this
mission. I am grateful for the staff’s openness and patience in responding to my many requests for
information.
I also would like to thank all the leaders of other credit NGOs, governmental officials, bankers, embassies
and donors' staff with whom we've met during this mission for giving part of their valuable time in spite
of their busy schedules. Their insights about the general situation in Tunisia and the importance of the
micro enterprise sector and accordingly the micro-finance services were very useful and helpful.
Last but not least, I would like to thank all the clients who also gave up some of their very busy time. I am
very grateful for their openness and patience and their courage to say what they think about the level of
services they are receiving from ENDA-IA and the fact that they insisted that they are clients who are
paying the cost of the service they get and accordingly their insistence on getting a high quality service.
Mohammed Khaled,
Technical Manager
Microserve (Micro-finance Consulting Services)
Appraisal of ENDA-Inter-Arabe
October 8, 2003
1
ABOUT THIS EVALUATION
In April 2003, ENDA-IA contacted Mohammed Khaled to discuss the possibility of his participation as a
team leader to make a mid-term evaluation1 of the implementation and results of the project financed by
the European Union and the Dutch NGO, ICCO2 (January 2002 – December 20043) and at the same time
a final evaluation of the project financed by the Spanish international development agency, AECI, and
Intermon-Oxfam4 (October 2000 – March 2003).
As the two projects concern the same micro-credit program but with specific objectives for each project,
it was agreed to undertake the evaluation through a single, joint mission and to use the CGAP Appraisal
Format for that purpose which is to evaluate the program performance in general. This format replies
almost to every point mentioned in the ICCO proposal under evaluation (as can be seen in Annex II).
Another donor for ENDA-IA was supposed to join the evaluation team and had to cancel her participation
due to other commitments.
Rafik Missaoui, a Tunisian consultant, was contracted to deal with some parts of this evaluation,
especially those parts related to the regulatory environment in Tunisia for Best Practice micro-credit.
Also, Mohammed Ali Atig, one of ENDA-IA’s staff accompanied the team leader in most of his meetings
and interviews of this mission.
The evaluation was based on the following:
1) Reading all available ENDA-IA documents such as the grants proposals, annual reports, business
plan etc.5
2) Meeting with a randomly6 selected group of ENDA-IA clients including clients who dropped out
of the program. Because of the limitation of time, after visiting several clients in the company of
Mohammed Ali Atig and Ramy Salhi7, and showing them what sort of questions to ask and what
issues to look at, the evaluator asked them to visit some clients by themselves and to report to him
on those visits.
1
Annex I shows the team leader Terms of References.
2
Annex II provides a summary of the ICCO grant proposal.
3
The start date of this project was postponed almost one year: the project was originally scheduled to end in
December 2003.
4
Annex III provides a summary of the Intermon grant proposal.
5
A list of these documents is provided in Annex V: Resources.
6
The evaluator visited the MIS department and asked them to provide him with a list of all the clients who have a
loan ID as a multiple of 300, a list of 52 clients was provided. In that list, beside the name of the client, other
information were provided such as the branch, active or not, # of loans received etc.. That list is provided in Annex
VI.
7
A university student who is working part time with ENDA-IA while doing his research on Tunisia’s structural
adjustment program.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
2
3) Also, it happened that ENDA-IA organized two trade fairs during the evaluation visit. This gave
the consultant the opportunity to meet with another group of clients and to talk to them about how
they perceive ENDA-IA’s services.
4) Meeting with ENDA-IA's management, finance unit, MIS unit, internal control, supervisors and
loan officers8 both in the main office and in the branch offices and sometimes in the field while
visiting some clients.
5) Meeting with ENDA-IA donors, competitors, supporters, friends9 etc. in attempt to understand
how they perceive ENDA-IA's work and to understand the environment under which ENDA-IA
is working and its impact not only on the previous work of ENDA-IA but also on its future plans
for expansion and growth.
It is important to keep in mind while reading this report ENDA-IA has finished the second phase of its
development, the sustainability phase, and is preparing itself to enter the third phase of growth and
development. Beside complying with the requirements of two of its main donors, ENDA-IA therefore
wanted to use this opportunity to look back at its performance with a critical eye, to assess its strengths in
order to enhance them and its weaknesses in order to develop action plans to overcome them over the
coming five years. This is why the recommendations of this evaluation focus on the bigger picture and do
not go down to the details which were left for other exercises of business planning and action plan
development.
While looking toward the future, two scenarios were developed, the first assuming that the constraints on
ENDA-IA's ability to access commercial funding will continue and ENDA-IA will have to keep relying
on grant money and donor funding. Through this scenario, ENDA-IA would plan to reach only some
25,00010 active clients by 2005 mainly in the poor neighborhoods of Greater Tunis (the capital). The
second scenario assumes that the constraints on commercial funding will be overcome either because the
Tunisian law will be changed or because ENDA-IA will manage to get a special waiver from the Tunisian
government or because ENDA-IA’s donors and supporters will find a way to provide it with the needed
capital to fund its growth. Under this scenario, ENDA-IA plans to reach 100 000 active clients by end2008 and will expand its work to include all the governorates/districts of Tunisia.
8
A list of all the staff which were interviewed during the evaluation and their posts is provided in Annex VII.
9
A list of all of those who were met is available in Annex VIII, while the itinerary of the whole evaluation mission
is provided in Annex IX.
10
It is expected that this number would increase to 35,000 active clients by the end of 2008 assuming that the same
constraints continue.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
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LIST OF ABBREVIATIONS
AFDB
ACCT
APEL
ATE
African Development Bank
Agence de Coopération Culturelle et Technique, France
Association of Promoting the Employment and the Housing, Tunisia
Tunisian Employment Agency
BTS
BDS
Solidarity Bank of Tunisia
Business Development Services
CCFD
Crenda
Catholic Committee Against Hunger and for Development, France.
Enda’s Credit Program
ENDA-IA
ENDA-TW
EU
ENDA-Inter Arabe
ENDA-Third World, Senegal
European Union
FATEN
FTSS
Palestine for Credit and Development (a Palestinian MFI)
Fédération de Tunis pour la Solidarité Sociale, Tunisia
ICCO
Interchurch Organization for Development Cooperation, The Netherlands
MAFF
MFW
MFI
MIS
Ministry of Women and Family Affairs, Tunisia
Microfund for Women (a Jordanian MFI)
Micro-finance Institution
Management Information System
NGO
Non Governmental Organization
Appraisal of ENDA-Inter-Arabe
October 8, 2003
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TABLE OF CONTENTS
Acknowlegements………………………………………………………………………………….…….p.1
About this Evaluation…………………………………………………………………………………….p.2
List of Abbreviations……………………………………………………………………………………..p.4
Table of Contents………………………………………………………………………………………...p.5
Executive Summary…………………………………………………………………………………….p.8
A.
B.
Summary of Key Data…………………………………………………………………………..p.8
Summary of Major Conclusions and Recommendations……………………………………….p.8
Chapter 1:
1.1
1.2
1.3
1.4
1.5
Background…………………………………………………………………………...p.10
The Tunisian Economy………………………………………………………………………...p.10
Poverty in Tunisia……………………………………………………………………………...p.11
Micro-credit Law………………………………………………………………………………p.12
ENDA-IA Overview…………………………………………………………………………...p.12
Scenarios for the Future………………………………………………………………………..p.13
Chapter 2: Institutional factors………………………………………………………………………p.14
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
Legal Structure…………………………………………………………………………………p.14
History and Vision……………………………………………………………………………..p.15
Ownership and Board of Directors…………………………………………………………….p.17
Alliances……………………………………………………………………………………….p.18
Leadership……………………………………………………………………………………..p.21
Human Resource Management………………………………………………………………..p.22
Organizational Structure………………………………………………………………………p.26
Management Information System MIS………………………………………………………..p.28
Internal Control System, Audit and Supervision……………………………………………...p.30
Experience and Recommendations of Other Donors………………………………………….p.31
Chapter 3: Services, Clientele and Market………………………………………………………….p.32
3.1
3.2
3.3
Services………………………………………………………………………………………...p.32
Outreach………………………………………………………………………………………..p.35
Clientele, Market and Competition…………………………………………………………….p.38
Chapter 4: Strategic Objectives………………………………………………………………………p.43
4.1
4.2
4.3
4.4
4.5
Mission and Objectives………………………………………………………………………...p.43
Evaluation of ENDA-IA mission and vision…………………………………………………..p.43
ENDA-IA’s views on Commercial Borrowing………………………………………………..p.44
Objectives for the Near to Medium Term……………………………………………………..p.44
Projected Performance………………………………………………………………………...p.45
Appraisal of ENDA-Inter-Arabe
October 8, 2003
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Chapter 5: Financial Performance……………………………………………………………………p.47
5.0
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
Notes to the Financial Statistics in the Appraisal Report………………………………………p.47
Income Statement and Balance Sheet…………………………………………………………..p.48
Adjustment for Inflation and Subsidies………………………………………………………...p.50
Profitability……………………………………………………………………………………..p.52
Efficiency……………………………………………………………………………………….p.54
Loan Portfolio Analysis………………………………………………………………………...p.55
Liquidity Management………………………………………………………………………….p.58
Interest Rate Analysis…………………………………………………………………………..p.59
Liabilities and Cost of Funds Analysis…………………………………………………………p.60
Capital Management……………………………………………………………………………p.61
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October 8, 2003
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List of Tables:
Summary of key data……………………………………………………………………………....p.8
1.1
2.1
2.2
2.3
2.4
Evolution of Active Clients and Loan Portfolio………………………………………….p.13
Donor support…………………………………………………………………………….p.16
Possible Members of the Council………………………………………………………...p.18
Human resources statistical summary……………………………………………………p.22
Salary Scale………………………………………………………………………………p.25
3.1
3.2
3.3
3.4
3.5
3.6
Loan Products……………………………………………………………………………p.33
Outreach summary……………………………………………………………………….p.36
Distribution of Loans Disbursed in 2002 by Loan Size………………………………….p.37
Distribution of Loans Disbursed in 2002 by Activity……………………………………p.39
Estimated Potential Female Microenterpreneurs in Tunisia……………………………..p.40
Competition………………………………………………………………………………p.42
4.1
Projected performance……………………………………………………………………p.45
5.1
5.2
5.3
5.4
5.5.1
5.5.2
5.6.1
5.6.2
5.7
5.8
5.9
5.10
5.11
5.12
Income statement…………………………………………………………………………p.48
Balance sheet……………………………………………………………………………..p.49
Shadow prices…………………………………………………………………………….p.50
Adjustments for inflation and subsidies…………………………………………………..p.51
Profitability Ratios………………………………………………………………………..p.52
Profitability in Comparison……………………………………………………………….p.53
Efficiency Ratios………………………………………………………………………….p.54
Efficiency in Comparison…………………………………………………………………p.54
Portfolio data……………………………………………………………………………...p.55
Portfolio Quality…………………………………………………………………………..p.56
Payback Statistics…………………………………………………………………………p.56
Loan Loss Provision………………………………………………………………………p.56
Written off Rates………………………………………………………………………….p.57
Interest Rate Analysis…………………………………………………………………….p.58
List of Annexes:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Terms of References for the Evaulation
ICCO Grant Proposal Summary
Intermon/Oxfam Grant Proposal Summary
Reflections on Intermon/Oxfam Project
Sources
List of Borrowers which were chosen from the MIS for visits
List of Staff Interviewed during the Mission
List of People ( not ENDA-IA staff) which were met during the Mission
The Itinerary of the Evaluation’s Mission
Detailed Summary of the Evaluation’s Findings and Recommedations
The Tunisian Micro-credit Law
Results of the BDS Activities 2000-2002
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October 8, 2003
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EXECUTIVE SUMMARY
A.
Summary of Key Data
Key Data
y/e 2001
4,739
1,275,657
269
y/e 2002
7,726
2,118,458
274
2003 (Aug)
8,986
2,609,481
290
Projected Scenario I (100,000 Active Clients): Commercial Funding Available
y/e 2004
y/e 2005
y/e 2006
Number of Active Loans
17,000
26,300
40,700
Total Outstanding Loan Balance
4,700,000 7,500,000
11,600,000
Average Loan Balance
276
285
285
y/e 2007
63,200
18,000,000
285
y/e 2008
100,000
28,000,000
280
Projected Scenario II (25,000 Active Clients): No Sustantial Commercial Funding Available
y/e 2004
y/e 2005
y/e 2006
y/e 2007
Number of Active Loans
13,800
17,000
23,000
29,000
Total Outstanding Loan Balance
3,900,000 4,700,000
5,500,000
6,300,000
Average Loan Balance
283
276
239
217
y/e 2008
35,000
7,100,000
203
Number of Active Loans
Total Outstanding Loan Balance
Average Loan Balance
y/e 1999
1,808
484,565
268
y/e 2000
3,389
806,798
238
Other Indicators
Number of voluntary savings clients
Total balance of voluntary savings accounts
Retention Rate
Loan loss rate
Portfolio-at-risk > than 30 days late
Administrative efficiency
Operational self-sufficiency
Financial self-sufficiency
Return on assets
Adjusted return on assets
Year-end free market exchange rate (USD vs TD)
Per capita GDP(TND)
* some of these ratios were annualized
B.
y/e 2000
NA
NA
79%
0.48%
1.43%
1.4
2,654
y/e 2001
NA
NA
72%
0.13%
0.80%
48%
87%
82%
-5%
-8%
1.32
2,831
y/e 2002
NA
NA
82%
0.78%
0.46%
42%
92%
86%
-3%
-5%
1.26
2,926
2003 (Aug)*
NA
NA
76%
0.50%
1.02%
32%
121%
110%
11%
3%
Summary of Major Conclusions and Recommendations
This section provides only a summary of the major conclusions/findings and recommendations. Annex 10
provides a more detailed list of the conclusions/findings and recommendations of this evaluation.
Conclusions:


As one of the few, single purpose MFIs in the region, and the only one in Tunisia operating on
principles of micro-finance best practice, ENDA-IA is recognized by donors and practitioners as
a model for the development of the sector that is helping to set standards for this burgeoning new
industry in that country.
Though ENDA-IA lending operation is relatively young, its profitability and efficiency ratios are
better than the average of MENA region and of all MFIs reporting to the MBB and getting close
to the average of sustainable MFIs. The same can be said about its portfolio quality. The
percentage of payment on time in ENDA-IA is one of the best in the world.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
8



ENDA-IA is a learning organization that from almost nothing and with a very limited support and
resources in the early days grew to become one of the main successful models in the region and
the only successful one in Tunisia.
ENDA-IA is celebrating these days the end of the second phase of its institutional development:
the sustainability phase, after completing the development phase; it is preparing to enter the third
phase, the phase of growth, which is more challenging.
ENDA-IA has actively engaged strategic partners from among regional MFIs. ENDA-IA
benefited a lot from exchanging experience with these MFIs in the past and it is expected similar
exchanges to be very useful over the coming period while it is trying to implement the strategic
plan to reach 100 000 active clients all over Tunisia by the end of 2008.
Recommendations for ENDA-IA
Faced with the very real prospect of the complicated and discouraging regulatory environment in Tunisia,
ENDA-IA, should realize that the coming phase of growth is different and for ENDA-IA to become the
largest MFI in Tunisia serving 100 000 of the poor micro-entrepreneurs, this requires:





Getting rid of all the residues of micro-management and using every minute of the co-directors’
and the management team’s time in moving the organization forward toward those goals.
Securing the needed funds for the growth thru a combination of capitalization, grants and loans.
This funding will be for (i) loan capital; (ii) supporting decentralization; and (iii) technical
assistance in the area of exponential growth management.
Solving its legal status in a way which increases its accountability and accordingly its reliability
before its donor, but more importantly, its future investors while maintaining its ability to
implement micro-finance best practices. ENDA-IA should explore the option of becoming an offshore for-profit financial institution.
Knowing that legislation applying to micro-credit in Tunisia is a main obstacle confronting many
of ENDA-IA’s plans, its management should allocate part of their time to work on achieving
appropriate changes. ENDA-IA is the best-placed institution to provide the Tunisian authorities
with concrete proof of the need for an alternative to current legislation.
As ENDA-IA knows that it will move to the national level and that decentralization will become
a must, ENDA-IA should begin a pilot scheme in one of its existing branches to gain experience
and to develop its systems, and policies and procedures, to move into decentralization safely.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
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Chapter 1.
1.1
BACKGROUND
The Tunisian Economy
Tunisia has a population of 10 million and a population growth rate of just above one percent. The
economy has grown fairly strongly over recent years, but currently it is facing some difficulties due to the
impact of structural adjustment policies, increased competition, the opening of markets, and, more
recently, a downturn in tourism (an essential component of the economy), following the events of 11 th
September 2001.
Unemployment is officially around 16 per cent. But among young people, even those that have completed
University studies, the rate is higher. Indeed, in poor areas where a substantial proportion of youth have
failed at school and have no professional qualification or experience, unemployment is as high as 50 per
cent among the under-25s.
In Tunisia, while the rate of employment is higher than in many developing countries, finding
employment in formal jobs is especially difficult for the poorly- or un-qualified who typically inhabit
poor suburbs. Men in this situation often find work on a daily basis and spend much time looking - or not
looking - for work. Their meagre incomes are insufficient to support their families and their wives
therefore have little choice but to find work themselves. The typical job an unqualified woman can find is
as a house cleaner or semi-skilled factory worker. But such work is tiring, poorly paid, insecure and often
humiliating. Increasing numbers of women have discovered that self-employment through microenterprise allows them to earn a reasonable living in dignity, save substantial amounts of time travelling
from their homes to their workplace and moreover leaves them time to look after the children and their
domestic chores since they very often work out of their homes. These micro-enterprises usually build on
existing skills, and utilise local inputs and markets. Often, the chief constraint to their profitability and
expansion is the lack of access to a sufficient and affordable source of credit for working capital.
Government services and subsidies constituting the “social safety net” are under strain, and the number of
beneficiaries has declined in recent years, as well as the amount of subsidies. For instance in the area of
health care, the number of cards giving the right to free health care has declined considerably while
previously free services now have to be paid for at least partially. In these conditions, the poor are finding
it increasingly difficult to cope. Similarly, the subsidy on cereal products (couscous, bread, pasta), an
essential part of poor peoples’ diet, is gradually being reduced.
Rural exodus has been proceeding apace, as in most developing countries, and the majority of these neourban inhabitants swell the suburbs of most cities, especially the capital, Tunis. Most of them have few
skills that are appropriate to urban life but they gradually adapt. A typical suburb is Hay Ettadhamen
(Solidarity Township), to the north-west of Tunis, which in fact has become the third largest conurbation
in the country after Tunis and Sfax.
The product of unplanned housing on formerly agricultural land, Hay Ettadhamen’s population exploded
from some 7 000 in 1975 to over 300 000 today, according to some estimates. The area suffers from the
type of problem typically found in underprivileged suburbs: poor though improving facilities, high rates
of school dropout, high unemployment combined with few job opportunities, a degree of petty
delinquency and sometimes worse, and so on.
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October 8, 2003
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1.2
Poverty in Tunisia
Different resources talk differently about the level of poverty in Tunisia. The UNDP Poverty Report 2000
states that “in 1995, about 6% of Tunisia's people were poor, down from 33% three decades before. With
the majority of people now in urban areas, the incidence of urban poverty is higher than that of rural
poverty”.
The World Bank website, under the country brief about Tunisia, states that: “Tunisia has an impressive
record in poverty reduction over the years, cutting the overall incidence of poverty from 40 percent in
1970, to 16 percent in 1990, to 10 percent in 2000. However, poverty remains considerably higher in
rural areas.” It adds also that: “Unemployment has remained relatively high at about 15 percent of the
labor force. With a steady increase in the number of young graduates, it is considerably higher for new
job seekers.”
Other people in Tunisia claim that these are the official figures and that almost 20% of Tunisia’s people
are still poor. They also claim that this percentage increases dramatically to 30-40 % of the population
when we talk about the popular neighborhoods around the big cities.
According to Professor Azzam Mahjoub, A Tunisian Professor who made a study of ENDA-IA’s
program in the late ‘90s, “In 1990, the economically vulnerable, including a certain core group of people,
totaled more than a quarter of the Tunisian population”.
In his report, Mahjoub described poverty in Ettadamen11 township where ENDA-IA micro-credit program
started:
“Ettadhamen is the largest spontaneous-growth, urban-peripheral zone of habitation in Tunisia. In the
last national census of 1994, a population of 150,000 inhabitants was counted. Most of these people were
young.
 The socio-economic profile of Ettadhamen is characterized by:




A small number of active persons per household: with an average of 1.27 compared to 1.54 active
persons per household within the district of Tunis;
A predominance of men (80%) among the active, occupied population;
A high unemployment rate (25%) among young males;
A low level of education among the employed population: 21% are illiterate and 46.5% have only
a primary-school education.
 In terms of revenues, there are essentially three social categories:



Disadvantaged households (50%);
Low-income households (40%);
Relatively well-off households (10%).
Essentially, 30% of Ettadhamen’s population is below the poverty-level and 50% are considered
to be economically vulnerable”.
11
All the neighborhoods where ENDA-IA is working today or where it plans to begin working are similar to
Ettadamen. So it makes sense to apply these characteristics to all the places where ENDA-IA works.
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October 8, 2003
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1.3
Micro-credit Law12
In July 1999, the government of Tunisia adopted a law on micro-credit. The law put a ceiling of 5%
declining on the interest rate the credit program can charge on its loans. The law is not inspired by best
practices and makes it impossible to achieve sustainability.
Since it applies specifically to Tunisian associations using government money, it does not apply to
ENDA-IA’s program. Benefiting from being an international NGO using foreign donor money, ENDAIA has managed to follow micro-finance best practice and to create a model for a sustainable micro-credit
in Tunisia.
ENDA-IA nevertheless enjoys active and passive support from the government. On the active side, the
Ministry for Women has provided some $100 000 towards capital and the local délégués (sub-prefects)
provide administrative support when needed and sometimes send candidates for loans. As for passive
support, it comes in the shape of visits by senior officials (such as a former Minister for Women’s affairs,
the Governor of Ariana, the governorate where ENDA-IA’s main office is located and a Secretary of
State13), invitations to relevant meetings and training courses and similar recognition. ENDA-IA also
receives a steady stream of foreign visitors from both government and non-governmental institutions.
1.4
ENDA-IA Overview
ENDA-Inter-Arabe was founded in 1990 by the two people who continue to manage it today, as a branch
of ENDA Third-World, based at Dakar, Senegal. ENDA-IA began as a multi-sectoral development
organisation focusing on environment, health, education and youth activities.
In 1995, after a year-long field study and observation of on-going micro-credit projects in the region,
ENDA Inter-Arabe launched a micro-credit programme, CRENDA, with total capital of just $20 000. By
September 2003, the program portfolio is about $2 million coming mainly from donations and from the
revenues the program used to make when all of its operational expenses were paid by its donors. Having
about 9,000 active clients, the program is not only the largest and the only best practice program in
Tunisia but also it is becoming one of the major and leading programs in the Arab World.
ENDA-IA is managed by two committed hard working Co-Directors who were its founders. They are
committed to the overarching goal of a Tunisia free of poverty in which poor people, especially women
have the opportunity to change/improve their lives. In spite of the difficult environment under which they
are working, they have succeeded in building an institution on principles of sustainability, transparency
and fairness. The Co-Directors are supported by a growing group of young people the overwhelming
majority of who come from the same poor communities where ENDA-IA works and are instilled with its
vision and mission. Over the last 2 years, the co-directors have begun giving more attention to recruiting
staff capable of leading the organization after their departure. More work is still needed on this front.
Over the years ENDA-IA has cultivated a number of strategic partnerships to help meet its institutional
development needs, first with several donors and diplomatic community which not only helped in
providing the needed funding but also different kinds of support while working in an environment which
is not supportive of best practices. Second, the Ministry of Women’s and family Affairs, which by
12
More details about the Tunisian Micro-credit Law are provided in Annex XI
13
In Tunisia, a Secretary of State (secrétaire d’état) is ranked below a Minister (for instance, one ministry would
have a single minister but may have one or more secretaries of state).
Appraisal of ENDA-Inter-Arabe
October 8, 2003
12
providing some financial and training support to ENDA-IA indirectly emphasized its support to best
practices micro-finance. Third, MFIs in the region like FATEN, MFW, Al Amana, Zakoura, CARE Egypt
and others with which ENDA-IA exchanged experience while borrowing several of their lending
techniques, manuals, systems etc. and later with the Micro-finance Network of Arab countries where one
of the ENDA-IA Co-Directors is serving on its first Executive Committee. As the only micro-finance
program in Tunisia operating on principles of micro-finance best practice, ENDA-IA is recognized by
donors and practitioners as a model for the development of the sector and is helping to set standards for
this young and growing industry.
Table 1.1
1.5
Scenarios for the Future
Two scenarios were used to estimate ENDA-IA’s future loan portfolio growth and number of active
clients. In the first scenario, the micro-credit law will be developed or at least ENDA-IA will be allowed
to borrow from the local and/or international banks using the history of its portfolio quality and
guarantees from its donors. In the second scenario, the current micro-credit law and the current
circumstances which prevent ENDA-IA from borrowing from banks will continue.
Under the first scenario, ENDA-IA will reach about 100 000 active clients by the end of year 2008 with
an outstanding portfolio of about 28 million TND. The increase of the outstanding portfolio will come
from grants, soft and commercial loans and operational profit. ENDA-IA’s operations will expand away
from Tunis the capital to reach almost all the popular/poor neighborhoods of the major cities of Tunisia.
Under this scenario, ENDA-IA will have to decentralize its operations and systems.
Under the second scenario, ENDA-IA will reach only about 35 000 active clients by the end of 2008, with
an outstanding portfolio of 7 million TND. The increase in the outstanding portfolio will be covered by
grants from ENDA-IA’s donors and capitalisation. It is recommended that, under such a scenario, keeping
ENDA-IA’s work within the popular neighborhoods of Greater Tunis so that ENDA-IA will not have to
invest in decentralizing its systems and operations.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
13
Chapter 2.
2.1
INSTITUTIONAL FACTORS
Legal structure
ENDA Inter-Arabe was set up in 1990 at the initiative of its two co-founders (and currently co-directors)
and with the agreement of the Executive Secretary of ENDA Third World, with its headquarters, based at
Dakar, Senegal. It is formally simply a representative office of ENDA Third World in Tunisia. Since
1990, the institution has been granted complete independence to operate by the headquarters, raising its
own funds, opening and operating bank accounts, hiring and firing staff, determining its project policy
and so on. It sends audited accounts and activity reports to the headquarters and financial reports are
checked by the ENDA Third World auditor, Jacques Moynat, based in Switzerland.
For the Tunisian authorities, ENDA-IA is recognised as an international NGO, coming under a July 1993
law that provides for a specific decree to be issued for each organisation. It was only in March 1999 that a
decree was published (see appendix). The Tunisian authorities grant various privileges to ENDA-IA,
including the right to purchase equipment and also supplies free of VAT (but according to a list
established by ENDA-IA every five years and which may or may not be approved by the Interior/Finance
Ministry). ENDA-IA also benefits from various government programs designed to encourage recruitment
of young people, especially graduates, but these are available to any employer.
ENDA-IA is not allowed by current rules and regulations to access bank loans (even if guaranteed by
foreign currency). This is a major constraint at present to expansion of the micro-credit operations.
However, ENDA-IA is allowed to open and manage foreign exchange accounts.
ENDA-IA currently does not have its own governance structure since, as an appendage of the
headquarters that has its Board, it cannot set up a Board of its own. It is working on an Assembly of
appointed persons that will elect a 5-person Council from among them.
ENDA-TW encourages its “antennae” in other countries to take on the status of national associations,
and this could enhance the strength and the accountability of ENDA-IA as it would provide it with the
opportunity of having its own board which will be fully focussed on its micro-finance activities.
Unfortunately, taking into consideration the regulatory environment under which ENDA-IA is currently
operating, this is not yet really an option if the micro-credit program is to continue on its best practices
path to sustainable growth and outreach. Thus, ENDA-IA remains an appendage of its headquarters and
its legal capacity is seriously constrained (who do assets belong to, what is the institution’s ability to face
lawsuits…). This lack of clarity is denying ENDA-IA access to substantial funding sources (for instance
partly-subsidised loans from DeutscheBank) and training sources (WWB, despite its wish to build
connections with ENDA-IA, was stumped by this problem). More importantly, and as will be noted later
when scenarios for growth will be discussed, the current legal structure is preventing ENDA-IA from
accessing commercial funding which is desperately needed for such growth plans.
Understanding how complicated and sensitive is its situation, ENDA-IA is currently seriously considering
contracting an experienced specialist in international law to examine all the aspects of this situation, and
the options open to it. The objective would be to find a solution whereby, if possible, ENDA-IA, remains
a member of the ENDA-IA family, while conferring full autonomy on it. A sort of autonomy that on one
hand allows it to present itself as an independent MFI with a good governance body before its donors,
potential investors and partners. On the other hand, such autonomy should not cause ENDA-IA to lose its
current license from the Tunisian Government under which it has been operating legally over all the
Appraisal of ENDA-Inter-Arabe
October 8, 2003
14
previous years and under which it managed to follow best practice in micro-finance without being in
contradiction with the Tunisian law.
2.2
History and Vision
ENDA Inter-Arabe was set up in 1990 at the initiative of its two co-founders (and currently co-directors)
and with the agreement of the Executive Secretary of ENDA-TW, whose headquarters are based in
Dakar, Senegal. As all the other branches of ENDA-TW, ENDA-IA began as a multi-sectoral
development organisation focusing on environment, health, education and youth activities.
In 1995, after a year-long field study and observation of on-going micro-credit projects in the region,
ENDA Inter-Arabe launched a micro-credit programme, CRENDA, with total capital of just $20 000. By
August 2003, the program portfolio is more than 2.6 million TND (about $2 million) coming mainly from
donations and from the revenues the program used to make when all of its operational expenses were paid
by its donors. Having about 9,000 active clients, the program is not only the largest and the only bestpractice program in Tunisia but also it is becoming one of the major and leading programs in the Arab
World. ENDA-IA stopped all of its other activities and focussed only on the micro-credit program and
certain non-financial services designed mainly to serve the clients of it credit program.
ENDA-IA’s staff and management are looking at the ENDA-IA which covers all the Tunisian Districts
and which focuses more and more on women micro-entrepreneurs and keeps trying to deepen its outreach
and to reach poorer segments of those women.
Table 2.1-A shows that, since it was established in 1994, the amount of funding ENDA-IA has signed
grants with its donors for its micro-credit program is about 4.3 million TND, out of which more than 0.85
million TND have not yet been received. From this table we can see that for years (until 1999) ENDA-IA
lived on very small amounts of funding which they managed to use effectively to build up a clean
growing portfolio which attracted several donors later to invest more and more into their operations. This
money has been critical in building up its loan portfolio and developing the necessary systems to manage
and support more rapid growth. EU and the Spanish Cooperation have been the main sources of funding
using ICCO and Intermon/Oxfam as an intermediary for their support.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
15
Table 2.1-A: Donor Support (All Figures are in TND)
Donor's
Name
Ford Foundation
Donors's
Accronym
Country
Year
Terms
Amount(TND)
Status
50,000 Closed
20,293 Disbursed
Ford
EMMAUS
American
France
1994
1995
Program Launching
Loan capital
CISS
Italy
1996
MFI development
Europeean
commission/'International
Cooperation South South
9,350 Closed
642,719
EC/CISS1
Italy
1996-2001
Loan capital
277,366 Closed
Operating costs
365,353
125,999
Ministry of Women and
Family Affairs
MAFF
Loan capital
114,999 Closed
International Cooperation
South South
Tunisia
1998-2000
MFI development
Interchurch Organization
for Development
Cooperation
11,000
ACCT
France
1999
Microcredit conference
1,422 Closed
ICCO
Netherland
1999
Microcredit conference
34,279 Closed
IPADE
Spain
1999
Loan capital
33,888 Disbursed
MFI development
37,471 Closed
Embassies
UK & USA
1999-2000
193,170
INTERMON
FCIL
Spain
Canada
1999-2000
2000-2001
Closed
Loan capital
95,130
Operating costs
98,040
BDS
15,300 Closed
828,186
Spanich Agency for
'International Cooperation
Spain 2
Intermon-Oxfam/AECI
600,000
Operating costs
203,625
MFI development
24,561
BDS
13,000 On going
GTZ
Germany
2002
BDS
37,349 Closed
ENDA TW
Senegal
2003
MFI development
14,093 Closed
Netherland
2002-2003
BDS
4,446 On going
2,069,815
ICCO/EC3
Netherland
2002-2004
Loan capital
Operating costs
MFI development
Rockdale Foundation
Closed
2002
Fondation Hajit
Interchurch Organization
for Development
Cooperation / European
Commission
Loan capital
Greece
Mundo en Harmonia
ENDA Third World
2000-2002
Rockdale
USA
2003
Total
MFI development
827,926
On going
1,159,096
82,793
165,000 On going
4,295,780
Notes
1- Remain with CISS about 50 000 TND
2- We expect about 30 000 TND as intrest
3- We expect about 787 468 TND
Appraisal of ENDA-Inter-Arabe
October 8, 2003
16
Table 2.1-B: Donor support (All Figures are in TND)
Items
Amount in TND
Loan capital
Operation cost
MFI development
BDS
Others
Total
%
1,969,602
1,826,114
344,268
46%
43%
8%
70,095
85,701
2%
2%
100%
4,295,780
Table 2.1.B shows that almost 3.8 million TND (90% of the funding) was allocated for loan capital and
operational expenses. ENDA-IA today is financially sustainable14, with a portfolio now above 2.6 million
TND and they have about 0.6 million TND in cash in the bank and 0.85 million of their grants has not yet
been received. This means that ENDA-IA has more than 4.05 million TND for loan capital. This means
that ENDA-IA has not only compensated all the operational cost deficit it had since the inception of its
credit program but it has also added about 0.25 million TND from its profits to this portfolio. By this
ENDA-IA raised the amount allocated for portfolio from about 2.0 million TND to more than 4.0 million
TND which is a 2 million TND increase or 100% of the originally-allocated amounts.
2.3
Ownership and Board of Directors
Though ENDA-IA and since 199015, was granted complete independence by the headquarters, before the
Tunisian government and the international donor community, ENDA-IA is a branch of an international
NGO, and simply a representative office of ENDA-TW in Tunisia. ENDA-IA currently does not have its
own governance structure since, as an appendage of the headquarters that has its Board, it cannot set up a
Board of its own.
This international status, which allowed ENDA-IA to work according to micro-finance best practices and
to achieve operational and financial sustainability, is becoming a constraint on ENDA-IA’s future
capacity to leverage commercial funding to cover its ambitious exponential growth needs for loan capital
as commercial lenders are usually reluctant to lend to an NGO. The possibility of getting access to
commercial funding when this NGO does not have its own board and is only a branch of an international
NGO which is not known for its micro-finance activities.
To overcome this issue, ENDA-IA is seeking legal advice to see how it can keep its international status,
which allowed it to work according to best practices while having a more accountable legal structure
which will allow it to have better access to commercial funding.
In parallel to this, ENDA-IA is working on an Assembly of appointed persons that will elect a 5-person
Council from among them. This Council will act as a reference for the co-directors until ENDA-IA can
14
ENDA-IA’s financial sustainability for the first eight months of 2003 was 93%. In calculating this ratio ENDAIA assumes that their loan capital is a loan which costs 12% per year. This cost is calculated using the average
outstanding portfolio amount at the beginning and the end of the reporting period. When we recalculated this ratio
according to the MBB, it became about 110%.
15
The date of opening the Tunisian branch
Appraisal of ENDA-Inter-Arabe
October 8, 2003
17
register as an independent entity without jeopardizing its ability to do best practice micro-finance in
Tunisia. At that point, it is expected that this assembly will become the general assembly and the owner of
the new entity.
The proposed members of the assembly come from diverse educational and professional backgrounds
(development, education, banking, law, business and management) and convey a strong sense of ownership
of and vision for the organization.
Though it is not an official board of directors, the Council is expected to be responsible for:
 developing and directing strategic planning for the institution;
 developing and approving organizational polices and goals;
 creating linkages to key persons or counterparts, or strategic partners, in the government, banking and
private sectors and donor community;
 fundraising;
 monitoring and evaluating institutional performance at both management and programmatic level;
 representing ENDA-IA in the communities as needed; and,
 following up on the legal issue to try to find a solution.
During the evaluation mission, the consultant met with the four members of the Council. They were all
very impressive, knowledgeable and interested in doing something to help the poor people in their
country.
Table 2:
Possible Members of the Council and Honorary Committee
Name
Moncef ZAAFRANE
Tunis
Rym SAIDANE
Los Angeles
Rafik MISSAOUI
Tunis
Mohsen BOUJBEL
Tunis
Nebiha GUEDDANA
Tunis
Morched CHABBI
Tunis
2.4
Qualifications/potential contribution
Retired banker. Former minister.
Economist. Knows ENDA-IA well (worked for CRENDA-IA for 18
months; used CRENDA-IA as the case study in her doctoral thesis)
Development economist. Good knowledge of the micro-credit field in
Tunisia (MOWA Mechanism).
Businessman. Former minister.
Former Secretary of State for Social Affairs. CEO of the Family Planning
Office (ONFP).
Urban planning. Sociologist.
Excellent knowledge of poor neighbourhoods in Tunisia.
Alliances
2.4.1. ENDA-Third World: ENDA Inter-Arabe is part of a 60-unit strong international family
of organisations, ENDA- Third World, operating in 21 countries world-wide, all enjoying high regard
from donors. Each unit, including ENDA Inter-Arabe, is given a substantial degree of autonomy of
operations. With the exception of some $25 000 received for a medicinal plants project in 1993, and the
recent (since May 2003) sending of some $2000 monthly, ENDA-IA receives no material support from
the mother organisation. Micro-finance is not practised on any scale by other member of the ENDA-IA
Appraisal of ENDA-Inter-Arabe
October 8, 2003
18
family. Should ENDA-IA be subjected to political pressures, it is very likely that the other members of
the family would come to its assistance at international level.
2.4.2. Tunisian institutions: Over recent years, the main Tunisian institution with which
ENDA-IA has entertained fairly close relations has been the Mechanism for Support to Female MicroEnterprise, within the Ministry for Women and Family. ENDA-IA has managed to have no small
influence on the decisions taken by this body, in particular through obtaining invitations for best practice
practitioners as trainers. Within the Mechanism, some Tunisian associations would like to be able to
follow best practices like ENDA-IA, others prefer the BTS approach, making for conflicting attitudes
towards ENDA-IA.
Sustained relations are also enjoyed with the local Tunisian Agency for Employment (ATE), mainly
with respect to recruitments and the Agency is fully aware that ENDA-IA has increased its staff
substantially over the past several years and usually recruits those taken on as interns. The Agency has
also provided training in management and accountancy for ENDA-IA’s clients.
Among other Tunisian institutions with which ENDA-IA maintains relationships is the National Office
for Population and Family. The Office is behind a national network of NGOs against AIDS and ENDAIA now and then organises sessions with clients or their adult children on the subject of STDs and
reproductive health.
2.4.3. Donors:
Intermon/Oxfam (Spain), provided project support for ENDA-IA in the area of micro-finance from 1996
to March 2003. It has withdrawn, following the closing of the most recent project as a result of a policy
decision to cease operating in Tunisia.
ICCO (Netherlands) is currently providing project support to the micro-credit program, with European
Union support but also using a fairly substantial amount of its own funds. Insofar as the project is
supposed to bring ENDA-IA to full self-sufficiency, and given that ICCO also appears not to be planning
to continue working in Tunisia, it is unlikely support will be forthcoming from this source in future.
ICCO is one of the largest Dutch (and European) NGOs with considerable influence in the Netherlands
and at the EU Commission.
Rockdale Foundation is composed of a group of US businessmen interested in promoting micro-finance
initiatives in the Middle East. The Rockdale Foundation has been in contact with ENDA-IA for some two
years. In January 2003, it disbursed a grant to ENDA-IA for capacity building for a 12-month period. It
has declared itself open to other forms of support once the current grant has been completed. Also,
Rockdale has been supporting the development of an informal micro-finance network in the region, which
ENDA-IA is one of its founders and serves on its first Executive Committee.
CCFD: (Catholic Committee Against Hunger and for Development), France. This NGO has provided
relatively modest and sporadic support to various ENDA-IA activities for the past 10 years (none
currently). It also supports other ENDA units. It has a strong lobbying programme and defends causes in
countries where democracy is not fully operational.
2.4.4. Commercial Banks: Over the years ENDA-IA has developed strong working relationships
with local banks (Banque de l’Habitat, Banque de Tunisie and Union Internationale de Banques) to
help it meet the program’s banking needs. In the early days, all cash transactions (i.e. client check cashing
and repayment) were handled at the bank branches with daily repayment information provided to ENDAIA. Over time and as a result of the dramatic increase of ENDA-IA number of active clients and
Appraisal of ENDA-Inter-Arabe
October 8, 2003
19
accordingly number of payments and transactions, the banks began complaining and ENDA-IA had to
open its own cash desks in its branches so that the clients can make their payments there. Clients still
disburse the checks of their loans from the bank.
Aiming to build a credit history with Banque de l’Habitat and to protect its funding against the currency
exchange rate, ENDA-IA used to keep a good part of its assets in a time deposit account (interest bearing)
in hard currency (USD and Euro) and to overdraft on its current account with the guarantee of the time
deposit account. Unfortunately, the BH informed ENDA-IA recently that they can not do this any more as
it contradicts the Tunisian Central Bank policies and accordingly ENDA-IA had to exchange part of its
hard currency money into Tunisian Dinars to cover its overdraft. However, no official notification was
provided to ENDA-IA concerning this matter.
Currently, ENDA-IA is discussing with Banque de l’Habitat the possibility of giving its clients smart
cards. A general agreement was reached with the CEO16 of the bank and details have to be worked out.
This will not only save ENDA-IA time in the disbursement process and make it more efficient but will
also provide security for the client as they will withdraw their money from the ATM whenever they need
them and only the amount they will need. ENDA-IA would be the first MFI in the Arab World that
provides such a service for its clients.
ENDA-IA relationship with the two other banks is purely as clients. However, UIB has been purchased
by a French bank, Société générale, that supports micro-credit in several countries. It is hoped that
support for micro-credit activities will be forthcoming once Tunisian legislation permits.
2.4.5. Local Diplomatic missions: ENDA-IA is perceived by most of the Western diplomatic
missions, including the European Commission delegation, as an independent development organisation
that operates efficiently and transparently and provides a good return on money invested by donors in its
activities. Moreover, the current co-directors have developed strong personal ties with several
Ambassadors.
Among the Ambassadors concerned in 2003, the following can be cited: Belgium, France, Italy, Pakistan,
Spain, South Africa, Switerland, UK, USA as well as the European Commission. Several Ambassadors
and/or their wives have visited ENDA-IA. Similarly, Embassies and donors often direct missions
concerned with micro-credit but also social development, women’s empowerment etc to visit ENDA-IA.
2.4.6. Regional MFIs and Networks:
SANABEL: ENDA-IA is a founder member of the Micro-finance Network or Arab Countries
(SANABEL) and its co-director was elected as a member of the Executive Board. It is active in various
aspects of the network’s programme. Through SANABEL, ENDA-IA is in contact with some 20 MFIs
throughout the Arab region many of them are among the leaders of the industry in the region and in the
world. Actually ENDA-IA’s relationship with some of those MFIs like FATEN in Palestine, Microfund
for Women in Jordan and Alamana and Zakoura in Morocco goes back years before SANABEL was
launched (first contacts were made during the Micro-Credit Summit in Washington D.C. and at a regional
conference on micro-credit organised by ENDA-IA in March 1999). It is for the demonstrated benefits of
these relationships in exchanging experience and lessons learned that the Network was launched.
16
The CEO of Banque de l’Habitat, ENDA-IA’s main bank, was once president of a local NGO created by Save the
Children and has visited several micro-credit projects. He has made several concessions in terms of bank charges.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
20
Planet Finance. In December 2002, ENDA-IA joined the Paris-based Planet Finance network.
Relationships have so far been practically inexistent though ENDA-IA intends to make greater use of
Planet Finance services in future.
2.4.7. OTHERS: The African Development Bank recently transferred its headquarters to Tunis. It
has a micro-finance unit that should be expanding its activities over the coming months, though with
limited resources. Discussions have already been held and relationships can be expected to develop.
ENDA-IA has been invited to make a presentation at a seminar on micro-finance in November 2003.
Informal support has also been received from CGAP, from the ILO, from the French Development
Agency, as well as the World Bank, UNIFEM and UNDP that have sent delegations to visit the program.
2.5
Leadership
The two co-directors were the founders of ENDA-IA in 1990. Both have a strong background in
development, including as consultants for UN agencies such as FAO and IFAD, and in the NGO world.
They decided to come to Tunisia to contribute to the general development of that country. They both
worked as volunteers or semi-volunteers during the early years. They began in the area of environmentecology and rapidly moved to concentrate on economic and social development in poor suburbs of Tunis.
In 1994, it was noted that women had considerable entrepreneurial skills but lacked capital. This gave rise
to the micro-credit program launched in 1995 that, in 2001, became the sole activity of the organisation.
The co-directors have succeeded in creating an institution built on principles of transparency and fairness.
Over the last two years, regular updates on the organization’s institutional and financial performance are
circulated to ENDA-IA’s partners and friends. ENDA-IA just joined the MIX market and is planning to
send its information to the MicroBanking Bulletin. Over the years ENDA-IA has opened itself up to a
number of external reviews some of which were funded by ENDA-IA like that done by Azzam Mahjoub
and others where students who chose ENDA-IA or its clients as the subject for their thesis like Rym Ait
Kaki whose thesis (Microlending for the poor: the challenge of poverty alleviation and evaluation) at the
University of Southern California (2003), won a prize; Selena Kyle (USA) who wrote a paper also at
Standford University (1998) and who also won a prize; Margarita Castelli (Italy) who wrote a paper on
solidarity groups; and Juliette Leconte-Weisz (France) who wrote on impact of ENDA-IA’s program on
women’s status. These reports, as well as this appraisal, are entered into the public domain as part of an
effort to promote greater regional learning and exchange.
Enda’s co-directors have convened meetings of several long-established Tunisian development NGOs to
discuss the environment and plea for efforts to reform the law. They also seize every opportunity to raise
awareness of the importance and advantages of best-practice micro-credit, for instance during the
meetings organized by the Ministry of Women and Family Affairs.
One co-director is responsible for financial services and the other for non-financial services and
administration. Working in a very complicated regulatory environment, for years the co-directors kept the
important things in their hands. Over time, and as the micro-credit program began to grow exponentially,
they began to try hard to recruit a group of managers to support them and to take their place when they
decide to leave. Currently, they are surrounded with a group of young but promising managers. The
departure of the co-directors now would certainly leave a big void in the organization. The co-directors
are aware of this and working very hard to develop the capacity of the new young mangers of the
organization.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
21
In this regard, more recruitment for the senior staff and more delegation to the managers, with more
opportunity to make mistakes and learn from the mistakes would be very useful.
2.6
Human Resource Management
Table 2.3 Human resources statistical summary
2000
Number of total staff, end of period
Number of staff hired during period
Number of staff who left during period
Turnover rate (staff who left as a percentage of average number of staff)
Number of loan officers, end of period
Loan officers as a percentage of total staff
Number of administrative staff, end of period a
Number of line staff, end of period b
Average annual loan officer compensation (TND)c
Typical annual compensation for veteran loan officers (TND)
Average loan officer compensation as multiple of per capita GDP
Average loan officer compensation as multiple of average outstanding
balance per loan
Staff training expenditures as a percentage of annual administrative
budget (excluding financial and loan-loss costs)
a.
b.
c.
2001
2002
June 2003
34
18
2
6%
18
53%
11
23
6 720
7 980
3.01
3.48
57
26
3
5%
15
26%
21
36
6 720
7 980
2.82
3.06
56
2
3
5%
28
50%
22
34
7 200
8 400
2.87
3.31
65
16
7
11 %
37
57%
23
42
7 200
8 400
10 %
11 %
10 %
12 %
2.76
Administrative staff includes management, finance, bookkeeping, internal control, and management information system (MIS) staff; it
does not include loan officers, cashiers, and others who spend most of their time dealing with clients.
Line staff includes loan officers, cashiers, and other staff with direct and continual client contact.
Include in loan officers’ annual compensation such benefits as the “thirteenth-month” premium, accrued severance pay (even if not paid
annually), typical incentive bonuses, and the like, as well as employer social security contributions.
2.6.1. Structure: ENDA-IA does not currently have a personnel department, instead depending
on the Finance unit and the two co-directors to manage all personnel issues. ENDA-IA has recruited staff
to take care of the HR but, unfortunately, the right person has still not been identified.
Staff recruitment policy has been guided by a wish to hire young people as they left University in order to
train them immediately in best practices and motivate them for ENDA-IA’s mission and vision, and to
seek these recruits mainly among the population of the areas where the program operates.
The staff has risen from 6 working on micro-credit en 1995 to 80 as of September 2003. The age group is
mainly between 24 and 30 years.
Staff motivation is promoted through incentive systems for field staff as well as a “promotion from
within” strategy. Most staff show considerable dedication to their job, working long hours without being
paid overtime, and rising to the challenge of being pioneers in the field.
ENDA-IA is committed to recruiting, developing and retaining human resources, as is evidenced by the
quality of its staff. A personnel manual has been drafted and is being refined. Staff policies have
developed over the years and an outside consultant is available for advice on all matters pertaining to staff
management (rights and duties, hiring and firing…).
Appraisal of ENDA-Inter-Arabe
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Though Job Descriptions have been developed for most of the positions in the organisation, they are not
used yet as the reference for staff work and annual expected results etc. ENDA-IA needs to complete the
development of the job descriptions and to begin using them in its daily life and to develop a mechanism
to revise/develop them over time so that they will keep reflecting what is exactly required from each
position.
As some of the senior management positions are not filled yet (Financial Manager was recruited but will
begin working immediately after the end of this evaluation, and similarly, the HR manager, etc.), and as
the organization grew from a very small number of staff when the credit program began and everybody
used to be supervised by the co-directors, many staff members have the habit of going to the co-directors
every time they have a problem. Accountability needs to be reinforced through clear lines of authority
and supervision, and division of responsibilities and it should be explained to the staff over and over that
the organization cannot grow and expand if the co-directors have to deal with all the details/issues.
The organization needs to develop a system of performance evaluation, which should aim to
provide each staff member an opportunity to reflect on her/his own performance and to apply
modifications where needed.
2.6.2. Recruitment: Recruitment is done either by placing advertisements in the newspaper or
replying to “job wanted” ads. Many candidates are referred by the local Tunisian Employment Offices.
During 2003, ENDA-IA used the services of a recruitment agency for some senior positions but without
success. Sometimes current staff or indeed clients bring candidates. All candidates are interviewed by the
co-directors and sometimes other staff, except for loan officers and tellers and some other positions where
the interviews are done by the middle managers. All go through a training and probation period before
final recruitment. Sometimes promising candidates are fitted into vacant posts rather than specific
candidates being sought for specific posts.
As an NGO working in poor neighbourhoods, while it did not have a problem recruiting young people for
loan officer and admin positions, ENDA-IA faced a problem recruiting for its management level
positions. Very few people in Tunisia want to work with an NGO and in poor neighbourhoods. For most
Tunisians there is no future with NGOs and no guarantee that it will continue tomorrow. However, it was
noticed that this attitude is changing. Partially as ENDA-IA has been there for almost 14 years but more
importantly because ENDA-IA can show continuous exponential growth in its portfolio, active clients and
number of staff over time and began to show positive adjusted return on equity which means that it can
continue to live even if its donors decided to stop funding it.
2.6.3. Formal training: Some 10 per cent of ENDA-IA’s operating budget is spent on staff
training, either in-house or abroad. In-house training is conducted by foreign trainers (nearly always
micro-finance practitioners from other Arab countries), by local consultants (for general topics such as
communications, gender issues, the participatory approach, computer skills, and English) and,
increasingly, by ENDA-IA’s own staff.
Training abroad usually consists in sending staff to other MFIs in the region and sometimes to formal
sessions organised by institutions such as the ILO or the French Development Agency. The new regional
network, SANABEL, will increase training opportunities and exchanges in the region.
Training is mainly provided to field staff (supervisors and loan officers) and, concerning administrative
staff, to the finance department.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
23
All new recruits for the field undergo three months of training and field experience during which they are
closely observed to determine their interest for, commitment to and appropriateness for micro-credit.
Once they begin to constitute a portfolio, new loan officers take approximately one year to reach a
reasonable degree of competence and level and quality of portfolio.
2.6.4. Loan officer profile: Most loan officers are young (mid to late twenties or early thirties),
have a University degree (four years’ course) in various subjects but most commonly finance and
management, social management and the humanities. Originally, a university degree was not demanded
but it became increasingly clear that a capacity for reflection and analysis was an important qualification.
Apart from this, unemployment is high among graduates and government programs encourage their
recruitment by providing incentives such as paying part of the salary and social security contributions for
the first year.
Many come from the area where they work but increasingly from other areas as the number of staff
increases and the program increases its outreach (in some areas there are no graduates to hire). Most come
from relatively poor backgrounds.
Half of the loan officers are women and half men. Experience has shown that there are no gender barriers
to loan officers’ work, men being as capable of building confident relations with women clients as women
and vice-versa. Women do have problems concerning transport: men use mopeds or scooters but this
poses cultural problems for women.
2.6.5. Salary: ENDA-IA has traditionally offered competitive salary and benefit packages as
part of its strategy for attracting and retaining high caliber staff and because the effort demanded by staff
is considerably greater than in the public sector. Employment opportunities for new university graduates
are generally limited, particularly for those who are living in the poor neighborhoods where ENDA-IA
works where private sector jobs are rare.
Loan officer basic salaries are approximately twice the official minimum wage, to which performancerelated incentives are paid each quarter; these can double the salary or more but poor performers may
receive no incentive. Bonuses may also be paid to compensate particular efforts.
In addition to receiving salaries higher than public-sector ones and equivalent to private-sector ones, staff
are eligible for a thirteenth month which is generally paid at the end of the year. To retain its staff and
accordingly its investment in training them and the accumulated experience they gained, ENDA-IA
introduced recently a severance scheme which is accrued at a rate of one month’s salary for every year
worked and is made available upon separation from the organization, under certain conditions. Only those
who spend at least 4 years working for ENDA-IA are eligible for this severance.
In a country where unemployment levels are increasing, ENDA-IA is becoming more and more an
attractive employer. Though this is still not the case when it comes to recruiting senior experienced
managers. It is recommended that ENDA-IA review/raise the salary ranges paid for these positions, which
proved to be an obstacle till now to attracting more experienced managers to those positions.
From Table 2.4, we can see that only at the directors’ levels, ENDA-IA’s salaries are not competitive.
This could be behind the fact that ENDA-IA faced and is facing difficulties recruiting for senior
management positions. Though ENDA-IA tried always to narrow the gap in salaries between the
management and all the other staff, the competition increases for people who can fill those positions. It is
recommended that ENDA-IA revises its salary scale for the management levels based on a more detailed
Appraisal of ENDA-Inter-Arabe
October 8, 2003
24
survey for what the private sector is paying for those positions so that it can attract good candidates to fill
management positions.
Table 2.4 Salary Scale
All Figures are in TND
Parameter
(Monthly Salary)
Finance & Admin Director
Operations Director
Accountant
Branch Supervisors
MIS administrator
MIS data entry
Secretary
Loan Officers
Cashiers
ENDA-IA
1750-2500
1750-2000
1200-1500
1000-1200
1200-1500
700-800
500-600
600-900
500-600
Private sector
and Banks
3000-4500
1500-2000
600-800
500-700
500-700
250-400
250-350
300-400
250-350
* gross salary including CNSS+tax+bonus+severance
2.6.6. Staff Turnover: For years, ENDA-IA tried to avoid releasing any of its staff, even those
whose performance was below the average hoping that it will find a way to make them perform better so
that they can keep their jobs and ENDA-IA would not lose its investment in training them. Though this
approach worked with many, it did not with some. In 2003, some low-performers have been released.
This is why staff turnover has been low over the previous years and it has increased slightly during 2003.
It is expected that the turnover rate will return to where it was over the coming years.
2.6.7. Atmosphere: Most staff are committed and dedicated and generally speaking relations
among them are good (given normal tensions or incompatibilities that will always develop). Training in
communications remains, however, necessary and useful. Annual outings and occasional parties are
organised which nearly all staff willingly attend.
2.6.8. Dependence on outside consultants: As an MFI which found its way in the field of
micro-finance without any institutional support from the mother organization, which did not know microfinance, nor from its donors, compared to other MFIs in the region which were created by or within
international NGOs17 that provided them with the training and the systems etc., ENDA-IA always felt that
they did not get enough training and tried very hard to compensate that by calling on outside consultants.
Though ENDA-IA has begun recently to depend on its own staff in training newly recruited loan officers,
still, no clear plan has developed to shift from dependence for training on outsiders to ENDA-IA itself. It
is believed that ENDA-IA has reached a point where most of the training for its loan officers and middle
management can be handled internally. It is recommended that ENDA-IA begin building its own training
unit and team on which it will rely over the coming 5 years to train all of those staff which will reach the
100 000 active clients. This unit can begin now by recruiting one training coordinator who can deliver
some of the training activities but more importantly who can coordinate all the training activities of
ENDA-IA. At the same time, other staff of ENDA-IA with good training abilities and good experience in
17
Alamana (Morocco) was created by VITA, FATEN (Palestine), MFW (Jordan) and Almajmou’a (Lebanon) were
created by Save the Children/US and so on.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
25
ENDA-IA’s products and methodologies should be identified and asked to deliver some training activities
beside their other responsibilities. In this regard, a Training of Trainers course might be needed at a
certain point after those potential trainers are identified to equip them with appropriate skills. ENDA-IA
should rather use the external consultants strategically to meet particular challenges or issues at critical
stages of its institutional development.
2.7
Organizational structure
ENDA-IA operates out of 9 branches in the northern, western and southern suburbs of Tunis, providing
services to urban and semi-urban populations. The Head Office is located in Ettadhamen neighborhood
which is where the organization began its lending operations. Beside the co-directors, this office has
centralized Finance and MIS units. Each branch office is treated as a separate profit center with head
office costs allocated according to the corresponding number of branch offices. Operating procedures are
standard across the branch offices with a shared corporate culture and understanding of policy evident
among staff.
With the ambitious plan to multiply its number of active clients by 10 over the coming 5 years and to
reach 100 000 active micro entrepreneurs all over Tunisia, ENDA-IA has to begin planning to
decentralize its operations and to set up finance units and MIS at the branch level. It is recommended
piloting this process with one of the existing branches now and developing appropriate internal control
systems in order to be able to deal with this decentralization.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
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ENDA-IA’s Organizational Chart
Appraisal of ENDA-Inter-Arabe
October 8, 2003
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2.8
Management Information System (MIS)
2.8.1. Hardware and software: ENDA-IA used to track its loan using excel sheets until April
2001 when it bought EL-FATEN, a loan tracking system, which was developed by FATEN (Palestine for
Credit and Development) in Palestine. The new system (El FATEN) employs a client server technology.
It uses MS-SQL as the base engine and Ms-Access 2000 as the front-end interface. The system will adapt
to future growth in data and the number of operations performed without a noticeable decrease in
performance.
A compatible yet separate accounting software (Assistant Informatique) was bought in September 2000 to
handle all ENDA-IA’s financial reporting needs. In order to generate the financial statements at branch
level, the finance department has to consolidate these statements for ENDA-IA as a whole. ENDA-IA is
currently looking for a new accounting system that can handle the branches as cost/profit centers and also
generate financial statements at branch level and ENDA-IA as a whole without the need to consolidate
things manually.
With its new plans for expansion, ENDA-IA is seriously considering installing the MIS in some of its
new branches, especially those that are distant from its head office. ENDA-IA is discussing with FATEN
plans to switch from a centralized system (using leased lines between the branches and the main office) to
a replication system, where branches are linked digitally with data uploaded periodically to the main
database. This will allow ENDA-IA's branches to operate in a decentralized manner while they are less
dependent on the head office which is expected to decrease the load on the central system and to increase
its capacity.
2.8.2. Reports: El FATEN is capable of producing a comprehensive set of statistical and
analytical reports designed to cover MIS needs of monitoring and evaluation. Data is entered in real time
and reports can be produced immediately at the various administrative levels based on selected criteria.
Portfolio information can be sorted by region, branch, product, employee, client gender, client business,
etc. Combined the MIS and accounting packages produce the following reports.
At Branch Level:
 Loan Repayment Schedule
 Daily Payments Report
 Loan Account Activity
 Client Status
 Group Membership report
 Active Loans per Loan Officer
 Delinquency Reports by Loan officer
 Portfolio Quality by Loan Officer
 Summary Operational Report
At the Head Office Level:
 Detailed Aging of Portfolio at Risk by and Branch
 Delinquent Loans by Branch and Product
 Delinquent Loans by loan officer
 Summary of Portfolio at Risk by Branch and Product
 Detailed Income Statement Summary Report for branch managers
 Portfolio Aging
 Income Statement by branch
Appraisal of ENDA-Inter-Arabe
October 8, 2003
28


Consolidated Income Statement
Summary Balance Sheet
2.8.3. Use: Daily portfolio reports are generated at the Head Office level for each of the
branches on repayments, delinquency and outstanding balances. These reports are used by the credit
officers for immediate follow up in the field and reviewed weekly by management to ensure high
portfolio quality.
2.8.4. Staff: Currently, ENDA-IA has three data entry persons managed by the MIS
administrator who is in weekly contact with FATEN regarding support.





2.8.5. Security: The MIS has the following security features:
Multi privileged levels, depending on user password
A security log where sensitive data operations are stored (noting the date and user altering data)
High data integrity
A log noting any data entry exceptions (containing the responsible user ID, date of exception and
description of the exception)
A well Designed Backup scheme.
2.8.6. Processes and supporting information: To date there is a draft manual for the MIS,
ENDA-IA's team was trained by the designer of the system who visited ENDA-IA once when the system
was installed and another time after almost a year to provide the team with more training and to make
some special developments on the system for ENDA-IA.
ENDA-IA has an annual support contract which has been renewed automatically over the previous years.
Under this contract, FATEN is committed to solve whatever problems are faced by ENDA-IA team and
to keep updating ENDA-IA's MIS every time there is a new version.
ENDA-IA uses the Assistant Informatique accounting software, designed for for-profit companies to
manage their finances. The system is an accrual based accounting system which is compatible with but
not linked to the MIS. If ENDA-IA replaces its accounting system with a new one which is more
efficient and user friendly, this will save ENDA-IA a good amount of time spent in consolidating
financial statements. At the same time, the arrangement of having the accounting system not linked to the
MIS appears to be adequate and provides ENDA-IA with a monthly station to reconcile its figures and to
cross check between the MIS and the accounting systems.
The system is flexible and can support a range of loan products and methodologies, loan requirements,
various interest rate calculations, savings components, multiple payment types and frequencies, fees, etc.
The system also supports multiple languages including Arabic, English and French, with other languages
possible.
Appraisal of ENDA-Inter-Arabe
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2.9
Internal Control System, Audits, and Supervision
2.9.1. Internal control system: The Branch Manager/ supervisor/ responsible loan officer,
screens all new loan applicants (randomly visiting client groups and businesses), sits on the credit
committee of the branch where all the loan officers of the branch discuss new loan applications, and sends
the client/group file to the Main Office for approval by MIS. Once approved, a check is issued in the main
office by the finance officer (in charge of loans out) to be signed by the co-director and sent back to the
branch. All clients come to the Branch to receive their loan, with the treasurer responsible for cashing the
check at the bank on behalf of the group and disbursing to the members accordingly. All group
repayments are made in ENDA-IA branches to the tellers18. The teller has to give the treasurer or the
client a receipt with the amount s/he paid. By the end of the day and sometimes several times per day, the
teller sends19 the money to the bank and gets a receipt. Every day, the teller has to submit a copy of all the
receipts s/he gave to the clients, a list of all these receipts numbers and amount and total and receipts from
the bank showing that the whole amount was deposited in the bank. A finance officer in the main office,
who is in charge of the treasury, checks those receipts and reconciles them on a daily basis. Those
receipts are then entered into the MIS where they are checked and reconciled again against the Journal
Voucher produced from the MIS. All the receipts and journal vouchers are reconciled once again at the
end of the month against the bank statements, and income statements are generated for all branches and
for ENDA-IA as whole. A balance sheet is produced once every six months.
Regular spot-checks of clients are carried out by the Branch and Operation Manager.
Each Branch Office has its own bank account in the nearest bank20for the collection of loans. All of these
bank accounts are managed from and reconciled centrally at the main office. Branch offices operate using
petty cash, which is replenished monthly.
Only in the case of delinquent clients and with pre-approval from the operations manager, may the loan
officer together with the supervisor/branch manager go to the clients to collect delinquent payments in
cash. Every time they do, they have to give a receipt to the client. Either the same day or the following
morning maximum, collected cash must be given to the teller in exchange for a copy of the receipt.
The segregation of duties and the amount of internal control systems have been working well in ENDAIA. Only one fraud incidence has happened when a loan officer asked some clients to pay early and began
to use those payments for personal use. The case was caught and the officer was dismissed. At the same
time, an internal control officer was recruited. The job of this new officer is to visit the field on a frequent
but random basis and to meet with the clients and ensure that the policies and the procedures are respected
and that there are no more incidents in which a loan officer might abuse his position and deceive a client.
When ENDA-IA begins moving to other governorates outside Tunis the capital, it will not be possible to
keep its centralized finance and MIS if they want to keep the quality of service their clients value the best,
18
ENDA-IA’s clients used to pay pack their loans to the bank directly. With the exponential growing number of
those payments the banks began to complain and ENDA-IA had to recruit and train tellers in it branches to collect
payments.
19
When s/he does that, usually they are accompanied by either the driver or another member of the staff for security
20
In most of the cases and whenever it was possible, ENDA-IA chooses it branch office to be very close to a bank
branch office so that the clients can easily go to the bank to cash the check and the tellers can safely go the bank to
deposit the payments.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
30
which is giving loans fast. They have to decentralize their systems. It is recommended revisiting their
internal control system while planning for decentralization.
2.9.2. External audit: When ENDA-IA began, they did not have audited statements. Their
home office promised them to send them an auditor but this was never done. When they began to get
involved in Micro-finance and were introduced to best practices, they went back in 1998 and audited their
work for the years 1991-1994 and 1995- 1998. Since then, they began regular external audits on an annual
basis. But those statements covered all the work of ENDA-IA including micro-finance, no separate
statements were done for micro-finance activities. Audited accounts are sent to donors as well as to the
head office at Dakar.
In early 2001, the finance and admin manager of FATEN (Palestine for credit and development) visited
ENDA-IA and helped them to develop their financial system and chart of accounts in a way that allows
them to generate their financial statements on a monthly basis and to separate the financial statements of
the financial services from those of non-financial services.
This split of the financial statements was used by the external auditor when the financial statements of
2002 were audited.
2.9.3. Internal audit: ENDA-IA does not currently have an internal audit function but plans to
establish one. ENDA-IA relies on random spot checks by its co-directors of accounting department at the
main office level.
It is recommended that ENDA-IA not begin opening branches in other governorates in Tunisia and
decentralizing its operations and its finance and MIS before it recruits and trains an internal auditor.
2.9.4. Public and prudential supervision: As an international NGO, ENDA-IA is not
subject to any bank or other financial supervision.
2.10
Experience and Recommendations of Other Donors
As part of the evaluation mission, the consultant met with representatives of the Spanish Cooperation and
the European Union, the main two donors of ENDA-IA. Both donors characterize their relationship with
ENDA-IA as positive and would like to continue their partnership into the future. They both recognize the
very difficult and complicated regulatory environment under which ENDA-IA is operating and expressed
their satisfaction with the results accomplished in spite of those conditions. The Spanish Cooperation did
not exclude the possibility of providing ENDA-IA with another grant thru a Spanish NGO.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
31
Chapter 3.
3.1
SERVICES, CLIENTELE, AND MARKET
Services
3.1.1. Financial Services: In order to better meet its clients’ demands and needs and therefore
to increase the retention rate, and consequently safeguard - even increase - its market share, especially
vis-à-vis competition from new micro-credit operators, ENDA-IA diversified and refined its financial
products. A team of its staff which was set up at the end of 2001 has been endeavouring to improve
existing services and to develop other financial and non-financial products. The team has been constantly
listening to old and new clients during the multiple meetings organized at ENDA-IA office and at also
clients’ locations. Feedback was reflected on ENDA-IA’s products and new products were added.
Accordingly ENDA-IA’s retention rate increased from 73% over 2001 to 82% over 2002.
Currently, ENDA-IA has three major loan products under which there are different categories of product:
Group Loan (Majmouâa): The primary21 loan product, introduced in 1998, is based on groups of three to
five members, exclusively or mainly women, who are given small (150-200 TND), individual, 6-8
months loans for working capital to expand their businesses. Each group guarantees the repayment of
each individual member, so reducing the risk of non-repayment. The groups repay their loans and interest
in instalments every month at ENDA-IA's branches. Upon repayment of their loans, the groups become
eligible for new cycles of loans of gradually increasing amounts. Loans support a wide variety of existing
businesses including selling clothes, small grocery stores, selling vegetables, knitting, sewing and
hairdressing. This product has two categories: Majmouâa Jadid and Majmouâa Tatweer.
Individual Loan (Fardi): The methodology for individual loans has been tested by ENDA-IA since the
outset of the program, refined to meet the demand and needs of clients and adapted on the basis of
experience22. A fardi loan can be given exceptionally as a first loan subject to sufficient guarantees. Upon
repayment of their loans, clients become eligible for new cycles of loans of gradually increasing amounts.
This product has three categories: Fardi Jadid and Fardi Tatweer and Fardi Machrua and Istithmar
Parallel Loans: Under this product there are two categories
 (Solfa): To meet the needs of loyal clients, and at their request, ENDA-IA developed in 2001 a new
product - “express” loans - to complement ongoing loans. These loans are individual. This type of
loan would be granted for commercial activities during a given season or a period, such as the
month of Ramadan and the start of school year, making it possible for the client to increase and
diversify their inventories and to make additional profits. These loans are granted in particular to
the most faithful clients in the old areas.
 Opportunity loans (Forsa) were introduced in 2002. Similarly granted in parallel to ongoing loans
(collective or individual), this type of loan makes it possible for a client to seize a particular
opportunity and is to be repaid over four months.
21
22
In 2002, group credit represents the main product of the program with 68 percent in value of granted loans and a total of 2,663 active groups.
Individual loans account for 26%, in value of the granted loans in 2002
Appraisal of ENDA-Inter-Arabe
October 8, 2003
32
Table 3.1 Loan Products
Group Loans
Majmouâa Tatouir
200 - 1200 (TND)
1.25 % flat per month
Individual Loans
Fardi Jadid
200 - 500 (TND)
1.25 % flat per month
Loan Size
Interest Rate
Loan Terms
Purpose of Loan
6 months
Working capital
Compulsory savings
Repayment Location
No
Cashier at ENDA-IA’s branch
Lending methodology
Group guarantee
Loan processing time
New client : 2 weeks
Renewal loan : 48 hours

Existing micro-activity

Group of 4/6 majority
women

Good reputation

Debt management
capacity
Renewal loan : 48 hours
No
 100-150 TND
- 6 TND for first time
- 5 TND for Renewal loans
without delinquency
- 6 TND for Renewal loans
with 1-3 days late
-10 TND for Renewal loans
with >3 days late
 200 – 500 TND
- 10 TND for first time
- 6 TND for Renewal loans
without delinquency
- 10 TND for Renewal loans
with 1-3 days late
-15 TND for Renewal loans
with >3 days late
1 % per month on the loan (
within 1 TND per month per
client as Life and Disability
Insurance)
Monthly
No
 200-500 TND
- 6 TND for Renewal loans
without delinquency
- 10 TND for Renewal loans
with 1-3 days late
-15 TND for Renewal loans
with >3 days late
 600-1200 TND
- 10 TND for Renewal loans
without delinquency
- 15 TND for Renewal loans
with 1-3 days late
- 20 TND for Renewal loans
with >3 days late
No
- 15 TND for first time
- 10 TND for Renewal loans
without delinquency
- 20 TND for Renewal loans
with 1-3 days late
-25 TND for Renewal loans
with >3 days late
No
- 15 TND for Renewal loans
without delinquency
- 20 TND for Renewal loans
with 1-3 days late
-25 TND for Renewal loans
with >3 days late
No
 1200-1700 TND
- 20 TND for Renewal loans without
delinquency
- 25 TND for Renewal loans with 1-3
days late
-35 TND for Renewal loans with >3
days late
 2000-3000 TND
- 30 TND for Renewal loans without
delinquency
- 35 TND for Renewal loans with 1-3
days late
- 40 TND for Renewal loans with >3
days late
No
1% per week
No
40 TND
1 % per month on the loan (
within 1 TND per month per
client as Life and Disability
Insurance)
Monthly
1 % per month on the loan (
within 1 TND per month per
client as Life and Disability
Insurance)
Monthly
1 % per month on the loan (
within 1 TND per month per
client as Life and Disability
Insurance)
Monthly
0.5 % per month on the loan ( within
1 TND per month per client as Life
and Disability Insurance)
-
0.75 % Flat per
month
Monthly
After 4; 6; 8; 12 Week
Monthly
Qualifications
Grace period
Application Fees
Commissions
Frequency of payment
8 - 12 months
Working capital
Investment
No
Cashier at ENDA-IA’s
branch
Group guarantee




Existing micro-activity
Group of 4/6 majority
women
Good reputation
Debt management
capacity
6 months
Working capital
No
Cashier at ENDA-IA’s branch

After 2 loans in GL with
good repayment history

Direct individual with a
solid guarantee
New client : 2 week
Renewal loan : 48 hours

Existing micro-activity

Good repayment
capacity (Cash flow/
B.sheet of the Micro
enterprise)

Good reputation

Debt management
capacity
Fardi Tatouir
600 - 1000 (TND)
1.25 % flat per month
Fardi Machroua Kabir & Istithmar
1200 - 3000 (TND)
1.25 % flat per month
8 - 12 months
Working capital
Investment
No
Cashier at ENDA-IA’s
branch

After 2 loans in Fardi
Jadid with good
repayment history
10 - 12 months
Working capital
Investment
No
Cashier at ENDA-IA’s branch
Renewal loan : 48 hours



Express Loans
Solfa
Forsa
200 - 500 (TND)
1000 (TND)
1 % flat per week
1.25 % flat per
month
4 – 12 week
4 months
Seasonal activity
Seasonal activity
Majmouâa Jadid
100 - 500 (TND)
1.25 % flat per month

Existing micro-activity
Good reputation
Debt management
capacity
Good repayment
capacity (Cash flow/
B.Sheet of the Micro
enterprise)
No
Cashier at ENDA-IA’s
branch
Individual
No
Cashier at ENDAIA premises
Individual
Renewal loan : 48 hours
24 hours
24 hours






After 2 loans in Fardi Tatouir
with good repayment history
Existing micro-activity
Good reputation
Debt management capacity
Good repayment capacity
(Cash flow/ B.Sheet of the
Micro enterprise)


Proof of a

business
opportunity
Last 3 loans

without
delinquency
Debt management 
capacity
Appraisal of ENDA-Inter-Arabe
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Proof of a
business
opportunity
Last 3 loans
without
delinquency
Debt
management
capacity
 Voluntary savings. As a non-governmental organization, which is not regulated by the
central bank of Tunisia, ENDA-IA is not licensed to mobilize voluntary savings. Only
banks and the Post Office are allowed to do so.
3.1.2. Non Financial Services: ENDA-IA was not away from the debate re whether or not an
MFI should provide non-financial services to its clients in addition to the loan. ENDA-IA introduced nonfinancial services (or what ENDA-IA calls Business Development Services (BDS)) since 1996. These
include the following: training in book-keeping and management; technical coaching; assistance with
procurement and marketing; imparting information and advice; outings; parties. Clients pay for these
activities, some being self-financed and others, especially formal training, being highly subsidised by
donor money.
Looking at the activities ENDA-IA has implemented under what is called BDS, we find two kinds of
activities:
The first kind is activities like training, health and education activities etc. The second kind is mainly
activities which help the clients in their procurements and marketing like outings, exhibitions and
parties23. Talking to ENDA-IA’s staff and clients, it was noticed that the first kind of activities were:

Organisation driven: ENDA-IA, which began in 1990 as a multisectoral organisation and gained
experience in that field, felt that they knew how to do them. For example, ENDA-IA had already
gained experience of this type of activity through the youth program it had been running since
1993 (stopped in 2000) as well as the health education project (1997 – 2000).

Donor driven: that feeling was enhanced with the demand of the donors in most of the cases to
implement these activities. Some donors insisted on having them as part of the grant and in some
cases the whole grant to ENDA-IA was conditional on the acceptance of ENDA-IA to implement
that part, which is usually a small part compared to the whole grant.

Those activities, especially formal training, are very expensive24 and sustaining them was not
possible even on the long run. As a result of this and the small amount of money allocated for
them in the grants, the outreach was always very limited25 and counted in many cases by tens
when ENDA-IA’s number of active clients was exponentially increasing to reach thousands and
thousands of clients.

Clients do not have the time to attend the course and most prefer to spend the time in their
enterprise and with their children.
While the second kind of activities were:
 Demand driven: ENDA-IA introduced these activities based on requests from the clients and
accordingly clients are not only willing to participate in them but also to pay the fee
 The cost per client is very small
23
Assistance with procurement is achieved through organising trips to specific towns where supplies can be purchased for less than at Tunis.
Assistance with marketing is achieved thru trade fairs where clients can set up stands and sell to people during 3-5 day fairs. Fairs are popular
since sales are for cash (normally, sales are on credit) and the fair provides clients with an opportunity to meet and possibly do business with
other clients or even visitors.
24
In some cases the cost of training per client reached about 200 TND
25
Annex XII shows the #s of beneficiaries during the period June 2000-May 2001 and for the year 2002
Appraisal of ENDA-Inter-Arabe
October 8, 2003
34

ENDA-IA could cover the cost of these activities from the very small fee they collected from the
participants and in some cases made some profit (surplus).
Recommendations on Non-Financial Services: It is recommended that:





3.2
ENDA-IA should stop doing the first kind of activities and to focus on the second kind only. This
includes doing the second kind on a wider scale and in a more organised manner under which all
the clients know when and where the exhibitions are going to be held at the beginning of every
year so that they can prepare themselves and produce the amount of products they would need to
market in those exhibitions.
ENDA-IA can refer its clients to training activities available in the market provided either by
governmental or other non- governmental NGOs without spending so much time on that.
If the micro-credit program (CRENDA) split from ENDA-IA under certain regulatory
arrangements, to keep the non-financial services under the ENDA-IA.
Any future piloting for new non-financial services or BDS should be based on a real demand
from the clients and not on donors’ requests.
ENDA-IA might want to benefit from Alamana’s BDS new initiative (Takween Jadid), where
short visual messages are developed on CDs. ENDA-IA might want to broadcast those messages
for free in its branches so that its clients can see them and benefit from them while they are there
to receive their loans or to make their payments. In such a case, it makes sense to consider this is
as part of the cost of the financial services, which is paid for by the clients and not to charge extra
fee for it. If this proved to be useful, ENDA-IA could then develop new messages over time.
Outreach
3.2.1. Branch Structure: ENDA-IA operates in the northern (Mnihla, Ettadhamen, Omrane
Superieur), western (Douar Hicher, Oued Ellil) and southern suburbs (Hrairia, Ezzouhour, Sijoumi,
Kabaria, Sidi Hassine). It is operating out of 9 branches in 12 delegations now all in underprivileged
neighborhoods.
Table 3.1 Distribution of the institution
2000
Branch offices
Posts (service-providing units not located
in permanent, dedicated quarters)
Subdistricts ( Delegations)
Employees per branch
Loan officers per branch
2001
2002
5
6
7
August 2003
9
9
4
4
9
4
3
10
5
4
12
5
4
Each branch has 4-5 loan officers, a teller and either a supervisor or one of the loan officers is playing the
role of the supervisor. All the client meetings and loan disbursements and payments are handled in the
branch. All accounting and MIS matters are handled from the main office. ENDA-IA is considering
decentralizing some of these accounting and MIS functions to the branch level especially, as it is
preparing to move outside Tunis to other governorates.
ENDA-IA considers the branch the cost/profit center for its operations. It generates portfolio reports,
income statements and ratios report on a monthly basis for each branch so that each branch can see how it
is doing in comparison to other branches and to the whole MFI’s averages too.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
35
As noted above, ENDA-IA has been using two management models in those branches. In some branches
there are supervisors whose full time job is to lead the branch and to manage the staff and to make sure
that the branch’s plans are implemented etc. Those supervisors do not manage a portfolio directly but thru
loan officers. In other branches, there are no supervisors and instead, one of the loan officers is defined as
officer in charge and s/he beside managing his/her own portfolio, handles general management issues in
the branch. In the region and in the world, the two models are working successfully and each has its pros
and cons. The only problem is usually that an MFI chooses one model and implements it in all of its
branches. The fact that this is not the case in ENDA-IA has created some confusion about the role of the
supervisor/officer in charge and accordingly began to require two sets of policies and procedures.
It is understood that ENDA-IA needed to try the two models for a while, but it is recommended
that ENDA-IA should choose one of them now and implement it in all of its branches.
2.10.1 Loans:
Table 3.2: Outreach Summary in TND
y/e 2000
y/e 2001
y/e 2002
30/6/03
6,566
7,167
Loan product: Majmouâa
Number of active clients at end of period
2,934
4,065
Amount of Outstanding Portfolio (EOP)
501,521
852,059
1,357,390
1,557,579
Average balance per loan (TND)
622
722
670
772
Average balance per client (TND)
128
166
168
203
4.8 %
5.9 %
5.7 %
671
1,176
420,251
743,514
900,875
Average balance/client as % GNP/capita
Loan product: Fardi +Istithmar
Number of active clients at end of period
Amount of Outstanding Portfolio (EOP)
440
301,277
1,551
Average balance per loan (TND)
599
538
495
530
Average balance per client (TND)
599
538
495
530
22.6%
19.0 %
16.9 %
Average balance/client as % GNP/capita
Loan product: Express
Number of active clients at end of period
15
12
50
157
Amount of Outstanding Portfolio ( EOP)
4,000
3,347
17,553
61,373
Average balance per loan (TND)
133
306
209
251
Average balance per client (TND)
133
306
209
251
5.0 %
10.9 %
7.1 %
4,739
7,726
8,70926
1,275,657
2,118,458
2,519,828
Average balance/client as % GNP/capita
Loan product: All products
Number of active clients at end of period
3,389
Amount of Outstanding Portfolio (EOP)
806,798
Percentage of clients who are women
86%
78%
81%
91%
Average balance per loan (TND)
193
219
218
261
Average balance per client (TND)
193
220
220
266
7.3 %
2,654
7.8 %
2,831
7.5 %
2,926
Average balance/client as % GNP/capita
Reminder: GNP Per Capita
26
Total number of active loans is 8,875 as the 157 Express loans are given to active clients under other products.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
36
ENDA-IA’s outstanding loan portfolio by the end of June 2003 was approximately TND 2.52 million
with 8,875 active loans. ENDA-IA’s main loan product – Majmouâa – comprised over 60 percent of
outstanding portfolio and over 80 percent of active loans. Over the last couple of years, ENDA-IA began
to diversify its loan products. They redesigned their individual loan and introduced the "Forsa" loan (see
section 3.1.1.). The MIS is able to provide all the necessary information per loan product, such as arrears,
portfolio at risk and other indicators per loan product. However, ENDA-IA does not yet look at the
sustainability and profitability of each product by itself.
With their ambitious growth plans, and exactly as they began to track revenues and expenses and all the
ratios and indicators by branch which was considered as the cost/profit center, ENDA-IA should begin to
routinely calculate and report arrears, portfolio at risk, profitability and efficiency ratios and other
indicators per loan product too. They need to be able to know which product is doing well and which
product needs adjustments or changes etc.. to perform better.
In the analysis below, all loan products are lumped together.
3.2.3. Depth of Outreach: From the table above we can see that the average balance/client as
% of GNP/capita is about 7.5%. This indicates that ENDA-IA has a very deep outreach and they are
targeting the poor. According to the MicroBanking Bulletin, this ratio is the Middle East North Africa
(MENA) 17%, is the lowest among the other regions where it ranges between 50%-86%.
From the table below we can also notice that in 2002, only 2.74% of the loans disbursed by ENDA-IA
were more than 1000 TND and that more than 82% of the loans disbursed were equal or below 500 TND.
This shows that though ENDA-IA’s loan size ranges between 100 TND and 3,000 TND, the
overwhelming majority of those loans are equal or less than 500 TND loans.
Table 3.3: Distibution of Loans Disbursed by ENDA-IA in 2002 according to Loan Size
Loan Size
Number
Cumulative
TND
of Loans
%
%
< 150
1,447
11.33%
11.33%
200
4,021
31.48%
42.80%
300
2,356
18.44%
61.24%
400
1,318
10.32%
71.56%
500
1,351
10.58%
82.14%
600-1000
1,932
15.12%
97.26%
> 1001
350
2.74%
100.00%
Total
12,775
100.00%
Appraisal of ENDA-Inter-Arabe
October 8, 2003
37
3.3
Clientele, Market and Competition
3.3.1. Clients and Poverty Targeting: The ENDA-IA program targets “entrepreneurial poor”,
mainly women, who are at or below the poverty line, who have existing, and often home-based, economic
activities currently in popular neighbourhoods of North West Tunis. In very few cases, ENDA-IA gave
loans to women with no existing business but who claimed to have experience. Though they paid back
their loans, a very high percentage of those dropped out after the first loan. ENDA-IA is currently
considering seriously stopping that and moving toward a clear definition of its target group as the
“entrepreneurial poor”. The “entrepreneurial poor” are defined as disadvantaged individuals with existing
economic activities and skills, rather than those with no business experience. Programs around the world
show that targeting those with no experience or skills is risky and normally unsuccessful without
significant training inputs. Targeting the entrepreneurial poor requires little or no additional training.
Therefore, larger numbers of individuals can be reached in a cost-effective manner with a reduced
likelihood of business failure.
Also, in its 5-year projections, in one of the scenarios of expansion, ENDA-IA was encouraged to look
beyond working in the Greater Tunis. Should certain conditions be fulfilled27, to begin considering
working on the national level to eventually try to reach all the “entrepreneurial poor” in the poor
governorates of Tunisia.
Client Profile: ENDA-IA clients must be from the same geographic area as other members of their group
and have an existing business. ENDA-IA loan officers have the responsibility to visit the client and
conduct a basic assessment on the status of the business and determine the ability of the client to repay the
loan. Since the target group is mainly women at or below the poverty line, education and income levels
are low. Many clients are not educated and most earn below the per capita GDP.
Typically, ENDA-IA borrowers are engaged in a variety of economic activities, including:
 Trading/Retailing: vegetables and fruits; grocery items; clothing; cosmetics
 Production: knitting/sewing; making and selling cakes etc.
 Small Animal Husbandry: breeding and selling chicken, rabbits and other poultry;
 Services: running hairdressing salons; photography; renting video games.
In 2002, almost 70% of ENDA-IA loans were for trading activities, 22% for production and handicraft
activities, 6% for services and 2% for animal raising activities. Looking at the distribution of active
clients recently by activity gives us almost the same percentages. It is expected that the percentage of
loans identified with each of these activities over the coming five years will remain roughly similar to
current trends unless ENDA-IA decides to change them by putting limitations on loans for a certain
activity. However, those clients involved in production activities are expected to require more money to
increase their assets and will grow to about 40%-50% of the portfolio within five years.
It was also noticed from the field visits and from the MIS reports that a good percentage of those clients
within the trading category are those who go to Ben Guerdane28 to buy clothes and other things for
cheaper prices to come back to sell them in their neighborhoods. More than one third of the trading
category (one forth of all clients), are classified under this specific category. Though till now there was no
problem and those loans were paid back and many clients, including those who began their business by
27
Those conditions are explained in another part of this document
28
This is a town close to the Libyan border where many goods are for sale at very low prices.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
38
getting a loan from ENDA-IA and went to Ben Guerdane, declared that they benefited a lot from the loan
and the business. It was recommended to deal with this issue in tracks:
-
the immediate track is to put controls on this product: a ceiling on how much these
loans or any other sub-activity will consist from ENDA-IA’s portfolio; a ceiling on the
loan size; only one or two clients per group with this activity etc.
the other track is to begin working on designing a new product for this activity, with a
ceiling on the amount of the loan, and with a short term (2-3 months), etc.
-
Table 3.4: Loans disbersed by activity financed (year 2002)
Sector Activity
Activity financed
Commerce
New clothing
Groceries
Fruit and vegetables
Second-hand clothing
"Suitcase trade"
Hardware goods
Crockery
Nuts and snacks
Perfumery
Poultry and poltry products
Sundries
Spices
others
TOTAL
Seamstresses
Home-made bread baking
Weaving
Production/Handcraft
Embroidery_crochet
Pasta
others
TOTAL
Hairdressing saloons
Educational services
Services
Restaurant
others
Animal rearing
TOTAL
Cattle raising
Petshop
(% sector)
(% total activity)
32.97%
10.10%
8.94%
7.94%
7.76%
6.98%
3.54%
3.07%
2.89%
3.25%
2.77%
2.16%
7.65%
69.71%
58.27%
11.98%
7.03%
6.17%
4.24%
12.30%
21.95%
41.00%
12.00%
10.00%
38.00%
6.81%
41.00%
12.00%
1.53%
22.98%
7.04%
6.23%
5.53%
5.41%
4.87%
2.47%
2.14%
2.01%
2.26%
1.93%
1.50%
5.33%
12.79%
2.63%
1.54%
1.35%
0.93%
2.70%
3.09%
1.08%
0.63%
2.01%
1.17%
0.36%
Appraisal of ENDA-Inter-Arabe
October 8, 2003
39
3.3.2. Market: According to a study “Micro-enterprises in Tunisia, 1997” conducted by the
Ministry of Economic Development and published by the National Statistics Institute, the number of
Micro-entrepreneurs (non agricultural sectors) in Tunisia was estimated to be some 423 000, around 15%
among them women29. A World Bank/CGAP study in 2001 estimated potential micro-credit clients at
about 125 000.
Table 3.5: Potential Female Micro-entrepreneurs in Tunisia in 2002
District
(wilaya)
Population
1994
Population
2002
(30%)
(20 %) <Poverty
MicroEnterp
line
renuers
709,726
141,945
42,584
(65%) Active
(50%)
Female
1 TUNIS
887,803
1,091,886
2 ARIANA
297,683
366,113
237,973
47,595
14,278
7,139
3 BEN AROUS
371,745
457,199
297,180
59,436
17,831
8,915
4 MANOUBA
271,611
334,047
217,131
43,426
13,028
6,514
5 NABEUL
578,618
711,627
462,558
92,512
27,753
13,877
6 ZAGHOUAN
143,036
175,916
114,346
22,869
6,861
3,430
7 BIZERTE
483,086
594,135
386,188
77,238
23,171
11,586
8 BEJA
303,853
373,701
242,906
48,581
14,574
7,287
9 JENDOUBA
404,783
497,832
323,591
64,718
19,415
9,708
10 LE KEF
272,352
334,959
217,723
43,545
13,063
6,532
11 SILIANA
244,910
301,208
195,785
39,157
11,747
5,874
12 KAIROUAN
532,709
655,165
425,857
85,171
25,551
12,776
13 KASSERINE
386,908
475,848
309,301
61,860
18,558
9,279
14 SIDI BOUZID
377,143
463,838
301,495
60,299
18,090
9,045
15 SOUSSE
433,709
533,407
346,715
69,343
20,803
10,401
16 MONASTIR
363,901
447,552
290,909
58,182
17,455
8,727
17 MAHDIA
335,744
412,923
268,400
53,680
16,104
8,052
18 SFAX
733,687
902,342
586,523
117,305
35,191
17,596
19 GAFSA
307,513
378,202
245,831
49,166
14,750
7,375
89,055
109,526
71,192
14,238
4,272
2,136
21 KEBILI
131,914
162,238
105,454
21,091
6,327
3,164
22 GABES
311,713
383,368
249,189
49,838
14,951
7,476
23 MEDENINE
386,185
474,959
308,723
61,745
18,523
9,262
24 TATAOUINE
135,703
166,898
108,483
21,697
6,509
3,255
421,391
210,695
20 TOZEUR
Total
8,785,364
10,804,890
7,023,178
1,404,636
21,292
Grand
Tunis
43,860
As an organization which is planning to focus more on women micro-entrepreneurs in Tunisia, ENDA-IA
did its own conservative calculations for the market which were not so far from the results of the study
above. Those calculations are shown in the table 3.5 According to these calculations, there are more than
0.42 million micro-entrepreneurs in Tunisia and at least half of them are women, which implies that there
are, today, more than 200 000 women micro-entrepreneurs in Tunisia. This is twice the number ENDAIA-I hopes to reach by 2008.
ENDA-IA estimates the total market for micro finance for women to be around TND 200 million. The
market was estimated by multiplying the potential number of women-headed micro enterprises by one
third of GNP per capita. As the GNP per capita was about 3000 TND in 2002, and hence an average loan
size of TND 1000 was used. As ENDA-IA will keep focus not only on women but also on the poorer
segments of women micro-entrepreneurs, they expect to serve the 100 000 active clients by 2008 with
only 30-40 million TND portfolio.
29
Many of ENDA-IA clients who have home based activities whose overwhelming majority are women are not
counted in this survey. ENDA-IA estimates the # of women micro entrepreneurs to be more than 200,000.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
40
3.3.3 Competition: ENDA-IA is the only micro-finance institution (MFI) in Tunisia working
according to best practices and focusing on women. Because of the Tunisian micro-credit law, all of the
other programs are very small, offer loans at subsidized rates, are not business-oriented and are far from
sustainable.
Although they may initially be attractive to (potential) ENDA-IA clients as a source of
cheap loans, these loans are also accompanied by “cheap” service. Many of these programs take months
to evaluate loan applications and do not offer continued access to reliable finance. Every time the
evaluator asked one of ENDA-IA clients why she took the loan from ENDA-IA and not from any other
credit program where the interest rate is very low compared to ENDA-IA, the answer was always the
same: “It takes so long to get a loan from there, it could be 6-8 months waiting, and you have to have ktaf
(shoulders)30 to get a loan from there”.
There are no guarantees that this will be the case in the future as several credit NGOs, especially those
that were there with ENDA-IA before the Tunisian micro-credit law, have been convinced about the
ENDA-IA model and best practices and have been lobbying to change the law so that they can begin
charging high enough interest rates to cover their operational costs from their own revenues and to stop
relying on the BTS for their survival. ENDA-IA realizes that any change in the law in the near future will
bring with it more serious competition. As a result of this, ENDA-IA already began to work to improve
its client service knowing that this will always be the main determinant for clients when they choose their
lender. Also, ENDA-IA decided to focus on women and poorer segments of the micro-entrepreneurs.
Areas where the other NGOs are not expected to focus on in the near and mid-term future.
Table 3.6 below provides a summary of characteristics of other credit NGOs working in Tunisia.
30
A word used in the Tunisian dialect which means that you have to know someone who is VIP etc. who is willing
to support you as a must to be able to get the service.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
41
Table 3.6: Competitors
Parameters
BTS
BTS associations FTSS
AFAQ
AMAL
Mnihla Association ATM
AFDD
Tunis, Nabeul,
Ariana, Ben Arous,
Manouba, Kairouan
APEL
ASAD
AAD
North West
Zaghouan/Kairouan
ATLAS
Location
Tunisia
Tunisia
Greater Tunis
Greater Tunis
Kabaria/Ouardia/Je
bel
Mnihla
Jeloud/Mhamdia/L
ac
Credit methodology
Individual
Individual
Individual/GL
Individual
Individual
Individual
Individual
Individual
Individual
Individual
Individual
Rural/Urban
Both
Both
Urban
Urban
Urban
Urban
Urban
Urban
Rural
Rural /Urban
Rural /Urban
Rural
Target group
Unemployed Younger Unemployed Young
S&Micrograduates, small
people + MS
entrepreneurs
entrepreneurs
entrepreneurs
S&Microentrepreneurs
S&Microentrepreneurs
S&Microentrepreneurs
S&Microentrepreneurs
S&Microentrepreneurs
S&Microentrepreneurs
S&Microentrepreneurs
S&Microentrepreneurs
S&Microentrepreneurs
% of women
30%
Loan amount in TND
3000-30 000
Loan terms
1 - 3 years
Grace Period
1 - 6 months
Repayment
40%
30%
30%
30%
30%
30%
30%
30%
North West
30%
30%
30%
300 - 2000
500 - 2000
501 - 2000
502 - 2000
503 - 2000
504 - 2000
505 - 2000
506 - 2000
507 - 2000
508 - 2000
2 - 3 years
3 - 3 years
4 - 3 years
5 - 3 years
6 - 3 years
7 - 3 years
8 - 3 years
9 - 3 years
10 - 3 years
11 - 3 years
12 - 3 years
1 - 3 months
2 - 3 months
3 - 3 months
4 - 3 months
5 - 3 months
6 - 3 months
7 - 3 months
8 - 3 months
9 - 3 months
10 - 3 months
11 - 3 months
monthly
monthly
monthly
monthly
monthly
monthly
monthly
monthly
monthly
monthly
monthly
monthly
Annual Interest rate
5% declining
5% declining
5% declining
5% declining
5% declining
5% declining
5% declining
5% declining
5% declining
5% declining
5% declining
5% declining
Fees
No fees
No fees
No fees
No fees
No fees
No fees
No fees
No fees
No fees
No fees
No fees
No fees
21 TND/loan made 22 TND/loan made 23 TND/loan made 24 TND/loan made 25 TND/loan made 26 TND/loan made 27 TND/loan made 28 TND/loan made 29 TND/loan made
30 TND/loan made
31 TND/loan made
promissory notes +
promissory notes +
90% guarantee for
90% guarantee for
principal by
principal by National
National
Guarantee Fund
Guarantee Fund
promissory notes +
90% guarantee for
principal by National
Guarantee Fund
promissory notes +
90% guarantee for
principal by National
Guarantee Fund
Subsidies (<500 files/year)
Garantee
promissory notes +
90% guarantee for
principal by National
Guarantee Fund
Type of Business
start ups &
86% start up, 14%
established
business established
business
Conditions
investment/working
capital
Number of Loans disbursed*
start ups &
established
business
promissory notes +
promissory notes +
90% guarantee for
90% guarantee for
principal by
principal by National
National
Guarantee Fund
Guarantee Fund
promissory notes +
90% guarantee for
principal by National
Guarantee Fund
start ups &
established
business
start ups &
start ups &
established
established business
business
start ups &
established
business
promissory notes +
90% guarantee for
principal by National
Guarantee Fund
promissory notes +
90% guarantee for
principal by National
Guarantee Fund
promissory notes +
90% guarantee for
principal by National
Guarantee Fund
start ups &
start ups &
established
established business
business
promissory notes +
90% guarantee for
principal by National
Guarantee Fund
start ups &
start ups &
start ups & established
established
established business business
business
investment/working investment/working investment/working investment/working investment/working investment/working investment/working investment/working investment/working
capital
capital
capital
capital
capital
capital
capital
capital
capital
51,000
1,219
503
459
162
263
investment/working
capital
investment/working
capital
2500
Appraisal of ENDA-Inter-Arabe
October 8, 2003
42
CHAPTER 4.
4.1
STRATEGIC OBJECTIVES
Mission and Objectives
In October 2002, ENDA-IA team reviewed and revised the vision and mission statements of the
institution to read:
a. Vision:
"Every micro-entrepreneur in Tunisia has access to credit to improve their livelihood
with dignity ".
b. Mission Statement:
"Provide Sustainable and high-quality financial and non-financial services to microentrepreneurs in poor neighborhoods of Tunisia to strengthen their economic conditions and
bring improvements to their lives".
c. General Objectives:
1 Provide micro-entrepreneurs in underprivileged urban areas with regular and sustainable
financial services.
2 Offer varied financial products adapted to clients’ needs.
3 Apply efficient methodologies while maintaining quality services to clients.
More specific objectives were also defined:
d. Socio-economic objectives:
1. Improve the incomes of clients that have received at least 5 loans in 3 years.
2. Improve entrepreneurial capacities of clients benefiting from non-financial services.
3. Raise women’s ability to participate in decision-making.
e. Institutional objectives:
1. Reach 100 000 (or 35 000) active clients by the end of 2008 based on the availability of
funding
2. Cover operational and financial expenditures and begin capitalization.
3. Contribute to improving the regulatory environment and thus make it possible for other
NGOs and institutions in Tunisia to adopt micro-credit best practices.
4.2
Evaluation of ENDA-IA Mission and Vision
ENDA-IA’s staff strongly believe in the jointly developed vision and mission statements stated above,
which is evident throughout the organization’s operations. The long-term vision to remain the largest MFI
in Tunisia with branches in every city and popular neighborhood, with a deep outreach by focusing more
and more on the poor and on women providing them with high quality diversified products permeates the
organization from top management to branch management and loan officers.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
43
ENDA-IA’s Views on Commercial Borrowing
4.3
Given the current regulatory environment in Tunisia and the likelihood of no major change in the near
future, ENDA-IA believes that commercial borrowing from local commercial banks or development
financiers would be the only option to finance its growth. As stated somewhere else in this report, ENDAIA tried to build a credit history with its banks and its overdraft reached more than 0.5 million TND on
which ENDA-IA paid the market rate of approximately 10% per annum. Unfortunately, instead of
rewarding ENDA-IA by allowing it to leverage more funds against the same guarantees, the Central Bank
forbad the renewal of this practice.
Assuming there is no change in the regulatory environment, the best way for ENDA-IA to finance its
growth is to find a non-Tunisian lender which is willing to lend ENDA-IA in cash and in Tunisian
currency or in hard currency but willing to get the loan back in Tunisian currency (which is not
convertible). At the same time, ENDA-IA should keep trying to convince the government to make some
changes in the law (or grant waivers to ENDA-IA), which will allow it to borrow from local banks at the
market rate with or without international guarantees etc.
4.4
Objectives for the near to medium term
4.4.1. General direction: In the next five years, ENDA-IA aims to reach 100 000 active
clients and to have branches in the major cities and neighborhoods of Tunisia. As was discussed earlier, it
is expected to do so if capital is available to fund this growth. If that issue is not resolved and ENDA-IA
has to rely on grants only, then its outreach capacity will be limited.
4.4.2. Key Changes: In order for ENDA-IA to achieve its projected performance – as outlined
in the first scenario in table 4.1, it will need to gradually implement the following changes:





find the funding resources for the growth of the loan capital.
open new branches outside Tunis.
decentralize its operations in the new branches outside Tunis. Each branch will become a profit
center with its own MIS and treasury function.
keep developing a strong internal control and internal audit procedures to minimize the increased
risk, which will accompany the decentralized operations.
get rid of all the residues of micro-management and give the co-directors and the management the
chance to focus more on the bigger picture. This would require building a Human Resource Unit
and to complete developing the Research and Development Unit
Appraisal of ENDA-Inter-Arabe
October 8, 2003
44
4.5
Projected Performance
Table 4.1 Projected Performance
Historical Data
y/e 2002
7,726
2,118,458
272
7
56
28
2003 (Aug)
8,986
2,609,481
282
9
83
35
Projected Scenario I (100,000 Active Clients): Commercial Funding Available
y/e 2004
y/e 2005
y/e 2006
y/e 2007
Number of Active Loans
17,000
26,300
40,700
63,200
Total Outstanding Loan Balance
4,700,000 7,500,000 11,600,000 18,000,000
Average Loan Balance
276
285
285
285
# of branches
16
23
36
55
# of staff
123
171
249
373
# of loan officers
65
94
143
222
y/e 2008
100,000
28,000,000
280
86
557
345
Number of Active Loans
Total Outstanding Loan Balance
Average Loan Balance
# of branches
# of staff
# of loan officers
y/e 1999
1,808
484,565
268
4
18
6
y/e 2000
3,389
806,798
238
5
30
14
y/e 2001
4,739
1,275,657
269
6
40
18
Projected Scenario II (25,000 Active Clients): No Sustantial Commercial Funding Available
y/e 2004
y/e 2005
y/e 2006
y/e 2007
y/e 2008
Number of Active Loans
13,800
17,000
23,000
29,000
35,000
Total Outstanding Loan Balance
3,900,000 4,700,000
5,500,000
6,300,000
7,100,000
Average Loan Balance
283
276
239
217
203
# of branches
13
15
20
25
30
# of staff
105
119
153
188
219
# of loan officers
53
61
81
102
121
4.5.1. Business Planning and Financial Modeling: ENDA-IA does engage in medium
strategic and financial planning and has a 3-year Business Plan which is updated on an annual basis.




In April 2001, all ENDA-IA’s staff met for a two-day retreat in order to conduct a SWOT
analysis covering all the institution’s activities and to define a strategy for the forthcoming three
years.
In January 2002, a strategic plan, with details for each branch, was worked out by the loan
officers and supervisors, with the operations coordinator and a representative of the
administration.
This exercise was followed up, in February 2002, by a detailed strategic and operational planning
exercise conducted by a representative group of ENDA-IA staff (field and administration) under
the guidance of an external consultant. Twenty-five persons took part actively in the six-day
meeting that also served as an intensive training exercise, to reflect on the strategic plan for 20022004. At the end of that period, ENDA-IA expected to reach 14 000 active clients.
Finally, in October 2002, again under the guidance of an external consultant, this first work was
completed and up-dated for 2003 - 2005, concluding that 25 000 active clients could be reached
by the end of that period.
4.5.2. Evaluation of the Projections: The projections were done on two levels. One part was
done with the supervisors of the existing branches as they were asked to write the maximum number their
branch would reach over the coming 3-5 years. The total of those numbers was more than 20 000 active
Appraisal of ENDA-Inter-Arabe
October 8, 2003
45
clients. Another 10 000 were added to the second scenario, as ENDA-IA will open more branches within
Tunis. This is from where the figure 35 000 active clients came. ENDA-IA can reach more than this
figure in the capital assuming that more funding is available.
For the first scenario to reach 100 000 active clients and to work all over Tunisia, the projections were
done by the management based on some population statistics.
If we take into consideration the unserved demand in the Tunisian Market for micro loans, and the
capacity of ENDA-IA to grow and to serve that demand, the projections under the two scenarios appear
realistic. Obviously, the main challenge to achieve these projections will be to secure the required funding
for that.
4.5.3. Challenges: Given the current regulatory environment, it currently seems unlikely the
needed funds for the loan capital growth can be secured from the local banks. This makes it extremely
challenging for ENDA-IA management to focus their work on four pillars:
1. keep building the capacity of ENDA-IA so that it will always be able to handle this growth
2. keep trying to attract loans from outside Tunisia from donors/investors, which understand the
Tunisian case and would be willing to give loans in cash to get these loans paid back in Tunisian
currency etc.
3. keep trying also to build its equity thru grants from donors for both capacity building and loan
capital.
4. work with all others which are interested in changing the micro-credit law in Tunisia to a law that
allows MFIs to apply what is known today as best practices and to work toward sustainability and
growth.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
46
Chapter 5:
5.0
FINANCIAL PERFORMANCE
Notes on Financial Statistics in Appraisal Report
The following notes describe some basic working methods and assumptions used in the appraisal and can
be grouped as follows: (a) currencies; (b) fiscal and calendar years; and (c) audited financial statements.
a. Currencies
All financial tables are in Tunisian Dinars (TND). In Tunisia this is the only currency which can be used.
ENDA-IA gets its donations in different currencies, TND, US Dollars, Euros etc.. depending on its source
of funding. Historical exchange rate of the TND to USD was provided within the document for those
interested in the seeing the figures in USD.
ENDA-IA receives most of its financial resources through Euro grants. Others are either in US dollars or
in TND. All of ENDA-IA products and all of its salaries and day to day expenses are in TND.
b. Fiscal and Calendar Years
The Tunisian fiscal year is the same as the calendar year.
c. Audited Financial Statements
In the audited financial statement for the year end balance sheet and income statement for 2001 and 2002
are the same as the balance sheet and income statement used by ENDA-IA for management decision
making and (financial) reporting.
The financial statements of the last two years (2001, 2002) are reliable and transparent. No significant
reformatting was needed to conform ENDA-IA’s financial statements to the CGAP format.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
47
5.1
Income Statement and Balance Sheet
Table 5.1. Income Statement
*These are annualized figures based on the Jan-Jun 2003 results
Appraisal of ENDA-Inter-Arabe
October 8, 2003
48
Balance Sheet (2000-2001-2002-June 2003) in Tunisian Dinars
Assets
Cash & Bank current accounts
Interest-bearing deposits
Gross portfolio outstanding
Current
Past-due portfolio
Rescheduled portfolio
Total Gross portfolio outstanding
(Loan Loss Reserve)
Net Portfolio Outstanding
Others Current Assets (accounts receivable)
Total Current Assets
Long-term investments
Occupancy Deposit
Property & Equipments
Equipment at Cost
(Accumulated Depreciation)
Net Property & Equipments
Dec. 2000
15,394
65,000
Dec. 2001
111,162
0
806,798
1,275,657
806,798
-24,204
782,594
9,690
872,678
Dec. 2002
june 2003
27,115
180,549
668,000
605,040
1,275,657
-37,221
1,238,436
4,474
1,354,071
2,087,516
11,552
19,390
2,118,458
-51,090
2,067,368
20,424
2,782,907
2,483,549
8,274
28,005
2,519,828
-62,943
2,456,885
10,826
3,253,300
0
1150
1680
1,680
141,320
-59,271
82,049
189,590
-96,662
92,928
270,401
-144,625
125,776
321,756
-171,856
149,901
Total Long-term Assets
82,049
94,078
127,456
151,581
Total Assets
954,727
1,448,149
2,910,363
3,404,881
2001
2002
June 03
Liabilities & Net Worth
Current Liabilities
Overdraft
Short-term Accounts payable
Total Current liabilities
2000
38,391
60,823
99,214
218
38,367
38,585
547,769
59,578
607,347
0
19,531
19,531
0
0
38,993
38,993
113,000
113,000
128,836
128,836
Long-term Liabilities
Other long term liabilities
Total Long-term Liabilities
Total Liabilities
99,214
77,578
720,347
148,367
Net Worth
Donated Loan Fund Capital
536,676
1,001,876
1,405,287
1,693,286
Donated prior years Loan Fund Capital (cumulative)
448,014
536,676
1,001,876
1,405,286
Grant Loan Fund Capital - current year
Grant for Equipement
Donated prior years for equipement (cumulative)
Grant for equipement - current year
Prior Years Retained Surplus/(deficitd)
Current year Net Surplus/(Deficit)
Current year Net Surplus
Total Net worth
88,662
141,320
73,376
67,944
131,969
465,200
149,647
141,320
8,327
139,495
403,411
214,399
149,647
64,752
219,048
288,000
265,954
214,399
51,555
570,330
45,548
855,513
79,553
1,370,571
351,282
2,190,016
726,943
3,256,514
Total Liabilities & Net Worth
954,727
1,448,149
2,910,363
3,404,881
Appraisal of ENDA-Inter-Arabe
October 8, 2003
49
Though ENDA-IA generates an income statement for each branch and for the whole organization on a
monthly basis, the balance sheet is generated only once every six months. It is recommended that ENDAIA begin generating the balance sheet on a monthly basis. Beside being part of closing the books on a
monthly basis and allowing ENDA-IA to double check on its MIS and other things, this will allow
ENDA-IA to get more correct ratios on monthly and quarterly bases.
a. Accrual of Interest Income on a non-performing loans
To be prudent, ENDA-IA uses cash accounting methodology for all revenue income. Hence, interest
income is only entered as income in ENDA-IA’s books once the money is in the bank. Hence, the
moment a payment is late (i.e., it has not been paid in the bank) no interest income is accounted for. For
all expenses, ENDA-IA uses accrual accounting.
b. Sources of Funds
The balance sheet shows that all of ENDA-IA’s sources of funds for onlending and operating costs are
grants. It also shows that in 2002, ENDA-IA kept some of these grants in interest-bearing deposits and
got an overdraft against these deposits. ENDA-IA paid 10-11% on overdraft, which is the market rate.
ENDA-IA did not receive any soft loans from donors. ENDA-IA does not take either compulsory or
voluntary savings.
5.2
Adjustment for Inflation and Subsidies
Table 5.3 Shadow Prices
Inflation rate (TND)
GDP deflator
Inter bank lending rate
90-day certificate of deposit rate
Short-term Treasury bonds (90 days)
Prime rate paid by commercial bank borrowers
Marginal commercial rate available to the MFI
Per capita GNP (TND)
Exchange rate (USD) to (TND)
2000
3%
155.3
2001
3%
159.5
2002
3%
163.2
2.9 %
?
2.0 %
?
2.7%
?
NA
2654
1.4
NA
2831
1.4
NA
2926
1.32
2003
3%
5.31
3%
6.13%
TMM+7points
NA
1.26
The inflation rate in Tunisia has officially been varying between 2 and 3 percent over the last 3-5 years.
However, ENDA-IA uses a 3 percent inflation rate for its financial planning. There is no tradition in
Tunisia of MFIs borrowing from banks. MFIs which were created by BTS get their loans for free and are
paid 20 TND per each loan they disburse up to 500 loans annually. ENDA-IA got some overdrafts from
the bank in 2002 and paid the commercial rate on that money which was 10.9% but even this is not
allowed today and not available. Hence the marginal commercial rate available to the MFI is of no
relevance to ENDA-IA. In its own calculations for financial sustainability, ENDA-IA uses a conservative
12 percent as imputed costs of capital while the prime rate is 9-10 percent. Hence it uses a commercial
bank prime rate plus as shadow price for costs of funds. The Tunisian inter-bank market rate is 5.31.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
50
Table 5.4 Adjustments for Inflation and Subsidies
All of ENDA-IA’s sources of funding are grants, which are capitalized as donated equity on the balance
sheet. In order to adjust for the subsidized cost of funds, the average outstanding principal loan portfolio
over a period was multiplied by the imputed costs of funds of 12 percent (see table on shadow prices)
Some organizations such as the MicroBanking Bulletin (MBB) argue that if a MFI is funded solely by
grants and if it is not having soft loans, the inflation rate can be used as shadow price for the costs of
funds adjustment. However, ENDA-IA argues that given its belief that the main sources of funding for its
growth in the future will come from commercial loans, the use of an imputed commercial bank rate for
the costs of capital adjustment is more prudent31.
The CGAP appraisal format requires an inflation adjustment on the average equity minus the average net
fixed assets. However, when we compare the adjusted operating profit (Loss) of ENDA-IA we find it
bigger than one calculated by ENDA-IA. This is mainly because ENDA-IA charges itself 12% per year as
imputed cost of funds on the whole portfolio, which is coming from grants32. For the calculation of the
Profitability ratios, we will use the adjusted operating profit.
31
FATEN participates in the MBB and is always surprised that the financial sustainability data calculated by MBB
for FATEN are better than its own financial sustainability ratios. The difference is due to the fact that MBB uses the
inflation rate for the costs of funds adjustment while FATEN uses an imputed commercial bank rate.
32
The way ENDA-IA calculates this cost is by multiplying the average outstanding portfolio during period by 12%
and then deducting whatever ENDA-IA paid for banks as interest on the overdraft.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
51
5.3.
Profitability
Table 5.5.1 Profitability Ratios
1. Return on Assets
Operating Profit divided by average total Assets
2. Adjusted return on Assets
Adjusted Operating Profit divided by average total assets
3. Return on Equity
Operating profit divided by average equity
4. Adjusted return on Equity
Adjusted operating profit divided by average equity
5. Operational self-sufficiency (excluding costs of funds)
Operating income divided by loan loss + op.expenses
6. Operational self-sufficiency (including costs of funds)
Operating income divided by loan loss + op.expenses
7. Financial self-sufficiency
Operating income divided by adjusted operating expenses
2001
-5%
2002 2003*
-3%
11%
-8%
-5%
3%
-6%
-3%
13%
-9%
-6%
3%
87%
96% 126%
87%
92% 121%
82%
86% 110%
*Annualised ratios based on the first 6 months results
The operational sustainability ratios are virtually the same as those calculated by ENDA-IA itself. The
financial sustainability ratios are better than those calculated by ENDA-IA mainly because ENDA-IA
assumes an imputed cost of funds equal to 12% when it calculates this ratio while here we adjusted for
inflation and in-kind donations.
There is no difference between the ratio # 4 (operational self-sufficiency excluding actual real costs of
funds) and ratio # 5 (operational self-sufficiency including actual real costs of funds) for 2001 as ENDAIA had no actual costs of funds in that year. However, in 2002 and 2003 these two ratios began to differ
as a result of the amount of interest ENDA-IA paid on the overdraft. This difference is more than the real
one as the interest rate which was paid for the bank for the overdraft was considered a cost, while the
interest rate which was paid by the bank for the interest bearing deposits, was not included in the
operational revenues of ENDA-IA for those periods.
The driving vision of the ENDA-IA co-directors and management is not profitability per se, but rather the
positive consequences of profitability: financial sustainability, independence and increased outreach. This
drives the staff to focus on clients, repayments and costs. ENDA-IA takes pride in how they managed to
increase their loan capital from interest revenues during those days when the whole operational cost was
covered by the grants. They also consider the potential operational profit as the only guaranteed source of
funding to increase their outreach.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
52
Table 5.5.2. Profitability Comparison ( Region, all MFIs and Sustainable MFIs)
2003* MENA
2. Adjusted return on Assets
Adjusted Operating Profit divided by average total assets
4. Adjusted return on Equity
Adjusted operating profit divided by average equity
6. Operational self-sufficiency (including costs of funds)
Operating income divided by loan loss + op.expenses
7. Financial self-sufficiency
Operating income divided by adjusted operating expenses
All MFIs
Sustainable MFIs
3%
-3.80%
-2.70%
5.50%
3%
-4%
-6.10%
14.10%
121%
91.30%
108.90%
138.20%
110%
82.70%
92.50%
123.40%
*Annualised ratios based on the first 6 months results
ENDA-IA’s adjusted return on assets (AROA) has shown continuous improvement over recent years.
This year will be the first one in which ENDA-IA will have a positive AROA. As shown in the table
above, the annualized AROA for 2003 is projected to be + 3%33. From the table above this is better than
the average AROA in the MENA region (-3.8), and better than the average of all MFIs reporting to the
MicroBanking Bulletin (-2.7 %) and is getting close to the average of sustainable MFIs though many of
those have been there for many years before ENDA-IA.
As in the AROA, the table above shows that ENDA-IA’s other profitability ratios: Adjusted Return on
Equity (AROE), operational and financial sustainability are higher than the average in the region and
better than the average of all MFIs and getting closer to the sustainable MFI ratios except in the case of
the AROE where there is a big difference between ENDA-IA AROE and that for sustainable MFIs. This
is mainly because ENDA-IA’s AROE is almost the same as ENDA-IA’s AROA. Which is because all of
ENDA-IA’s assets, mainly its outstanding portfolio, are coming from grants, which were transferred into
donated Equity. It is expected that when ENDA-IA can leverage some commercial loans or any other sort
of liabilities to fund its loan capital growth, then it is AROE will increase dramatically to be twice or three
times the AROA as it is the case in the sustainable MFIs whose a significant part of their asset (loan
capital) is coming from loans.
33
These are conservative projections as they were built on the assumption that the performance of ENDA-IA over
the second half of the year will be the same as in the first half. Historical data shows that this is not the case and the
results of the second half are usually better than those of the first half.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
53
5.4. Efficiency
Table 5.6.1 Effeciency Ratios
1.a Personnel Efficiency
1. b Administrative Efficiency
2. Operational Efficiency
3a. Administrative costs per active loan (TND)
3b. Administrative costs per loan made (TND)
4. Personnel costs as % of total administrative costs
5. Number of line staff as % of total staff
5. Number of loan officers as % of total staff
6. Number of active loan clients per staff member
7. Number of active loan clients per loan officer
8. Outstanding portfolio per loan officer (TND)
9. Number of clients per branch office
2001
28%
48%
2002 2003 (June)
28%
21%
42%
32%
50%
45%
105
91
59%
67%
58%
45%
118
263
62%
51%
140
276
35%
84
48
65%
66%
52%
138
264
70,870
790
75,659
1,104
76,749
998
58
55
As shown above, ENDA-IA depth of targeting is among the best in the region as the average client’s
balance/GNP per capita is about 7.5% compared to an average of 17% in the region. As a consequence,
ENDA-IA has high operational costs but lower average loan balances, which effectively skews its
operational efficiency ratio (i.e. the operating expenses as a percentage of the average net outstanding
portfolio). To adjust for this reality of doing business in the poor neighborhoods in Tunisia, ENDA-IA
focuses on increased outreach and greater efficiency. This was reflected in ENDA-IA efficiency ratios
when compared to the MENA ratios.
The table above shows the ENDA-IA efficiency ratios are improving over time. From the table below we
can see the ratios of 2003 compared to the averages of the industry in the region, all the MFIs, and the
sustainable MFIs which are reporting to the MicroBanking Bulletin34. A quick look at that table shows
that ENDA-IA is doing better than the average of the region. When it comes to the productivity of its staff
and loan officers it is almost 50% higher than the average of the region and either better or very close to
the averages of all MFIs. When we compare those results to the sustainable MFIs we can see that there is
a difference and there is still a good margin for ENDA-IA to improve its efficiency. This should be seen
with two facts in mind: 1) ENDA-IA is a relatively young MFI compared to the sustainable ones and
2) ENDA-IA is still struggling to secure resources to fund the growth of its loan capital in a regulatory
environment which is one of the most difficult in the region if not the most difficult.
Table 5.6.2 Effeciency Comparison ( Region, all MFIs and Sustainable MFIs)
2003 (June) MENA
1.a Personnel Efficiency
2. Operational Efficiency
3a. Administrative costs per active loan (TND)
5. Number of loan officers as % of total staff
6. Number of active loan clients per staff member
7. Number of active loan clients per loan officer
34
21%
35%
84
52%
138
264
25.3
37.8
112.14
63.7
99
153
All MFIs
14.8
27.4
113.4
44.7
128
308
Sustainable MFIs
13.1
23.5
127.26
42.5
145
408
The comparison is to the averages of the MBB of its 8 th issue which was published in November 2002
Appraisal of ENDA-Inter-Arabe
October 8, 2003
54
5.5
Loan Portfolio Analysis
Table: 5.7 Portfolio Data
1. Total principal balance outstanding, end of period
2. Number of active loans, end of period
3. Average principal balance per client
4. Average principal balance outstanding over the perioda
5. Equals Loan Loss Reserve End of Period
6. Increase in loan loss reserve over the periodc
7. Loan loss rate
2000
2001
2002
Jun-03
806,798
1,275,657
2,118,457
2,519,827
3,389
238
4,748
269
7,792
272
8,875
284
655,254
1,041,228
1,697,057
2,319,142
24,204
37,221
51,090
62,944
9%
54%
37%
23%
0.48%
0.13%
0.78%
0.25%
Amount
8. Total outstanding balance paid on time Amount TND
Late (at least 1 payment)
• 1–30 days
• 31–60 days
• 61–90 days
• 91–180 days
• > 180 days
9. Portfolio-at-risk one day late
10. Portfolio-at-risk (more than 30 days late)
%
Amount
%
Amount
%
792,760 98.26% 1,260,987 98.85% 2,106,938 99.46%
Amount
%
2,490,808 98.85%
14,038 1.74%
2,429 0.30%
0 0.00%
14,670 1.15%
4,545 0.36%
2,415 0.19%
11,519 0.54%
1,828 0.09%
4,302 0.20%
29,019
1.15%
12,869
0.51%
4,987
0.20%
1,910 0.24%
423 0.05%
2,443 0.19%
2,073 0.16%
2,447 0.12%
2,942 0.14%
2,808
0.11%
8,355
0.33%
9,277
1.15%
3,194
0.25%
-
-
-
-
14,038
11,610
1.74%
1.43%
14,670
10,125
1.15%
0.80%
11,519
9,691
0.54%
0.46%
29,019
16,150
1.15%
0.64%
ENDA-IA’s outstanding loan portfolio year-end 2002 was about 2.12 million TND with about 7 800
active clients. These numbers increased to 2.52 million TND and to about 8 875 active clients by the end
of June 200335. ENDA-IA's main loan product – group: Majmouâa – comprised about 62 percent of
outstanding portfolio and over 82 percent of active clients. Its second loan product - individual loan: Fardi
- comprised 36% of the portfolio and 18% of the active clients. ENDA-IA provides its clients with a
parallel loan, too, whenever they have a good investment opportunity.
5.5.1. Delinquency and Collection: ENDA-IA’s clients used to pay back their loans to the
banks directly. As a result of the exponential growth of the number of those payments, banks decided to
stop accepting them and ENDA-IA had to recruit and train tellers in its branches to receive the payments.
By the end of each day the teller sends the money collected to the bank against a receipt and sends that
receipt, with a copy of all the receipts given to the clients for their payments and a list of those payments
showing that their total is the same amount which was deposited in the bank. Those receipts are checked
by a finance officer in the main office and then transferred to the MIS data entry officers. When they are
entered in the MIS, a journal voucher is printed which shows all the receipts entered and their amounts
and dates etc..
A copy of the teller’s list is made available to the branch manager/supervisor and loan officers in the
branch so that they can tell which of their clients have paid and which are in arrears 36. In cases of nonrepayment, ENDA-IA staff often follows up the same day or the second morning.
The table below shows that portfolio in arrears for ENDA-IA over the last three years was very close to
zero. It also shows that portfolio at risk one day late was around 1% and portfolio at risk >30 days was
35
By the end of August 2003, the portfolio became 2.62 million TND and the # of active clients reached almost
9,000.
36
Loan Officers are provided on a weekly basis with a report from the MIS which shows all of their due payments
within the coming week. By comparing this report to the daily report of the teller of their branch, they can tell who
paid and who did not yet.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
55
below 1%. Compared to the ratios in the region and in the world, these are considered among the best
ratios and ENDA-IA portfolio is considered very healthy and clean.
Table 5.8 Portfolio Quality
1) Portfolio in arrears EOP 1 day late
2) Portfolio at risk EOP 1 day late
3) Portfolio in arrears EOP > than 30 days late
4) Portfolio at risk EOP > than 30 days late
2000
0.28%
1.74%
0.22%
1.43%
2001
0.32%
1.15%
0.23%
0.80%
2002 2003 (june)
0.19%
0.34%
0.55%
1.15%
0.12%
0.22%
0.46%
0.64%
The table below shows that ENDA-IA managed over recent years to gradually improve its repayment
before or on time to the point that it reached in year 2003 an average of more than 95%, which is one of
the best in the world37.
Table 5.9: Payback Statistics
Payed Before Due Date
Payed on date:
Payed 1 days late:
Payed 2 days late:
Payed 3 days late:
Payed 4 days late:
Payed 5 days late:
Payed 6 days late:
Payed 7 days late:
Payed 8 - 14 days late:
Payed 15 - 30 days late:
YEAR 2000
YEAR 2001
YEAR 2002
YEAR 2003
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3 Q4
45,56% 42,49% 36,36% 36,62% 31,19% 27,87% 23,74% 28,85% 37,51% 42,21% 42,80% 51,91% 64,27% 71,01%
75,59% 76,53% 72,79% 82,34% 86,92% 86,51% 85,60% 85,96% 89,48% 90,02% 84,96% 91,49% 94,54% 95,74%
84,37% 84,01% 83,00% 90,46% 94,37% 94,18% 90,50% 90,17% 93,39% 94,36% 93,34% 95,32% 96,91% 97,51%
88,54% 90,24% 89,89% 93,91% 96,37% 96,48% 93,27% 92,37% 94,90% 95,82% 95,23% 96,62% 97,63% 98,12%
91,05% 92,34% 93,30% 95,87% 97,67% 97,16% 94,49% 93,40% 95,77% 96,44% 96,10% 97,10% 98,03% 98,48%
92,18% 93,86% 94,34% 96,85% 97,90% 97,29% 94,81% 93,77% 95,89% 96,52% 96,44% 97,30% 98,34% 98,65%
93,36% 94,95% 95,25% 97,16% 97,98% 97,29% 94,84% 93,90% 96,12% 96,69% 96,65% 97,63% 98,52% 98,81%
94,03% 95,27% 96,29% 97,63% 98,36% 98,04% 95,47% 95,02% 96,95% 97,45% 97,14% 98,04% 98,69% 99,08%
94,67% 96,14% 96,89% 97,92% 98,70% 98,34% 96,52% 96,20% 97,61% 98,01% 97,64% 98,46% 99,00% 99,27%
96,68% 97,90% 98,55% 99,27% 99,24% 99,27% 98,02% 97,71% 98,61% 98,80% 98,86% 99,22% 99,50% 99,67%
99,68% 99,50% 99,69% 99,96% 99,77% 99,99% 99,52% 99,57% 99,60% 99,69% 99,74% 99,86% 99,88% 99,85%
5.5.2. Provisioning policy: ENDA-IA's provisioning policy provisions the higher of: (a) three
percent of the highest outstanding loan portfolio in a period; or (b) provisions based on the ageing of
arrears table below. In practice this means that in “good” periods the three-percent rule is used while in
not so good periods the ageing table is used.
Table 5.10: Loan Loss Provision
Number of days past due
01-30 days
31-60-days
61-90 days
91 days +
Provisioning percentage
10 percent
50 percent
100 percent
100 percent
37
98% percent of ENDA-IA payments are paid before time or on time or 3 days late. This percentage goes up to
more than 99% when it is 7 days late.
Appraisal of ENDA-Inter-Arabe
October 8, 2003
56
The fact that ENDA-IA did not have a clear provisioning policy and a clear write off policy before the
middle of 2001 and that they did not provide for loan losses at all before that and then had to go back and
to do some provisioning, was behind the minor error in the calculation of the loan loss provision for 2001
and 2002. In 2001 they provisioned 2,605 TND less than they should and in 2002, they provisioned 666
TND more than they should. However in 2003, ENDA-IA corrected those calculations and began to use
the right formula38. As the differences are very small and would not significantly affecting the general
results of ENDA-IA over those two years, it was decided not to change the audited financial statements
and to leave them as they are.
5.5.3. Written Off Loans: ENDA-IA writes off loans when at least one payment of the loan is
180 days late on a monthly basis. This does not mean the ENDA-IA stops following up the loan but it
means that the loan gets out of ENDA-IA outstanding portfolio and financial books. At the same time, it
goes to the list of written-off loans to be followed up. In spite of the small amounts ENDA-IA has written
off over the previous years, it recruited a money collector to follow up on those loans paid on a
percentage basis. ENDA-IA was and is willing to pay almost the whole balance of the loan to the
loan collector. It only wants to send a message to its clients that it does not forget its loans and it does
everything possible to make sure that they are paid back.
However, ENDA-IA did not have this policy before 2002 and this is why there were payments which
were more than 180 days late and were still part of their portfolio.
Written off Rate
Total principal balance outstanding, end of period
Average principal balance outstanding over the perioda
Amount written off over period
Written off Rate
2000
2001
806,798
645,682
3,116
0.48%
1,275,657
1,041,228
1,396
0.13%
2002 2003 (June)*
2,118,457
1,697,057
13,234
0.78%
2,519,827
2,319,142
11,654
0.50%
* The amount written off was doubled to get the annualized ratio
5.5.4. Rescheduling and Refinancing: At the end 2002, ENDA-IA decided to reschedule
some of its delinquent loans. 17 loans were rescheduled at that time with a balance of about 23 000 TND.
ENDA-IA continued to reschedule some of its delinquent loans in 2003 where by the end of July another
9 loans of 19 000 TND were rescheduled. By the end of July 8 000 TND were collected from a total of 42
000 TND leaving 34 000 TND39. Though ENDA-IA estimates that half of the loans which were
rescheduled are paying now, and though the number of rescheduled loans has so far been very limited and
its effect on the total portfolio is very marginal, this issue was discussed at length during the evaluation
and as a result ENDA-IA decided to stop rescheduling delinquent loans as this behavior would hide
delinquency. Instead, it was agreed that loans will be followed up in the MIS till they are 180 days late,
and after that they will be written off and transferred to an excel sheet where they could be followed up
from there on regular basis.
ENDA-IA had never done refinancing. Unfortunately, during the evaluation mission and just after that, a
very hard storm hit the area and flooded many houses there including the houses of some of ENDA-IA
clients which destroyed many of their belongings including the enterprise itself. ENDA-IA is currently
considering refinancing those projects with zero interest rate loans to help them rebuild their businesses
hoping that this will allow them to pay the balance of the old loan and the new loan together.
38
Usually, Loan Loss Reserve at the end of period should equal loan loss Reserve at the beginning of period + loan
loss provision during period –amount written off during period. This wan not the case in the years 2001 and 2002.
39
This is principal and interest and the principal amount of this is 27,600 TND.
57
5.6
Liquidity Management
ENDA-IA has always suffered from not having enough funds to support its growth plans. In many cases,
ENDA-IA’s clients had to wait until ENDA-IA collects money from repayments so that it can disburse
their loans. This pushed ENDA-IA in some cases to limit the number of loans it gives to its new clients
and to focus more on existing clients.
In 2002, ENDA-IA decided to keep its money in hard currency interest-bearing accounts and to overdraft
against these accounts hoping that this would build its credit history with the banks. This is why we see
big amount as under interest bearing deposits where there was 668 000 TND by the end of 2002. ENDAIA was allowed to get an overdraft equivalent to a maximum of 80% of this amount. On the same balance
sheet we see that the overdraft at the same time was about 548 000 TND40.
Though the overdraft was paid off, the balance sheet by the end of June shows about 600 000
TND in interest bearing deposits. This is a new annual payment which was received from
ICCO/EU grant but not yet disbursed. ENDA-IA expects that by the end of 2003, no significant
amounts of cash will be in their bank accounts, as it will be used in growing their portfolio. Still,
the issue of liquidity will continue to be a serious issue for ENDA-IA as long as it does not
overcome the problem of not being able to get loans to fund the growth of its portfolio.
40
Unfortunately, this is not the case any more and ENDA-IA had to stop this in 2003 and to change some of its hard
currency to local currency to pay back the bank the overdraft as the Central Bank prohibited this.
58
5.7. Interest Rate Analysis
Table 5.12 Examples of APR % to clients
Loan type and conditions
1.
APR
Majmouâa Jadid TND 100, 6 months, 6 payments
Upfront fee 5 TND; 1.25% per month, commission 6 TND (1% per month), no savings
Monthly Repayment is 18.92 TND
2.
64 %
Majmouâa Jadid TND 500, 6 months, 6 payments
Upfront fee 6 TND; 1.25% per month, commission 30 TND (1% per month), no savings
Monthly Repayment is 94.58 TND
3.
49 %
Majmouâa Tatweer TND 200, 8 months, 8 payments
Upfront fee 6 TND; 1.25% per month, commission 16 TND (1% per month), no savings
Monthly Repayment is 29.5 TND
4.
55 %
Majmouâa Tatweer TND 1200, 10 months, 10 payments
Upfront fee 10 TND; 1.25% per month, commission 144 TND (1% per month), no savings
Monthly Repayment is 127 TND
5.
48 %
Fardi Jadid TND 200, 6 months, 6 payments
Upfront fee 15 TND; 1.25% per month, commission 12 TND (1% per month), no savings
Monthly Repayment is 37.83 TND
6.
64 %
Fardi Tatweer TND 1000, 12 months, 12 payments
Upfront fee 15 TND; 1.25% per month, commission 120 TND (1% per month), no savings
Monthly Repayment is 105.83 TND
7.
50 %
Fardi Machrou Kbir TND 3000, 18 months, 18 payments
Upfront fee 30 TND; 1.25% per month, commission 180 TND (0.5 % per month), no savings
Monthly Repayment is 302.5 TND
8.
39 %
Parallel Solfa TND 500, 12 weeks, 12 payments
Upfront fee 40 TND; 1 % per month, no commission, no savings
Monthly Repayment is 46.67 TND
9.
165 %
Parallel Forsa TND 1000, 4 months, 4 payments
Upfront fee 40 TND; 2 % per month, no commission, no savings
Monthly Repayment is 270 TND
59 %
59
Table 5.12 provides some examples of the APR to the borrower and ENDA-IA’s yield on its book
portfolio (average) for the different ENDA-IA loan products. The Majmouâa loan composed almost two
thirds of ENDA-IA’s active clients and the Fardi Loan is about one quarter of active clients. It is very
clear that for those loans, ENDA-IA is charging enough to cover its real cost including the imputed cost
and to capitalize for growth.
Though the APR for the Solfa loan is very high, we should keep in mind that though the loan almost cost
like any other loan to process its file, it is only a 4 -12 week loan, and accordingly it generates interest for
a very limited period of time; on the other hand, it was introduced based on the demand and the need of
the clients.
When we compare the effective interest rate for the products to the actual yield we find differences. These
differences are due to the fact that the current interest rates are relatively new as ENDA-IA had to change
the structure of its interest rate recently to be fully in compliance with Tunisian law. In the past there were
several times when ENDA-IA changed its interest rate for those products and it was not possible to track
those changes to calculate the theoretical yield for each period. However, the theoretical yield for 2003
based on the results of the five months during which the new interest rate structure was implemented, was
44% which is not far from the the expected average of the thoritical yield of all the products.
5.7.1. Rate Setting: ENDA-IA sets the interest rates and fees based on the costs of making the
loans (including the loan losses and imputed costs of capital) at a certain level of efficiency and a “breakeven” level of loan portfolio outstanding. It reasons that it would be unfair to transfer to the borrower the
costs of inefficiency and the costs of growing the loan portfolio. In effect, ENDA-IA uses for interest rate
and fee setting the CGAP guidelines as outlined in the CGAP Focus note on this issue.
5.7.2. Legal Constraints: There are legal constraints in Tunisia on rates and fees for loans.
The 1999 Micro-credit law sets a ceiling of 5% annual declining rate on micro loans. No other
commissions or fees are allowed. Due to its international status, ENDA-IA is not subject to this law
which was made for local credit associations, which are funded by BTS.
5.7.3. Comparable Rates: ENDA-IA’s rates are comparable to other best practice programs in
world and charge to cover the real cost of lending and to allow for a margin to capitalize. ENDA-IA’s
rates are much higher than the rates charged by the subsidized lending programs. ENDA-IA’s clients
know that they are paying far higher interest rate to ENDA-IA than other credit NGOs charge. Still the
overwhelming majority of those which were interviewed during this evaluation declared that paying this
rate and getting the loan fast and when they need it is better than waiting for months to get the loan. They
also understand that making loans costs money and that in order for ENDA-IA to continue making loans
it needs to recover the costs of doing so.
5.8
Liabilities and Cost of Funds Analysis
Section 5.1 outlined that ENDA-IA has no funding liabilities. ENDA-IA is solely funded by grants.
In order to calculate its financial ratios ENDA-IA uses as shadow price, 12 percent, which is comparable
to a commercial bank prime rate plus a risk premium.
In late 2002, ENDA-IA faced a shortage of funds to cover its expansion plans. One of its donors,
Rockdale Foundation, offered to provide them with loan guarantees so that they can access a commercial
60
loan from a Tunisian bank. After extensive discussions and negotiations with local and international
banks, ENDA-IA understood that banks are not allowed to lend to NGOs even if there is a 100%
guarantee. ENDA-IA is still trying to find a solution for this major obstacle in front of its ambitious
growth plans over the coming 3-5 years.
5.9
Capital Management – Solvency
As an NGO, ENDA-IA has no paid-in capital. Its donated equity (i.e. capitalized grants) amounts to about
TND 2.2 million by the end of 2002. This figure increased to TND 3.2 million by the end of June 2003.
The ownership rights of this donated equity are still ill defined and it is not clear whether it is the
ownership of ENDA-TW or of ENDA-IA in Tunisia. While ENDA-IA is working on having a new legal
status which allows it to be able to access commercial funding and to have its own Board etc. it is
important to clarify this issue and to make sure that it will not be a point of conflict with ENDA-TW in
the future.
61
ANNEX- I
Mid-term Evaluation (UE/ICCO)
(January 2002 – December 2004)
and Final Evaluation (AECI/Intermon
(October 2000 – March 2003)
Terms of Reference for the Mission
The consultants, working as a team, will make a mid-term evaluation of the implementation and
results of the project financed by the European Union and the Dutch NGO ICCO and at the same time a
final evaluation of the project financed by the Spanish international development agency ((AECI) and
Intermon-Oxfam.
Insofar as both projects concern the same micro-credit programme but with specific objectives for
each project, it is possible to undertake the evaluation through a single, joint, mission.
After familiarising themselves with the data relating to the programme, launched in 1995,and of the
texts of the two projects, and after obtaining all necessary clarifications, the consultants should in
particular:
1.
2.
3.
4.
5.
6.
7.
8.
9.
establish by all necessary means the degree of achievement of the objectives:
a. financial
i. quality of portfolio
ii. efficiency
iii. operational and financial self-sufficiency
b. quantitative
i. growth strategy
ii. number of active clients
iii. evolution of new clients
c. qualitative
i. clients’ economic situation (degree of poverty)
ii. «empowerment» of women
iii. adaptation of products to clients’ needs
check :
a. management capacity at various levels of responsibility
b. whether procedures exist and are clear and respected
c. the performance of the MIS
d. the Business Plan and whether it is regularly up-dated in the might of results obtained
investigate the non-financial services and whether they are adapted to clients’ needs
ascertain that ENDA-IA is managed separately from other activities of ENDA-IA
check out the institution’s financial soundness
undertake any other task required to evaluate the achievement of the objectives of each
project.
draft a report setting out the conclusions of the evaluation and highlighting both positive and
negative points, as well as possible deviations from the original objectives.
make proposals, as far as the EU/ICCO project goes, possible proposals for adjustments or on
any other matter considered useful.
send this report respectively to ICCO and Intermon-Oxfam, with a copy to ENDA-IA interarabe.
62
ANNEX II:
ICCO/EU Project
Translation of the main elements from the French original
Objectives
General objective
The programme aims to improve the quality of life of women and their families living in
underprivileged suburbs of Greater Tunis by integrating them into the economic fabric through the
strengthening of their entrepreneurial capacities and the consolidation of their micro-enterprises by
providing access to sustainable financial services.
Specific Objectives
On the economic and social plane
-
-
contribute to the consolidation and creation of micro-enterprises in the informal sector
managed by economically vulnerable families living in poor suburbs of Tunis.
provide regular access to credit for micro-entrepreneurs by offering excellent quality
services adapted to the needs of the population
strengthen the entrepreneurial capacities of micro-entrepreneurs, especially women,
through training and advice
encourage the participation of poor people in democratic management at the grassroots
and the exercise of their citizenship
contribute to strengthening autonomy and self-reliance among women as viable and
dynamic economic actors capable of contributing to the development of their families and
communities through their integration into the world of enterprise and into the local
economy.
contribute to strengthening women’s empowerment within the family and community.
On the institutional plane
-
-
a sustainable micro-credit programme able to diversify its funding sources by borrowing
on local and international financial markets in order to reach large numbers of
underprivileged micro-entrepreneurs
3 branches operating in 10 “delegations” and 3 governorates
a portfolio of exemplary quality and performance in line with best practices of
international micro-finance
procedures and rules that are fully understood and accepted by the population while
maintaining excellent quality of services
the idea of unsubsidised micro-credit accepted and recognised
a competent and well-trained professional staff well versed in internationally recognised
best practice methodologies of micro-credit
an external audit system.
an operational MIS
63
-
a client committee aimed at associating clients with decision-making regarding new
policies and procedures
an advisory committee drawing on both national and Arab competencies to steer the
implementation of the programme
internationally-recognised best practices refined and adapted to the Tunisian context able
to serve as a pilot project
an environment conducive to the development of best practice micro-finance in Tunisia
and in the Maghreb achieved through exchange and reflection.
Results expected
-
In December 200541, the programme will have achieved (see attached table).
Activities
a.
strengthening institutional capacities and consolidation of policies and procedures
-
recruit executive staff and reinforce the current team.
identify and recruit loan officers in line with projections
devise a policy for salaries and incentives
produce an administrative and a financial manual
train staff in management (financial management, data management, analysis of ratios)
train loan officers (enterprise management, marketing, solidarity groups, teamwork,
communications, monitoring of clients)
organise staff retreats every six months for reflections on the programme
review the current policies and procedures in line with programme expansion
draft an operations manual.
b.
c.
-
41
loan disbursement activities and monitoring the portfolio
loans disbursed in line with projections (solidarity groups, including follow-up and
collaboration with group leaders)
monitoring of repayments
financial management of portfolio and other funds
improve loan disbursement procedures and methodologies, calculate ratios
open or consolidate three branches
market the programme in new zones.
Client support
regular monitoring and support to clients
train groups in self-management, community spirit, literacy, management
hold information meetings
In fact, the project activities began one year later; the data presented was updated to December 2004 with ICCO’s
agreement.
64
d.
Consolidation of the audit system
-
recruit and train an internal auditor
obtain the services of a private audit company for the auditing of the accounts
e.
Monitoring and evaluation of the project and of the impact of the loans on clients and
their families
-
set up a Committee of Advisors
strengthen the Clients’ Committee by regular meetings aimed at client participation in
improvements to procedures
contribute to broader understanding of micro-credit best practices through meetings and
exchanges with Tunisian NGOs
strengthen exchange and networking among MFIs in the Arab region.
Evaluation
Annual self-evaluation of project performance and impact will be undertaken, as well as mid-term
and final evaluations by external consultants in collaboration with ICCO.
In the terms of reference for these evaluations, the following elements will be included:
a. outreach
-
are crenda services reaching the poor/poorest
is the share between women and men clients reasonable
is the number of clients reached proportional to available resources
growth strategy: is there an appropriate strategy to attain outreach
b. Contribution to development
-
is the credit system adapted to the needs of the target group
do the financial products take sufficient account of the possible effects on income security
and self-promotion and are possible negative effects taken into account
are there differences between different client groups in terms of performance and the
services offered. What do such differences tell about the structure of CRENDA
does the organisation use an appropriate SME system to evaluate development impact.
c. Financial results
-
transparency: do the financial reports provide a clear idea of enda’s financial results
does the portfolio show good repayment rates
are administrative and operational costs reasonable and sustainable
does the gross financial margin??? suffice to cover total costs (within a reasonable time
frame)
is CRENDA moving towards greater independence from donors
d. Organisational structure
-
are the mandate, management and administration of CRENA sufficiently separated from
the other activities of enda
65
-
do the achievements of CRENDA denote adequate expertise and experience on the part of
its management
e. Planning, monitoring and evaluation
-
f.
have the planned activities been adjusted in the light of achievements
are policies, procedures and decisions followed and registered.
does the MIS generate the information required to monitor progress on the planned
activities
Relations with other institutions
-
does CRENDA entertain quality and appropriate relations with other institutions
(supervisory bodies, evaluating organisations, similar institutions, bodies specialised in
financial and technical services
g. General financial situation of the organisation
-
transparency: are the financial statements presented clearly and comprehensibly
financial health: is the situation of the organisation generally healthy.
66
ANNEX III
Project Intermon/AECI
Translation/adaptation from French of the main elements42
OBJECTIVES
General Objective: Improve the quality of life of families living in the most vulnerable and
underprivileged areas of the suburbs of Tunis, by integrating them into the economy of the informal
sector, with special reference to women.
Indicators:
-
increase in employment in the areas covered
fall in the number of families with a monthly income of less than DT200
increased participation of women in local organisations.
Specific objectives:
1.
Contribute to the integration into the economy of the informal sector of families living in
vulnerable and underprivileged areas in the suburbs of Tunis. Creation and consolidation of
micro-enterprises and encouragement of the enterprising spirit, providing regular access to
credit and improving the quality of management.
Indicators:
-
number of new micro-entrepreneurs setting up a micro-enterprise
number of new micro-entrepreneurs expanding their business and obtaining several loans
improvement in the repayment rate (98.31% in 1999).
reduction in the number of micro-enterprises that go bankrupt (2% in 1999)
increase in the number of micro-enterprises having increased their turnover
Increase women’s empowerment
2.
Indicators
-
42
increase in the number of families living off income generated by female microentrepreneur heads of family
increase in the number of micro-enterprises created by women in order to cover their
children’s needs
It should be noted that this was the first micro-credit project funded by Intermon. It was the first to be drafted
following intensive discussions with the local partner (their project preparation officer spent a full week at
ENDA’s offices). Their usual practice is to gather elements and data at a distance and draft projects at Madrid
without visiting the project site. The absence of experience in micro-credit meant that they based the document
on the usual project approach, insisting on describing many separate “activities” and thus defining indicators
that may sometimes appear unrealistic.
67
3.
changes in women’s capacity to take part in decision-making within the family and the
community
increase in the number of women participating in the Client Committee.
Consolidate the micro-finance programme (reach 5000 clients by the end of the project
period).
Indicators:
-
increase in active clients during the project period from 1900 at the start of the project
rise in operational self-sufficiency from 37% in 1999.
reach 9 “délégations” (up from 7) by the end of the project period.
EXPECTED RESULTS
1.
Micro-entrepreneurs will be encouraged and regular access to credit will be provided
By the end of the project, the number of loans will increase from 2518 loans granted to 1430 microentrepreneurs in 1999 to 5332 loans granted to 4000 micro-entrepreneurs by the end of the project.
Indicators
2.
number and amount of loans granted to new clients
number of loans renewed
increase in the value of portfolio (estimated at DT 500 000 at the start of the project).
The quality of the management of the micro-enterprises will improve
The quality of management skills by micro-entrepreneurs in the programme will improve thanks
to monitoring of all the clients and basic training in administration, marketing, and accountancy for all
those that need it.
Indicators
-
3.
number of visits to micro-enterprises and share of clients concerned
number of micro-entrepreneurs trained in the various fields as well as the degree of
application of this acquired knowledge.
Women micro-entrepreneurs will obtain assistance for self-emancipation, community
participation and the exercise of their citizenship.
All women clients will have access to training in democratic and participatory practices as well as
legal advice enabling them to defend their interests and increase their negotiating skills. 60% of these
women will be members of solidarity groups.
Indicators
-
number of visits and share of women clients visited.
number of training sessions, or participants at these sessions and share of women
participating in the programme and degree of application of new skills
68
-
number of solidarity groups created by women micro-entrepreneurs (409 women or
mixed groups ate the start of the project).
share of loans granted through women or mixed solidarity groups (46% of women in
groups at the start of the project).
-
4.
The programme reaches new zones
At the end of the project period, two new branches will have been opened.
Indicators
5.
level of equipment of the branches and number of staff working in them
number of active clients in the new delegations.
The programme will be viable and autonomous, both operationally and financially
By the project’s end, the local partner will have improved its internal efficiency and its
operational and financial management thanks to the setting up an MIS. This will enable it to achieve
operational and financial self-sufficiency. The number of clients per loan officer will rise to between 300
and 375.
Indicators
-
level of operation of the MIS
speed and regularity in obtaining up-dated data
the rate of non-repayment remains less than 1.5% (1.26% in 1999)
the portfolio at risk remains below 5% (2.83% in 1999)
the rate of write-offs (> 180 days late) falls to around 2% (5% in 1999)
the number of active clients per loan officer rises.
ACTIVITIES
1.
Promotion of the micro-finance programme
Promotion will be undertaken in the suburbs of Tunis through the following activities:
a.
b.
c.
d.
e.
f.
g.
h.
2.
a brochure in Arabic will be produced and widely distributed
3000 posters and stickers will be designed and distributed to micro-entrepreneurs in
the area
5 meetings will be organised each year in each area, with the blessing of the local
authorities, to present the programme to potential clients
2 meetings will be held in each area at the Employment Office in order to reach
unemployed youth
2 meetings will be held at the branches for new potential clients
Each quarter, a meeting will be held with well-established clients with a view to their
contributing to promotional activities
5 articles will be published annually by the media
a quarterly review will be published to inform clients of programme activities.
Micro-credit will be granted and repayment obtained
69
Activities aimed at disbursing loans and ensuring repayment are as follows:
a.
b.
c.
d.
e.
f.
g.
3.
loans officers will enquire into the economic and social situation of new clients
supervisors will check out the data collected
the director of crenda and the programme director will approve the loans
a loan file will be opened for each client
data and other information on the portfolio will be entered into the MIS and in the
accounting documents
data management and analysis will be undertaken, outlining the trends, and ratios
calculated
monitoring of clients with late payments will be undertaken, including possible
recourse to legal measures to obtain payment and penalties will be applied.
Training and follow-up of clients
Clients will receive follow-up on the management of their loan and basic training in management and
accounting, training being voluntary. The following activities will be carried out:
a.
b.
c.
d.
4.
after disbursement, loan officers will make monthly visits to clients and assist them
with debt management and promote solidarity
in line with requests from clients, on-the-job training will be provided
micro-entrepreneurs will receive training once monthly in management, accounting,
marketing… at enda’s headquarters and the Tunisian Employment Agency will
provide training twice yearly. Attendance at training sessions will be voluntary.
3 different types of guides for micro-entrepreneurs will be produced in Arabic and
distributed to clients.
Priority to Women
For activities 2 and 3 above, priority will be given to women.
5.
Establishment and follow-up of self-managed solidarity groups
In order to encourage women’s autonomy in the areas concerned, the following will be done:
a.
b.
c.
d.
e.
f.
g.
h.
solidarity groups of 5 -7 members will be formed, all women or with at most one
man.
4 meetings will be held prior to the first loan being disbursed. Each group will elect a
group leader and a treasurer.
the supervisors will check out the solidity of the group prior to the loan being
approved.
literacy and numeracy classes will be organised
advice and counselling will be proposed in subjects such as taxation, legal matters,
and health
activities of a social nature will be organised, including 3 annual exchange visits
between micro-entrepreneurs and an annual trade fair.
2 parties for women clients will be organised each year in the course of which the
best clients will receive prizes
case studies illustrating the situation of women in the zones will be undertaken.
70
6.
Expansion of the programme to two new “delegations”.
Two small-scale market studies will be undertaken with a view to opening new branches at Douar Hicher
and Hrairia.
To this end, two offices will be rented and equipped
2 new supervisors and 4 loan officers will be recruited.
7.
Strengthening of the programme team in terms of quantity and quality.
The following will be done in order to improve the staff’s capacities.
a.
b.
c.
d.
8.
a financial director and a director of operations will be recruited, as well as an
internal auditor
2 staff members will be recruited and trained in the use of the MIS
loan officers will be trained twice a year with special emphasis on their advisory and
monitoring abilities, including training abroad
exchanges will be organised with MFIs in other Arab countries.
Introduce an MIS and internal audit aimed at improving the quality and capacities of the
programme
An MIS will be installed. An internal audit system will aim to ensure that operations are properly
conducted and the procedures followed. A staff management programme will also be set up. A procedural
manual will be drafted, covering operations, administration and finance.
9.
Monitoring of the micro-credit programme, research and impact evaluation.
The following activities will be undertaken with a view to exhaustive monitoring of accounting and
financial operations in order to reach self-sufficiency:
a.
b.
c.
d.
e.
f.
10.
data collection and analysis will be done, providing statistics for programme
monitoring
monitoring reports on programme achievements will be prepared
a photo album on the clients will be constituted
increased documentation will be added to the documentation centre
annual polls will be organised to assess the quality of services
a modest impact study will be undertaken.
Consolidation of the micro-credit programme
The following will be done to consolidate the programme model in the country:
a.
b.
partnership agreements will be negotiated with national and local authorities such as
the Ministry for Women, the Tunisian Employment Agency and the Tunisian
Solidarity Bank.
Articles and reports will be published in the press.
71
ANNEX IV
Intermon/AECI Project
In this Annex, we will try to reflect on those issues, which were mentioned in the grant proposal
and which were not covered by the CGAP Appraisal Format.
The consultant was informed that this was the first Micro-credit Project funded by Intermon. It
seems that the absence of experience in Micro-credit was behind the fact that the project proposal
document was prepared based on the usual project approach they use in other typical development
projects.
The Overall Objective: Improve the quality of life of families living in the most vulnerable
and underprivileged areas of the suburbs of Tunis by integrating them into the economy of the informal
sector, with special reference to women.
It is believed that the project contributed to such an objective. The overwhelming majority of the
clients who were interviewed during the mission, especially those who took several loans from ENDAIA, talked about the increase in their income as a result of the loans and about their satisfaction from the
quality of services ENDA-IA provides for them. Also, the fact that ENDA-IA has a relatively high client
retention rate is an indication of client satisfaction. Of course, this is not enough to prove scientifically
that there was a positive impact. ENDA-IA is planning to implement an Impact Assessment in the near
future to try to measure the impact of its work on the life of its clients.
It is important to mention here that micro-credit is not a job creation tool. Though some of
ENDA-IA clients began their businesses with the first loan and succeeded, those are very limited numbers
and usually MFIs tend to lend more for existing business as the risk is lower. Still by doing so, they
sustain vulnerable jobs.
In the matrix below, we tried to go thru each objective/expected result and activity and to try to
assess the degree of achievement for that.
72
Project objectives, expected results and activities – degree of achievement43
Indicators
Objectives
Improve the quality
of life of families
living in the most
vulnerable
and
underprivileged areas
of the suburbs of
Tunis, by integrating
them
into
the
economy of the
informal sector, with
special reference to
women.
*
increase
in
employment in the
areas covered
* fall in the number of
families
with
a
monthly income of
less than DT200
*
increased
participation
of
women
in
local
organisations.
* Contribute to the
integration into the
economy of the
informal sector of
families living in
vulnerable
and
underprivileged areas
in the suburbs of
Tunis. Creation and
consolidation
of
* number of new
micro-entrepreneurs
setting up a microenterprise
* number of new
micro-entrepreneurs
expanding
their
business
and
obtaining
several
loans
43
Activity
Degree of achievement and
comments
Some of the areas where enda
works, in particular Hay
Ettadhamen, show clear signs
of recent economic progress.
The employment situation is
complex and CRENDA’s
contribution to job creation,
can only be small given the
size of the population (1
million inhabitants).
A small study of 40 clients
undertaken in 2002 showed
the results given in table 1,
which show that for over 90%
of clients, incomes progressed
substantially. Baseline income
data is collected, in principle,
by the loan officers and must
be assumed to be reasonably
accurate. But it was found not
to be readily available from
the MIS meaning systematic
tracking is not currently
possible.
Few women clients spoken to
appear to be participating (or
interested)
in
local
organisations.
Only 4% of CRENDA clients
have a new enterprise and 10%
have been in existence for less
than a year at the time of the
first loan, making roughly
1000 “new” micro-enterprises
with a loan in March 2003.
Business expansion can be
judged from the evolution of
loan size (higher loans are not
It should be noted that this was the first micro-credit project funded by Intermon. It was the first to be drafted
following intensive discussions with the local partner (their project preparation officer spent a full week at
ENDA’s offices). Their usual practice is to gather elements and data at a distance and draft projects at Madrid
without visiting the project site. The absence of experience in micro-credit meant that they based the document
on the usual project approach, insisting on describing many separate “activities” and thus defining indicators
that may sometimes appear unrealistic.
73
micro-enterprises
and encouragement
of the enterprising
spirit,
providing
regular access to
credit and improving
the
quality
of
management.
* improvement in the
repayment
rate
(98.31% in 1999).
* reduction in the
number of microenterprises that go
bankrupt (2% in 1999)
* increase in the
number of microenterprises
having
increased
their
turnover
Increase
women’s * increase in the
empowerment
number of families
living off income
generated by female
micro-entrepreneur
heads of family
* increase in the
number of microenterprises created by
women in order to
cover their children’s
needs
* changes in women’s
capacity to take part in
decision-making
within the family and
the community
* increase in the
number of women
participating in the
Client Committee.
given unless justified). During
the project period, 70% clients
renewed their loan at least
once. As of March 2003, 95
active clients had received 10
loans or more.
The loan repayment rate was
99.2% in March 2003, a very
high rate. Repayment on time
(0 days late) evolved from
83% in September 1999 to
95% in the first quarter of
2003.
Client
micro-entrepreneurs
that went bankrupt remains
very low at around 4%
(possibly over 20% in the
country as a whole).
Increasing
turnover
and
expanding business are very
similar terms (see above).
No information was found
enabling the evaluator to reply
to this item. If the number
increased, it tends to imply a
fall in male income-earning
capacity which appears to be
the case in some families (job
loss
due
to
factories
closing…).
The reasons women create a
micro-enterprise are multiple
but experience in every
country, confirmed through
discussions with clients, is
usually as a priority to
improve
their
children’s
current and future prospects.
Enda staff affirm that several
clients have created a microenterprise for their children
(most often their son) but
relevant data has not been
collected on this phenomenon.
This is a question of
empowerment on which hard
data cannot be provided.
Declarations by many clients
indicate that they gain a
greater say in family affairs by
generating and controlling
74
Consolidate the
micro-finance
programme (reach
5000 clients by the
end of the project
period).
Expected Results
Micro-entrepreneurs
will be encouraged
and regular access to
credit
will
be
provided.
The
number of loans will
increase from 2518
loans granted to 1430
micro-entrepreneurs
in 1999 to 5332 loans
granted to 4000
micro-entrepreneurs
by the end of the
project.
The quality of the
management of the
micro-enterprises
will improve thanks
to monitoring of all
* increase in active
clients during the
project period from
1900 at the start of the
project
* rise in operational
self-sufficiency from
37% in 1999.
*
reach
9
“délégations”
(up
from 7) by the end of
the project period.
income. In their community,
they gain recognition and
some
become
informal
advisors and counsellors for
other women.
A Client Committee had
operated in 1999 – 2000 but
has since lapsed. There is
about 1 meeting with clients
each week in one branch or
another. And client opinion
and requests are noted. There
seems to be a case for setting
up Client Committees at each
branch (how to designate the
members?) from which a
central Client Committee
could be elected.
* See general report
* See general report
* See general report
* number and amount
of loans granted to
new clients
* number of loans
renewed
* increase in the value
of portfolio (estimated
at DT 500 000 at the
start of the project).
*See general
Intermon table
report
and
* number of visits to
micro-enterprises and
share
of
clients
concerned
* number of micro-
* In principle, clients receive
three visits form the loan
officer during the constitution
of their loan agreement and
monthly
thereafter.
The
* During the project period, 95
clients renewed their loan at
least once.
* See general report
75
the clients and basic
training
in
administration,
marketing,
and
accountancy for all
those that need it.
entrepreneurs trained
in the various fields as
well as the degree of
application of this
acquired knowledge.
Women
microentrepreneurs
will
obtain assistance for
self-emancipation,
community
participation and the
exercise of their
citizenship.
* number of visits and
share
of
women
clients visited.
* number of training
sessions,
or
participants at these
sessions and share of
women participating
in the programme and
degree of application
of new skills
* number of solidarity
groups created by
women
microentrepreneurs
(409
women or mixed
groups ate the start of
the project).
* share of loans
granted
through
women or mixed
solidarity
groups
(46% of women in
groups at the start of
the project).
All women clients
will have access to
training
in
democratic
and
participatory
practices as well as
legal advice enabling
them to defend their
interests and increase
their
negotiating
skills.
60% of these women
will be members of
solidarity groups
At the end of the * level of equipment
project period, two of the branches and
consultant noted that such
visits are not systematic (some
clients are virtually never
visited) which is a serious
breach of the procedures.
Moreover, loan officers ability
to advise in accountancy and
management is limited and
further training for them in
these areas would be justified.
Premiums could be paid for
proven ability in these areas.
* A case could be made for
training appointing follow-up
officers.
* During the project period,
only a very small proportion of
clients received training.
* See above
* Training courses are almost
exclusively
attended
by
women.
* Information and counselling
sessions provide a degree of
self-emancipation
and
participatory
skills
by
providing
clients
with
knowledge about their rights.
See table.
* In March 2003, 70% of
women clients were members
of women or mixed groups.
While a client may obtain an
individual loan after three
problem-free group cycles,
approximately one quarter of
groups stay together beyond
the 3rd loan, implying that
groups
develop
internal
cohesion and dynamic, a
phenomenon confirmed in
discussions with clients. See
study by Margherita Castelli:
Les
Groupes
Solidaires,
August 2002.
See table on groups.
See table on branch opening,
clients etc.
76
new branches will number
of
staff
have been opened.
working in them
* number of active
clients in the new
delegations.
Standard
equipment
for
branches is: 2 computers, 1
printer, 1 photocopier, 5 desks,
5 office chairs, 80 normal
chairs, 3 cupboards with keys,
1
safe,
1
telephone,
ventilators/air
conditioners,
heaters, 2 notice boards, 1
stove, 1 refrigerator.
The programme will
be
viable
and
autonomous,
both
operationally
and
financially
See general development on
the MIS.
See tables on the programme
and specific data on the
Intermon project period.
See general report on loan
officer performance.
By the project’s end,
the local partner will
have improved its
internal
efficiency
and its operational
and
financial
management thanks
to the setting up an
MIS.
This
will
enable it to achieve
operational
and
financial
selfsufficiency.
* level of operation of
the MIS
* speed and regularity
in obtaining up-dated
data
* the rate of nonrepayment
remains
less than 1.5% (1.26%
in 1999)
* the portfolio at risk
remains below 5%
(2.83% in 1999)
* the rate of write-offs
(> 180 days late) falls
to around 2% (5% in
1999)
* the number of active
clients per loan officer
rises.
The
number
of
clients
per
loan
officer will rise to
between 300 and
375.
Activities
Promotion of
micro-finance
programme
the
* a brochure in Arabic
will be produced and
widely distributed
* 3000 posters and
stickers
will
be
designed
and
distributed to microentrepreneurs in the
area
* 5 meetings will be
organised each year in
each area, with the
The consultant was informed
that the brochure was not
produced due to a high rate of
illiteracy among clients, the
lack of a reading culture, and
the
cost-effectiveness
of
producing the brochure in
these
conditions.
10 000
stickers were produced and
distributed. During his visits to
clients the consultant did/did
not/ notice these stickers being
77
blessing of the local
authorities, to present
the programme to
potential clients
* 2 meetings will be
held in each area at the
Employment Office in
order
to
reach
unemployed youth
* 2 meetings will be
held at the branches
for new potential
clients
* Each quarter, a
meeting will be held
with well-established
clients with a view to
their contributing to
promotional activities
* 5 articles will be
published annually by
the media
* a quarterly review
will be published to
inform
clients
of
programme activities.
Micro-credit will be
granted
and
repayment obtained
(with priority to
women)
* loans officers will
enquire
into
the
economic and social
situation of new clients
* supervisors will
check out the data
collected
* the director of
crenda
and
the
programme
director
will approve the loans
* a loan file will be
opened for each client
* data and other
information on the
portfolio
will
be
displayed. Wall calendars
were produced and distributed
to clients in 2000 and 2001.
The planned meetings did not
take
place:
promotional
activities were undertaken in
other ways that appear to have
been effective.
The consultant was informed
that relations with the local
Employment Offices mainly
concerned staff recruitment.
Marketing of the programme
is reportedly done mainly by
clients (80%) implying a high
degree of satisfaction with the
services proposed. Marketing
and promotional campaigns
are undertaken by the staff but
special meetings have not been
held.
Quarterly
meetings
with
established clients reportedly
have not been held since
clients spontaneously do the
marketing
without
such
meetings (see above).
In early 2003, an internal staff
review was published on an
experimental basis but with no
second issue at the time of the
evaluation. This may be
developed into a staff and
client review if the means
become available.
Economic and social data on
clients appears to be collected
but is not entered into the MIS,
meaning for practical purposes
that baseline information is not
available. The consultant has
the impression that such data
is not collected seriously
(forms filled in without a visit
to the enterprise, for instance)
and more importance should
be given to this by the internal
controllers.
The loan approval process is
adequate, with six levels of
control before the cheque is
78
entered into the MIS
and in the accounting
documents
* data management
and analysis will be
undertaken, outlining
the trends, and ratios
calculated
* monitoring of clients
with late payments
will be undertaken,
including
possible
recourse
to
legal
measures to obtain
payment and penalties
will be applied.
Clients will receive
follow-up on the
management of their
loan
and
basic
training
in
management
and
accounting, training
being voluntary (with
priority to women).
signed.
Client loan files both physical
and on the MIS are/are not
properly maintained.
Late payment entails a penalty
of 1 DT per day late and other
sanctions. Payment on time
improved during the project
period and has reached an
impressive 96.5% not attained
by many MFIs.
ENDA applies social pressures
to obtain payment and
practises
a
policy
of
rescheduling when a client
appears to have genuine
difficulties and calling, by
degrees, on a lawyer, a bailiff
and the courts when a client is
clearly
in
bad
faith.
Rescheduling, even in special
cases, is not generally a good
policy.
* after disbursement, These visits are not systematic
loan officers will make (see above).
monthly
visits
to
clients and assist them
with debt management
and promote solidarity
* in line with requests This has not been done,
from clients, on-the- apparently for lack of funding.
job training will be
provided
On training, see above.
* micro-entrepreneurs
will receive training
once
monthly
in
management,
accounting,
marketing… at enda’s
headquarters and the
Tunisian Employment
Agency will provide A guide was produced in
training twice yearly. March but had not been
Attendance at training reproduced or distributed at
sessions
will
be the time of the evaluation. No
voluntary.
other guides or manuals for
* 3 different types of clients had been produced.
guides for microentrepreneurs will be
produced in Arabic
and distributed to
79
Self-managed
solidarity groups will
be established and
follow-up ensured
Expansion of the
programme to two
new “delegations”.
clients.
* solidarity groups of
5 -7 members will be
formed, all women or
with at most one man.
* 4 meetings will be
held prior to the first
loan being disbursed.
Each group will elect a
group leader and a
treasurer.
* the supervisors will
check out the solidity
of the group prior to
the
loan
being
approved.
*
literacy
and
numeracy classes will
be organised
*
advice
and
counselling will be
proposed in subjects
such as taxation, legal
matters, and health
* activities of a social
nature
will
be
organised, including 3
annual exchange visits
between
microentrepreneurs and an
annual trade fair.
* 2 parties for women
clients
will
be
organised each year in
the course of which
the best clients will
receive prizes
*
case
studies
illustrating
the
situation of women in
the zones will be
undertaken.
*Two
small-scale
market studies will be
undertaken with a
view to opening new
branches at Douar
Hicher and Hrairia.
The groups are in fact between
3 and 6, mainly since not all
clients
are
sufficiently
confident in a sufficient
number of other clients.
Pressure for the higher number
has in the past led to “dud”
group members and various
weaknesses such as nonrepayment by the additional
member. Many women clients
refuse to accept even one man
in their group.
Literacy classes are not
organised (clients can accede
to State-sponsored literacy
courses).
See
table
of
meetings
organised. Many clients do not
appear to be aware of such
meetings though those that
have
attended
generally
express satisfaction. This
service would be more
effective if meetings were
organised regularly (same day
and time) in each branch.
No trace was found of
exchange visits but xx trade
fairs were organised during the
project period (the consultant
visited the one at Douar
Hicher during his stay and
clients expressed satisfaction).
Some
15
parties
were
organised during the project
period. Such events are used to
introduce and recognise the
best clients.
ENDA-IA always sends its
officers to understand the area
where it will open a new branch
before it does so. Actually in
many cases, those officers
begin working in the area from
other branches and over time
they open a branch there.
80
The programme team
will be strengthened
in terms of quantity
and quality.
An MIS and an
internal audit will be
introduced aimed at
improving
the
quality
and
capacities of the
programme.
The
micro-credit
programme will be
monitored,
and
research and impact
evaluation will be
undertaken.
* To this end, two
offices will be rented
and equipped
* 2 new supervisors
and 4 loan officers will
be recruited.
* a financial director
and a director of
operations will be
recruited, as well as an
internal auditor
* 2 staff members will
be
recruited
and
trained in the use of
the MIS
* loan officers will be
trained twice a year
with special emphasis
on their advisory and
monitoring abilities,
including
training
abroad
* exchanges will be
organised with MFIs
in
other
Arab
countries.
* An MIS will be
installed.
* An internal audit
system will aim to
ensure that operations
are properly conducted
and the procedures
followed.
* A staff management
programme will also
be set up.
* A procedural manual
will
be
drafted,
covering operations,
administration
and
finance.
* data collection and
analysis will be done,
providing statistics for
programme monitoring
* monitoring reports
on
programme
achievements will be
prepared
* a photo album on the
See general report.
See general report.
At the time of drafting the
evaluation report, the financial
director had been recruited and
was about to take up his
position.
The
internal
controller
produces
satisfactory
reports
but
requires further training.
See general report.
See
general
report:
developments on the MicroFinance Network in the Arab
World.
See general report.
See above.
Manuals have been drafted
and were being finalized or
improved
during
the
evaluation period.
See general report on the MIS.
A CD-Rom of photos has been
supplied to Intermon.
ENDA possesses a wide range
81
The
micro-credit
programme will be
consolidated
clients
will
be
constituted
*
increased
documentation will be
added
to
the
documentation centre
* annual polls will be
organised to assess the
quality of services
* a modest impact
study
will
be
undertaken.
*
partnership
agreements will be
negotiated
with
national and local
authorities such as the
Ministry for Women,
the
Tunisian
Employment Agency
and
the
Tunisian
Solidarity Bank.
* Articles and reports
will be published in
the press.
of documentation on many
aspects of micro-finance.
Further documentation is
regularly
purchased,
or
downloaded from Internet. A
disadvantage for most of the
staff is that a high proportion
is in English.
Client opinion is gathered
through meetings.
See general report
Evaluation of CRENDA Client incomes44
44
Situation
Number of
clients
Percentage of
sample
Excluded
from
program
Decline in income
Stagnating income
23% annual increase
34% annual increase
1
2.5%
2
3
19
15
5%
7.5%
47.5%
37.5%
TOTAL
40
100
Based on a survey of 40 clients carried out in September 2002.
82
ANNEX V
Sources


“Making Micro-finance Work in the Middle East and North Africa”
Judith Brandsma and Rafika Chaouali, the World Bank and Regional Bureau for Arab States/UNDP
1998


“Making Micro-finance Work Better in the Middle East and North Africa”
Judith Brandsma and Laurence Hart, the World Bank 2001

“The Microbanking Bulletin, the Premier Source of Industry Benchmarks” Issue No.8, November
2002.

Enda inter-arabe: Annual Reports 2000, 2001, 2002

Enda inter-arabe: Business Plan 2003-2005

Rafik Missaoui: Evaluation du Programme de Micro-crédit de enda inter-arabe, septembre 2001 (for
Intermon)

Rym A. Kaki: Microlending for the poor: the challenge of poverty alleviation and evaluation
University of Southern California, 2003

Selena Kyle: Female Client Experiences in Micro-entrepreneurship: a case study of enda inter-arabe
Tunis, Standford University President’s Scholar research project; 1998

Azzam Mahjoub: Lutte contre la pauvreté par le micro-crédit: appui aux initiatives économiques dans
une zone péri-urbaine de Tunis: Ettadhamen-Douar Hicher-Mnihla, septembre 1997 (for enda
inter-arabe)

Juliette Leconte-Weisz: Répercussions psycho-sociales de l’entreprenariat sur le statut de la femme,
évaluation de l’octroi de micro-crédits, juillet 2000 (for enda inter-arabe)

Intermon/Oxfam-AECI project

ICCO/EC project
Web-pages:





www.worldbank.org
www.undp.org
www.AmericanArabInstitute.org
www.endarabe.org.tn
http://www.investintunisia.com/fre/poleA/center0212.html
83
ANNEX VI:
List of Borrowers which were chosen from the MIS for visits
Client ID
Client
00119193 Fatma
Abderahmen
00210978 Meriem
Mohamed
00272442 Faouzia
Ahmed
00349808 Samia
Majid
00434153 Emna
Mohamed
00476126 Najet
Amor
00509567 Chérifa
Mohamed Saleh
00535918 Gouta
Mouldi
00563836 Mabrouka Amara
00597539 Radhia
Amor
00635026 Mbarka
Chedly
00659067 Mongi
Mohamed
00674827 Saida
Mouldi
00688134 Nejia
Hassen
00702387 Hadhria
Salah
00717667 Mokhtar
Abdallah
00730135 Kamel
Mohamed
00742263 Chadlia
Bahi
00785611 Yamina
Amar
00843680 Mounira
Mohamed
01376469 Youssef
Mohamed
01766590 Farida
Ahmed
02172548 Mabrouka Massoud
02239896 Aicha
Khalifa
02356900 Saida
Sebti
02508025 Kamel
Lakhdhar
02706602 Zina
Jemli
03644861 Saada
Ali
03729240 Hadda
04250448 Taieb
Ali
04438495 Yamonta
Borni
04531468 Echrak
Mohamed
04617062 Hamida
Amine
04635330 Samia
Hassan
04652961 Selma
Ahmed
04670472 Sonia
Mohamed
04693929 Hela
Salah
04727001 Imen
Abdessalem
04769793 Lamia
Amar
04789610 Ahlem
Boujemaa
05188601 Mabrouka Dhib
05204306 Farida
Sassi
05219617 Nouri
Amor
05234788 Fatma
Belguessem
07250726 Samira
Said
07269229 Mohamed Salah
07288012 Zakia
Naceur
07303460 Abdelkader Boubker
07318429 Hayet
Khmisse
07339261 Kalthoum Toumi
07507606 Hénia
***
08315119 Sana
Amor
B0963
Nassima
Tijani
A/NA: active client / Non active client
Salah
Abid
Abidi
Ben Romdhane
Argat
Belhareth
Arfaoui
Ferchichi
Mejri
Kouki
Hosni
Maaoueni
Touhami
Jebali
Melki
Fathalla
Abidi
Hedhili
Ferchichi
Belmannoubi
Dalaii
Gharbi
Boughdiri
Amdouni
Soumri
Damghouni
Jemli
Mannaï
Kasdaoui
Aloui
Saidi
Jouini
Sadek
Askri
Bouzidi
Cherni
Hajji
Mahfoudhi
Khadhraoui
Jelassi
Massoudi
Ouerghui
Harbaoui
Ajbouni
Ben Abed
Oueslati
Hessini
Amari
Dhawedi
Mzoughui
Nasrallah
Chetoui
Ben Said
A/NA
A
A
A
A
A
NA
A
A
A
A
A
A
NA
A
NA
NA
NA
A
A
A
A
A
A
A
A
NA
NA
A
NA
NA
NA
NA
A
NA
NA
A
A
A
NA
NA
A
A
NA
NA
NA
NA
A
A
NA
A
NA
A
NA
Location # loans
ZH
1
DH
6
TD
4
HR
2
DH
3
Osup
3
OE
1
SH
1
ZH
4
TD
6
TD
4
TD
3
SH
3
MN
2
TD
2
TD
3
DH
1
DH
7
Tahr
1
HR
2
SH
2
HR
2
SH
2
DH
2
HR
2
DH
2
DH
4
ZH
1
DH
1
DH
5
OE
2
OE
1
ZH
5
DH
2
HR
1
SH
3
SH
2
ZH
1
Tahr
2
Tahr
1
TD
1
DH
2
DH
4
TD
1
OE
1
DH
1
TD
6
OE
5
TD
1
MN
3
MN
1
Tahr
4
TD
1
C officer
Tarak
Nizar
Fathia
Khaiereddine
Aida
Noureddine
Héla
Walid
Adel Khemiri
Noura
Lamia
Samir
Kamal
Adel Abidi
Noura
Fathia
Aida
Noureddine
Rekaya
Atef
Mondher
Atef
Mondher
Nizar
Nabiha
Adel Abidi
Nizar
Besma
Adel Abidi
Adel Abidi
Hager
Jamila
Adel Khemiri
Nabil
Tarak
Hichem
Walid
Tarak
Rekaya
Rekaya
Samir
Nizar
Nabil
Adel Abidi
Nafaa
Adel Abidi
Samir
Héla
Noureddine
Selma
Selma
Rekaya
Noureddine
84
Department
Name
Management Essma
BEN HAMIDA
Michael Philip CRACKNELL
Mohamed
ZMANDER
Mohamed Ali ATIG
Chokri
AYED
Houssem
CHEIKHROUHOU
Finance +
Habib
CHEBAANE
Adminstration Fathi
CHERNI
Samia
RAGGAD
Naoufel
MGHIRBI
Fahd
ELLILI
Lassaad
BEL HADJ
Hédia
BEN AHMED
Habiba
DERBALI
Wided
CHIBOUNI
Operations
Nabil
AMDOUNI
Tarek
AMDOUNI
Mourad
CHERNI
Mongi
TEBBINI
Mohamed
GHAZOUANI
Noura
ALOUI
Zouhair
JARBOUI
Héla
CHLAGOU
Walid
RTIB
Faouzia
HAOUATMIA
Houssem
CHEIKHROUHOU
Khaireddine AMAIRA
Fathia
MOUMNI
Adel
KHEMIRI
Rkaya
BETTAIEB
Sondess
MEZNI
Ibtissem
CHARFI
Atef
LOUNISSI
Olfa
GHALLAB
Latifa
TLILI
Samia
HAJ CHEDLY
Fathi
AL HAKIRI
Ramy
SALHI
Position
Co-director enda
Co-director enda
Director of Operations
Public Relations & partnership
Financial Director
Internal Controller
Accountant
Accountant
Accountant
comptable
Administrator
Analyste données
MIS data entry
MIS data entry
MIS Administor
Loan Officer in charge of branch
Veteran Loan Officer
Officer in charge of branch
Officer in charge of branch
Officer in charge of branch
Veteran Loan Officer
Supervisor
Veteran Loan Officer
Loan Officer
Loan Officer
Internal Controller
Loan Officer
Loan Officer
Veteran Loan Officer
Veteran Loan Officer
Veteran Loan Officer
Veteran Loan Officer
Loan Officer
Officer in charge of BDS
Loan Officer trainee
Loan Officer trainee
Loan Officer trainee
Research and marketing
85
ANNEX VII
List of Staff Interviewed during the Mission
Department
Name
Management Essma
BEN HAMIDA
Michael Philip CRACKNELL
Mohamed
ZMANDER
Mohamed Ali ATIG
Chokri
AYED
Houssem
CHEIKHROUHOU
Finance +
Habib
CHEBAANE
Adminstration Fathi
CHERNI
Samia
RAGGAD
Naoufel
MGHIRBI
Fahd
ELLILI
Lassaad
BEL HADJ
Hédia
BEN AHMED
Habiba
DERBALI
Wided
CHIBOUNI
Operations
Nabil
AMDOUNI
Tarek
AMDOUNI
Mourad
CHERNI
Mongi
TEBBINI
Mohamed
GHAZOUANI
Noura
ALOUI
Zouhair
JARBOUI
Héla
CHLAGOU
Walid
RTIB
Faouzia
HAOUATMIA
Houssem
CHEIKHROUHOU
Khaireddine AMAIRA
Fathia
MOUMNI
Adel
KHEMIRI
Rkaya
BETTAIEB
Sondess
MEZNI
Ibtissem
CHARFI
Atef
LOUNISSI
Olfa
GHALLAB
Latifa
TLILI
Samia
HAJ CHEDLY
Fathi
AL HAKIRI
Ramy
SALHI
Position
Co-director enda
Co-director enda
Director of Operations
Public Relations & partnership
Financial Director
Internal Controller
Accountant
Accountant
Accountant
comptable
Administrator
Analyste données
MIS data entry
MIS data entry
MIS Administor
Loan Officer in charge of branch
Veteran Loan Officer
Officer in charge of branch
Officer in charge of branch
Officer in charge of branch
Veteran Loan Officer
Supervisor
Veteran Loan Officer
Loan Officer
Loan Officer
Internal Controller
Loan Officer
Loan Officer
Veteran Loan Officer
Veteran Loan Officer
Veteran Loan Officer
Veteran Loan Officer
Loan Officer
Officer in charge of BDS
Loan Officer trainee
Loan Officer trainee
Loan Officer trainee
Research and marketing
86
ANNEX VIII
List of People (not ENDA-IA staff) which were met during the Mission
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Organisation
Banque de l’Habitat
BTS
Spanish Embassy
Spanish Cooperation Agency
AfDB
European Union delegation in
Tunisia
Ministry of Women and Family
APEL
FTSS
APEL-Tabarka Training Center
Development Initiative Support
Name
Aïssa Hidoussi,
Samia Mansour
Senén Florensa Palau
Victor Guasch
Ines Mazzarazza
Jeanne Nzeyimana (in
place of Ross Croulet)
Ramon Bernabeu
Position
CEO
Deputy CEO (micro-credit)
Ambassador
Coordinator General
NGO specialist
Micro-finance Expert
Abderrahmane Jmour
Director General and in charge
of the Micro-credit Mechanism
Moncef Zaafrane,*
Rafik Missaoui, *
Morched Chabbi,*
Mohsen Boujbel*
Abdelwahad Lajmi
Lassad Messadi
Ali Slaimi
Ayoub Ben Ali
Civil Society Officer
Executive Director
Executive Director
Director
Director
* A potential member of the Advisory Council
87
ANNEX IX
The Itinerary of the Evaluation’s Mission
August 30th- September 14th, 2003
Day
SAT
SUN
Date
Time
30/8 14:10
Morning
Afternoon
Evening
31/8 All day
Activity
MK Arrives
Transfer to Korba
Rest
Discuss with Co-Directors
Discussion with senior management
Return to Tunis
MON 01/9
End of
afternoon
Morning
Meet with finance staff
Afternoon
Meet with MIS and other staff
Evening
(drink)
Discuss with Rafik Missaoui (2nd
consultant)
Go to the field and meet some
clients
Go to the field and meet some
clients
Meet with selected branch staff
Aïssa Hidoussi, CEO Banque de
TUE
02/9
Morning
Afternoon
WED
03/9
9.30
l’Habitat (71 78 52 77)
10.30
12
Afternoon
THU
FRI
04/9
05/9
9 a.m.
11.00
5
9.00
1.30
Notes
Met at airport
Hotel, 40 km from Tunis
* Expectations from the evaluation
* Review the two projects and the
grant agreements and quote what is
useful from them
* Review available data
* Check available data and other
data required
* To get a general feel of the
programme and MIS
* Check out functioning of MIS
and other matters
* Agree on programme and task
sharing
Old zones
New zones
Discuss banking situation;
resistance to micro-credit; rules
and regulations at Finance Ministry
Samia Mansour, Deputy CEO
(micro-credit) BTS
(The appointment with the EU has
been rescheduled)
Perception of CRENDA, the
Spanish Embassy: 1. Victor Guasch; project, the environment, outlook
for micro-credit, the Spanish
2. Senén Florensa (Ambassador)
Cooperation Agency line of credit,
obstacles to its introduction in
Meet with clients/branch staff
Tunisia.
Jeanne Nzeyimana (in place of Ross Environment. MAFFE Mechanism.
Croulet), AfDB
Outlook. Tunisian NGO efforts to
change law…
Discuss with Michael: BDS
Visit client fair at Douar Hicher
Meet with branch staff (old areas)
Accompanied by Mohamed
Lunch Ramon Bernabeu, civil
Zmander
88
society officer, European Union
delegation in Tunisia
SAT
06/9
3.00
end of
afternoon
All Day
SUN
07/9
All Day
MON 08/9
9.00
All day
TUE
9.00
09/9
Evening
WED
10/9
All day
15.30 PM
Evening
THU
11/9
Morning
Afternoon
FRI
12/9
All day
End of
afternoon
SAT
13/9
SUN
14/9
24/9
25/9
26/9
30/9
8:30
Samia Mansour (BTS) second
meeting
Meet with branch staff (new areas)
Begin Analysis (getting data and
figures)
Begin Analysis (getting data and
figures)
Abderrahmane Jmour (MAFFE)
Meet with branch staff at selected
branches
Aïssa Hiddousi
Meet with clients
Dinner with potential Council
members: Moncef Zaafrane, Rafik
Missaoui, Morched Chabbi, Mohsen
Boujbel.
Meet with Clients
Meet with NGOs (at APEL office)
Dinner with Robin Kealy (UK
Abassador) and Omar Dajani
Final check on possible missing
data.
Discussions with staff as necessary
Prepare presentation
Party with all staff
Get an idea about the environment,
attitudes towards CRENDA, the
EU’s approach, possibility of EU
“pressure” on the government to
make environment more
conducive.
Second appointment
Get to know these first “members”;
no “training” required at this stage.
Restaurant “Le Pirate”
Discussion of environment (and
SANABEL business etc)
* Gather as necessary
* Check any details, possible
difficulties
At their request
Meet with senior management to
present the draft findings and to get
feed back on them
MK Leaves to Morocco
Report Writing
Report Writing
Report Writing
A draft will be sent to ENDA for
comments by the end of the day
Report finalized and sent to donors
and to enda
Preferably on 29th (Intermon’s
deadline)
89
ANNEX X:
Detailed Summary of the Evaluation’s Findings and Recommedations
I.
II.
Area
1. Legal Structure
& International
Status
2. Ownership
3. Alliances
4. Leadership
5. Human Resource
Management
Institutional Factors
Findings
positive
constraints
Law is not applicable (largest MFI in
- no local/special BoD, constrains
Tunis, only best practice)
on funding, partnerships etc
- no money from BTS
Attracted external funding
- ambiguity re future
High ownership feeling from the
management and the staff in general
Intrl: Diplomats, donors, CGAP
-Some locals feel threatened by
Rgnl: SANABEL, leading MFIs
ENDA
Local: clients, Mo'tamads and some
- No commercial investors yet??
officials
Highly capable committed co-directors
(created something from nothing)
A small group of highly committed young
mangers
Today if Essma and Michael leave,
ENDA might collapse
A rapidly growing MFI,
good working environment and team
spirit, low turn over
good personnel policies on different
levels
good salaries and incentives compared to
the market for loan officers and
supervisors
high investment in training the staff
(only Madam Essma can solve
it)???
Tendency to micromanagement
No personnel department and
no personnel manual
no competitive salaries for senior
positions
Recommendations
-to keep the international status while
overcoming the constraints: two orgs,
with one owning part of the other; council
of advisors etc..
Find ways to keep it while growing and
decentralization as a key for success
Reach more officials and explain your
case more.
More efforts from the directors into this
issue to change the law or at least to find a
window which would allow u + others to
work outside the law
to work toward canceling such a threat by
recruiting more managers, training them
and delegate more responsibilities for
them.
Use the MT meeting as an approach to
train and build capacity of managers
Create a personnel department even if it is
with one person now
Develop a personnel Manual
Improve the salaries for the senior
positions and management in order to be
able to attract managers with good
calibers.
To begin ENDA's training unit and to
handle most of the training internally and
90
most of the positions have clear job
description
6.Organisational
Structure
Clear in the area of operations, finance.
7. MIS
It replies to most of the program current
issues (after the impact reports are
installed)
8. Internal Control,
Audit
External audit
Internal control systems are good and
proved efficient
Internal controller for methodology is
new
Too much dependence on external
consultants and trainers
Confusing messages from different
trainers.
Some posts do not have clear job
description yet and even those
which have, it is not used well as a
reference for the job. Some new
staff did not see their job
description yet
New depts., people do not
understand exactly what is expected
from them, responsibilities keep
changing, etc.
Needs more development in the
new units/areas like: admin, client
service-R&D, PR, BDS, personnel
Except with the supervisors, two
models
It is not clear how it will reply to
future needs/issues like
Exponential growth
decentralization
No internal auditor
to limit dependence on outsiders for only
new and/or strategic issues.
To agree on training messages before
training
Finalize JDs for all posts, use them as the
base for the job and for the annual
expected results and develop/update them
whenever it is needed
Beside the jd, better training and
orientation for those not only about enda
and its work but about the work they are
expected to do.
To keep developing the structure and
building those new units
Need to choose a model for the branch
management and to use it
Work on two tracks:
Current system: better management and
follow up for the development needs with
the current supplier
Open eyes to see if a better system is
available in the market ( SANABEL
conference is a good opportunity in this
regard)
Internal auditor when decentralize
More stability for the internal controller
and more into customer service
91
II. Services, Clientele and Market
Area
Findings
positive
constraints
1. Loan Services
Only loans
no savings
began the life and disability insurance
recently
2. Non financial
Two kinds:
The first part is supported by donors
Services
-Expensive activities, small # of
and is donors' driven
beneficiaries etc like training in
management etc
-Cheap Activities, demand driven and
high participation of clients like,
exhibitions, trips and parties which are
almost covered by the clients
3. Outreach
4. Branch Structure
Loans are provided from the branch as
Clients go to the bank to disburse
checks. (one branch gives loans in cash)
the loan.
Repayments made in the branch
Loans are issued in the main office
Branches are welcoming environment to
MIS is centralized in the main
the clients ( kisses etc)
office
5. Loans
Several products
No deep understanding for the
market and the clients needs
Retention rate is relatively high
6.Clientele, Market
Compare figures with BTS
Recommendations
Stop the first kind
Focus on the second kind and do it on a
bigger scale and with clear plan/schedule
from the beginning of the year
Begin a cheap approach for training, like
video clips with important messages to be
shown to clients while waiting to receive
the loan or to pay their loan etc.
Reach 100,000 if funding is solved
Begin piloting decentralizing the MIS and
the finance to the branch
Market research and develop products
based on findings .
No understanding for why clients
leave
Exit survey, to be analyzed and policies
and products are developed based on the
findings/results
High percentage of clients Ben
Gerdan/risky, no inventory seen
during the visit, no need for 8
months loans etc..
Develop a special product for Ben Gerdan
( lower ceiling re the amount, short period
of time ( one cycle only), and try to
decide on a ceiling for its percentage
among ENDA's portfolio and # of active
clients.
Improve the client service, improve
Competition is coming
92
and Competition
No real competition
Others hate ENDA and see it as a
threat to their philosophies
7. Clients and
Poverty targeting
Enda targets poor neighborhoods
Poor microenterpreneurs (average loan
balance per GNP per capita = 10-15%)
>80% are women
efficiency and try to cut down interest
rates whenever possible
Get specialized in women
8. Market
III. Strategic Objectives
Area
Findings
positive
constraints
1. Mission and
Management and old staff believe in the
Many new staff at the same time
Objectives
mission and vision, new staff say that
might ruin the institutional culture
Business plan
Developed and updated
IV. Financial Performance
Area
positive
Income statement
Generated on monthly basis
Not used as a reference for short
plans?
Findings
constrains
Balance sheet
Adjustments
Every six months??
Was done for cost of fund as part of the
income statements
Portfolio quality
Very high quality, payment on time
>95%
Rescheduling and
refinancing
Was done on limited scale
How do you calculate the ratios??
Not done for inflation and for in
kind donations
Recommendations
Make sure to protect the institutional
culture while expanding
Use it
Recommendations
Generate on monthly basis
Begin using CGAP format and calculate all
the adjustments on monthly basis
Keep it
Proved to be not useful as it covers
arrears
ENDA stopped it. Keep that policy and do
not change it in favor of doing it
93
ANNEX XI
The Tunisian Micro-credit Law
Micro-credit in Tunisia:
Tunisia has long experience with credit programs, especially for rural development and to
encourage handicrafts. This has often been handled in the framework of internationally-funded
development projects. However, the credit element of rural projects was conceived as one instrument
among others for the implementation of the project and a means of guaranteeing a degree of
autonomy for the project beneficiaries.
Several special funds were set up to supply credit. These include:
1) The National Fund for the Promotion of Handicrafts and Small Crafts
2) The Regional Development Programme
3) Integrated Rural Development Fund
4) National Crafts Office, and
5) National Solidarity Fund
The repayment record of these various funds, about which official information is rarely
available, has been very poor, averaging perhaps around 30 per cent. This long experience has created
an environment that is definitely not conducive to micro-credit that must be repaid!
Tunisia has always adopted a generous attitude towards the underprivileged, a category of the
population that has been steadily declining as economic development has progressed. Under Islamic
custom, charity towards the poor (zakat) is a duty and the concept has remained even though in the
interim State-run taxation systems have been established to ensure a degree of redistribution of
wealth. Tunisia’s poverty-relief programs have generally been based on the charity approach. Thus,
the poor in Tunisia have adopted a charity mindset which was perceived as not easy to overcome.
This explains the high degree of non-repayment of loans under State programmes since “the
government’s money is my money”…
The Tunisian NGOs which had credit as part of their programs were not different from the
governmental organisations. Non of them was specialised in credit, they all were developmental
organisations which were providing credit as a small part of a bigger package/deal to their
beneficiaries45. Their repayment rate was not better than that of the governmental lending outlets.
45
NGOs used to call those to whom they gave loans, beneficiaries and not clients which reflects the way they
perceived them
94
The Tunisian Micro Credit Law:
The law on micro-credit adopted in July 1999, tried to build a framework for Micro-credit in
Tunisia to generate income and to improve the living conditions of the limited-income segments of
the Tunisian society:
1) It encourages the Tunisians to invest in funds which are allocated for micro-credit, should this
fund be managed properly, it makes it easy for MFIs to easily access loan capital to fund its
growth plans which is not available in many countries in the region.
2) It also legislates the creation of single purpose NGOs which solely focussed on micro-credit,
something which the international experience proved to be right in order to reach many
people in a cost efficient way.
3) It asked the Solidarity Bank of Tunisia ( BTS) to sign partnership agreements with those
newly created MFIs and to deal with their needs for start-up capital and for training etc. in
addition to giving them the required loan capital.46.
On the other hand, the law included the obstacle which prevents it from accomplishing its
goals:
1) The law consider the poor micro-entrepreneurs as a group which needs subsidised loans and
that the role of the government is to provide such subsidy
2) Accordingly the law fixes the interest rate at 5% declining rate and makes it clear that no
other fees or commission should be added to that. When we know that the inflation rate in
Tunisia is about 3% and the 90 days certificate of deposit rate in Tunisia is 6.13%, and that
the average operating cost ratio of efficient MFIs in the MBB varies between 15-25%, we can
tell that there is no way for such a rate to cover the cost of the credit program which
accordingly will always rely on subsidy to cover its cost.
3) The BTS realises that such an interest rate does not cover the cost of the association, so it
gives each association 20 TND per each loan they disburse up to 500 loans (this was
increased recently to 750 loans) and those associations benefit from the 21/21 program which
pays 50% of the salaries of new recruited staff who graduated from the university for 3 years
to help decreasing the level of unemployment.
4) The BTS argues that if the associations get loans from BTS for zero interest rate, and get 20
TND per loan and half the salaries of their staff are subsidized, then that is enough and they
should be able to cover their cost.
5) This looks logical from the outside, but ignores the fact that this argument is built on the
assumption that BTS will keep paying these associations forever, and that the staff are half
paid and there is no cost of funds.
6) If we add to this the fact the BTS requires that capital, supplied by the BTS, be reimbursed
every month to be reallocated in a system of perpetual motion that constitutes extraordinary
bureaucratic constraints on micro-credit providers, it becomes more and more clear that:
a) The BTS47 is actually converting those associations to wholesalers to its subsidized credit
activities. Those wholesalers will never be independent from the BTS.
46
A grant of TND 15,000 is given to each newly established credit NGO to cover the start up cost ( rent, computers,
furniture etc.). also a loan of 100,000 TND is given to each NGO for the loan capital.
47
It is not clear if this was meant by the BTS or it is just because they are not familiar with best practices and very
resistant to learn about it as they really believe that they have the solution and that the Tunisian Model is the
one which should be replicated in other parts of the world as the solution for micro-credit in the world.
95
b) No best practice cultures are created in those associations, this is why the overwhelming
majority of them issued loans up to 500 per year and then stopped as BTS pays only for the
first 500 loans. It is expected now that this number will increase to 750 since BTS increased
the # of loans to which it will pay the 20 TND per loan.
c) The fact that BTS requires the association to have at least 80% repayment on its loans in order
to disburse the second tranch of its loan to the association, gives the impression that 80%
repayment rate is acceptable. Accordingly, the announced repayment rate of these programs is
about 60% compared to almost 100% of the best practice programs.
d) This means that there is a good amount of losses in these programs which also make it
impossible to sustain these programs. BTS compensates for this by ensuring these loans with
the National Risk Guarantee Fund
e) There is no incentive for efficiency or for a good customer service. In my interviews with
ENDA-IA's clients, they all emphasized that its advantage number one vs the others that
while it takes a maximum of a week to get a loan from ENDA-IA, this period can easily
become one year with other resources and they do not get the loan in most of the cases.
f) It even goes beyond efficiency to corruption sometimes and favorism as some better off
people with good connections would find their way to these subsidized loans though they
could access loans from commercial sources as it is cheaper.
No figures are available about how much it cost the BTS to lend an outstanding TND, as such
figures would show them the whole story. They have some figures about their direct cost only and the
amount of their loans to the associations and the amount which was repaid till now. They could not
calculate the # of active clients and the amount of outstanding portfolio. Instead, they are dealing with
the # of loans issued and amount of loans disbursed.
As of 31/8/2003, BTS established/gave grants to 81 credit associations48 . They disbursed a total
of 61,000 loans amounting 45 million TND.
48
This number includes the 5 Tunisian NGOs which were there before BTS
96
ANNEX XII
Results of the BDS Activities
JUNE 2000 –MAY 2001
Activity
Number of
participants
49
Number of
sessions
180
Management/book-keeping/ Marketing
Tunisian Employment Office (ATE)
Management/book-keeping/ Marketing
ENDA staff
25
62
543
01µ
02µ
144
Ettadhamen
Douar Hicher
All areas
Advice on legal matters
70
18
Ettadhamen
Douar Hicher
Zouhour
Advice on health matters
340
96
Ettadhamen
Douar Hicher
Zouhour
Discussions
Parties
Excursions
35
210
79
02
03
03
Ettadhamen
3 zones
3 zones
Technical coaching
31
336
Ettadhamen
1 444
participants
**
Literacy
Total*
Area
Ettadhamen
3 crenda areas
Training by ATE is done over periods of one month for a total duration of 100 – 120 hours each course.
* This is not a true total since the same persons may have participated in several activities or types of service.
** Since «sessions» are of different nature, totalling them would be meaningless.
µ
2002 Results
Activity
Number of Participants
1. Meetings with clients
698
2. Parties
2058
3. Excursions
661
4. Trade Fairs
138
5. Counseling
100
6. Health Education
112
Total
3767
97