The new round of spot checks was conducted between November and December 2011. The main objectives were:
- To ascertain that the data as it appears on the MYC4 platform is the same as that on the providers records.
- To verify that the loans are actually given to bona fide clients.
- To establish whether the providers are adhering to their policies and procedures approved by MYC4 at the time of carrying due diligence on the providers.
- To identify gaps in capacity that may be addressed through a capacity building program; as well as sharing industry best practice with the providers.
The spot checks were conducted on four of our partners namely, Gatsby Microfinance Limited (Uganda), Micro Africa (Uganda and Rwanda), and Premier Resource Consulting (Ghana).
Spot check was not conducted on other existing partners for one of three reasons: 1) they were still in their pilot stage (these include KEEF, BELITA, Tujijenge Uganda); 2) their activity levels on the platform were not sufficient to justify the exercise (these included Tujijenge Tanzania and Micro Africa, Kenya Operations); and 3) the partners have suspended or are no longer uploading fresh loans to the MYC4 platform (these included Growth Africa, Makao Mashinani and Fusion).
It was a pleasure to note that not only were the institutions visited running their operations professionally, but that they had a learning culture of wanting to innovate and improve. Three of the institutions visited had good organisation structures with essential, functional departments, separation of duties, defined authorisation levels. There was good reliance on MIS with reports being generated regularly and used to inform decisions. There was also good corporate governance, with properly functioning Board of Directors, in most of the visited institutions.
Overall, it was positive improvement in the partners’ operations compared to previous spot-checks. This time, no partner had a declining score. All partners had made efforts to correct anomalies pointed out in previous spot checks. Among the improvements included: Introduction of loan assessment forms by a partner that did not previously use, there was also vast improvement in filing, documentation and collateral perfection. All partners are now utilising the MYC4 consent form. Some of the issues identified included: Some institutions did not consider certain elements in credit appraisal such as bank statement and previous external borrowing history (these are especially important on the larger loans); there was some lack of consistency in collateral procedures within some institutions.
MYC4 will in the second quarter finalise pilot review of the three partners currently in the pilot stage. The pilot review for Belita has already been completed by our Africa Director, Eric Naivasha. Among the major findings were that there was data integrity in relation to MYC4 platform and Belita has just completed migration into a new MIS platform; assessment of large loans, collateral perfection, and governance were identified as areas for improvement.