A simple loan tracking system: the first IT challenge for SAP & PF joint-initiative
Two weeks ago, I was telling you how the SAP community is supporting the Shea program in Ghana through its SCN team. The first challenge on which we have started working together is the development of a software aiming at tracking microloans' delinquency. Let me tell you more about this deliverable and answer questions that have been frequently asked :
- Why developing a loan tracking system?
- Doesn't PlaNet Finance already have a MIS offered by its department Microfit?
- And what does a loan tracking system has to do with the reinforcement of the shea value chain?
The starting point of the problem is that the loan officers of our partner MFIs do not have an adequate tool to follow-up on their portfolio in a timely manner. So most of the actions they take to recover delinquent loans are based on their memory on arrears. But when you have up to 700 clients, it is not safe to rely on memory to maintain a qualitative portfolio!
At the MFI's head offices, based in the regional capital of Tamale, there is a management information system named "Loan Performer" which has recently been installed. But this software is not at the branch level, where most of the loan officers work, both because of costs and availability of skills to run this quite complex software. So, the loan officers based in the branches send hand-written updates on group repayments to the head office which then enter the information into the MIS. The portfolio at risk is then known by the institution but long after the delinquency took place. Consequently, the loan officers can never have a timely update of their portfolio and delinquency measures are then taken too late...
A simple loan tracking system at the branch level will then solve two critical issues:
1) Delinquency due to the unavailability of accurate and timely information on the quality of their portfolio at the branch level
2) Lack of time to spend with clients due to a time-consuming reporting process and heavy caseloads
Loan tracking and reinforcement of the shea value chain
But what does a loan tracking system has to do with the reinforcement of the shea value chain?
Well, almost all clients of our partner MFIs are women who pick shea and process them into kernel. Therefore, if the loan officer spends less time on reporting and more time with the clients, he will be able to better monitor the business of its clients, which is an integral part of its credit monitoring. And if the pickers improve the quality of their products and the management of their sales, they will bring increasing value into the supply chain.
In addition to these direct benefits to the value chain, supporting the MFIs in reducing delinquency levels contributes to building its financial sustainability thus bringing financial and non-financial services to poor population on the long-run.
This also will have an impact on efficiency of MFIs as well as lead to less delinquency. Pls. have a look at blog from Michael Schwand on this topic Community considered MFI interest rates too high and refused to contribute…...
Local MFIs provided fruitful feedback to SAP Community
Some members of SAP community, namely Craig Cmehil and Abesh Bhattacharjee, have started developing the software and we have tested a first version with the MFIs last week. They were very excited to see the first result of the work achieved! They have been longing for it for a while now since my colleague and I where trying to develop it on excel but go stuck at some point with the loan ageing formula... This first version of SAP community totally satisfied the MFIs in term of rapidity to download and usability. Then, many comments were made on information required, functionality and accuracy of calculations. Hopefully, this fruitful feedback will enable the SDN team to complete the software development with an improved understanding of the field needs.
Thanks again for the involvement of the community & good luck to the developers for the coming weeks!
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