Client Assessment in Zambia

Microfinance Assignment 2012 of Yvonne Suter


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Beginning of Client Interviews – great to talk to the Entrepreneurs

After two weeks of diligent preparatory work, I had finally been able to start with the client interviews in the field. Together with Priscilla, who has been nominated as Social Performance Officer, I am going to conduct more than 300 interviews with new FINCA clients across all FINCA branches. We have started in the headquarter in Lusaka and we will go to the FINCA branch in the southern city of Choma next. The branches in the north – Kabwe, Ndola, Kitwe – and in the east – Chipata (close to the boarder to Malawi) – will follow in the weeks to come.

The interviews plus the financial analyses of the loans build the data basis for the resulting Social Performance Analysis. The focus of the Social Performance Analysis is on getting better knowledge of the living standards of the FINCA clients and on getting some indication to which extend the loans can improve the living standards of low-income entrepreneurs. I am really curious about the outcome but first we need to ensure to get comprehensive and reliable data from the interviews. As you may assume that proves to be quite a challenge in some respect.

Visit at Business of ClientVisit at Business of Client

The first challenge is the timing. In order to collect data before the loan may cause any impact on the living standard, we try to conduct the interviews before the loan disbursement. This means that we have only a few hours or days between the loan application and the disbursement to conduct the interviews. That is why we try – whenever possible – to join the Loan Officers at their visits of the clients’ businesses for the financial analysis – as we did last week with Oliver and others. This way we can avoid the hassle of trying to find the precise market stall in an overcrowded market place or in a compound (township) with hundreds of houses but no street names.

Most clients we have visited are active in agricultural and retail trade such as selling shoes & clothes, chicken & vegetables or alcohol & tobacco. The welcome is usually very warm. We are always offered the only chair they have got while they sit either on a straw mat on the ground or on any other item to be used as a seat. Even though most of the clients speak some English, Priscilla translates our questions into one of the more common Zambian languages (there are more than 70 idioms in Zambia!) so that the clients feel more comfortable.

Client Interview of Village Banking ClientsClient Interview with Village Banking ClientsMore Pictures

Apart from the personal data, the number of household members and the type of business they are in, we basically focus on their living expenses for food, transport, rent, telephone, shoes & clothes, health as well as education expenses. For them as for us, it is not easy to come up with a good estimation of those expenses. Some of the interviewed clients even struggle with their personal data such as their date of birth or their home address. Thus, to get reliable data is another challenge we face.

The third challenge is to get the respective financial analysis from the Loan Officers. They are not put on a central server. Usually, we need to get a copy of the paper package which may easily take hours or even days. At last, you need to regularly double-check that all the data are correctly filled in our master template. Though challenging, it is definitively worth the effort. The direct interaction with the entrepreneurs getting to know about their ideas and experiences is just awesome! I am looking forward to the next few weeks visiting clients all over the country. I am happy to keep you posted with some of my highlights…

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Experiencing Village Banking – In the Field with Loan Officers

After being well introduced in the project and the loan business, I took the opportunity to join Vasity and Mabvuto, two FINCA Loan Officers, to get a closer insight into the field work. It was a great experience which I enjoyed immensely. I was particularly impressed of how professionally Vasity and Mabvuto manage their Village Banking business and of how warmly I was being welcomed by the people in the compounds.

Village Banking was launched by FINCA Zambia more than 10 years ago. It has been one of the most successful products. Apart from Village Banking, FINCA Zambia also offers Small Group Loans for groups of five entrepreneurs and Business Loans for individuals as well as Insurance and Savings Plans.

Village Banking is designed to reach the poorest of the – still working – poor. As they lack any access to working capital, the small loans help them to build and further develop their businesses so they can earn more, become part of a larger marketplace, create jobs for others and thereby improve their families’ well-being.

Village Banking - TrainingVillage Banking - Training

Village Banking includes neighbours coming together in financial support groups called “Village Banks” of a minimum of 15 up to a maximum of 35 micro-entrepreneurs. In a few sessions they get trained by the Loan Officers – as by Vasity in one of the compounds close to Lusaka. They get informed on how Village Banking works, what the benefits and what the conditions are. As soon as everything has been clarified, they prepare their loan application and they decide on a group name and on roles such as Chairperson, Vice-Chairperson, Secretary, Treasurer and even Police.

Village Banking - Visit client's businessVillage Banking - Visit at client's business

Even though the loans are small, it is crucial to evaluate their business thoroughly by collecting information on their income and expenses before the loan is being granted. Because the clients have little to offer as collateral, it is the whole group which guarantees the loans. The analysis of their business and living standard takes primarily place in the field. The Loan Officer visits the working places as well as the micro-entrepreneurs’ houses – as I was doing with Mabvuto at a small store and on the market in one of the compounds close to Lusaka.

Village Banking - Disbursment at FINCA OfficeVillage Banking - Disbursment at FINCA Office More Pictures

The Credit Committee decides on the loans and the loan amount. The disbursement of the loan takes usually place at the FINCA office whereas the fortnightly or monthly pay-back is being conducted in the field. If the group works well they can apply for a next loan, which – depending on their success – may even be raised.

The way out of poverty is long and challenging, but my first experiences in the field indicate that there are indeed promising ways. I aim at receiving answers on how those promising ways can be triggered and supported. I will keep you posted with my results and assumptions.


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Off the Beaten Tracks – a Special City Tour through Lusaka

On my first weekend in Lusaka I took the chance to get around in town. Together with Zambian-born Chibesa (currently on a Credit Suisse assignment in education), Makaika (her sister living in Lusaka) and a colleague of theirs we were visiting the main spots in Lusaka. Even though my guidebook is quite comprehensive, Lusaka’s places to go sum up to less than a single page. Yet, the most lasting impressions were indeed those you didn’t find in the guidebook. I immensely enjoyed strolling through the less known parts of Lusaka as this is probably more of today’s “real Africa” than any of Zambia’s beautiful national parks with their carefully preserved flora and fauna.

Travelling with the blue-colored Minibuses Road in LusakaThe main transport vehicle here in town are the blue-colored minibuses. Even though you find them everywhere, it is quite challenging to get on the right one. There are neither maps nor signs to help such newcomers as me. The only somehow promising way is to ask around and to hope for – at least – two corresponding answers. As you are ready to decide for a certain minibus always search for a fully-packed one as the minibuses only leave when they are as full as one can possibly think of. The fares basically depend on the driver but compared to many other things in Zambia like accommodation, food or taxis, which all are extraordinarily expensive, with ZMK 2,000 (USD 0.40) minibuses are cheap. Most roads are unpaved and therefore fairly dusty but the trees to both sides of the roads give the town a welcoming green touch.

Kabwata Cultural VillageStatue of FreedomOur city tour included the National Museum with a selection of impressive colourful paintings and figures, the main avenue Cairo Road with lots of small shops, and some busy street markets such as City Market at Lumumba Road where you can buy everything from clothes and food to IT equipment and even gravestones. Of course, we didn’t miss to take pictures of the Statue of Freedom which commemorates the victims of the war of independence in front of the UNIP party headquarter at the Independence Road. At the Kabwata Cultural Village we found lots of wonderful handmade Zambian handicrafts. As I haven’t yet quite figured out a way to get it transported back home to Switzerland, I prevented myself from buying some very nice tall wooden figures.

Township Garden CompoundTownship Garden CompoundMore pictures

Around the town centre, you find the main residential areas – the wealthy neighbourhoods with big houses surrounded by high walls with security guards as well as the so-called compounds such as the Garden, one of the oldest townships in Lusaka. Even though people are poor and have to feed 5 to 6 children on average, I was impressed how well-kept some of the huts and small houses looked like. In the Garden compound they have started to embellish the area with nice colourful wall-paintings. Moreover, it was cheerful to see how much fun the children have while playing football or dancing on the streets. Of course, their daily life is quite different. Most of them hardly get any opportunity to be properly educated, which would be crucial for improving their living standard. At best, they are able to establish small business, but many, particularly men, get addicted to alcohol and may even end up in criminal gangs.

It is noble duty to take care that Zambia’s promising economic development will succeed in trickling down to the less-privileged parts of the population.


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Warm Welcome at the FINCA Zambia Headquarter

FINCA’s Zambia headquarter is well-located in Lusaka’s city centre. It is a two-storeyed building with the open for clients Loan Office on the ground level and the Accounting, Process & Project Experts, HR and Marketing offices on the upper level. The headquarter employs about 30 people, with nearly 300 employees across all eight Zambia branches. With around 28’000 clients, FINCA is one of the biggest players in microfinance in Zambia. As regards products, FINCA Zambia focuses on business loans, small group loans and village banking. They plan to launch even saving products and to further expand to other rural areas opening up more branches.

Everybody is supposed to be in office by 8am, whereas after 5pm it is getting noticeably calmer in the office. For lunch most bring their own food and stay in office, but you can always order some rice or the typically Zambian dish “N’shima” – a kind of maize porridge. As a European novice it is rather challenging to eat N’shima properly as I am not very experienced to eat with my hands. Apparently, some of my colleagues at work seem to be quite addicted to N’shima as they eat it daily for lunch and at times for dinner as well. Until now, I am not yet acclimatised enough to completely withstand the temptations of Asian food which you can get everywhere in town.

Headquarter of FINCA in ZambiaMarketing Team at FINCA

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My welcome by the FINCA team has been very warm and cordial. My new colleagues at work are all extremely helpful and motivated to do good business. In particular, I am going to work closely with Social Performer Officer Priscilla, Credit Manager Jackson, and Credit Assistant Crispin (see picture above). Humphrey, Ignatius, and Andrew, all three IT experts (see picture below left) as well as the Operations team (see picture below right) will be key-stakeholders in the project. The SPO as well as the Credit Managers are reporting to COO Mikhail, one of my main contact persons in the project (who, by the way, is very keen on practicing with the new Swiss army knife I gave him as a present from Switzerland).

IT Team at FINCAOperations Team at FINCA

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Apart from resolving the ever-unavoidable IT malfunctions, I am currently trying to better understand the business on the ground and to clarify the scope of the project. Next week, I am already going to join some of the Loan Officers in the field, which means some travelling in and out of Lusaka. I am happy to keep you posted about those experiences and impressions…


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Arrival at Lusaka – Zambia’s Booming Capital City

After a 15-hours flight from Switzerland via South Africa to Zambia I safely arrived in Lusaka – yet quite tired and without any luggage. Not without confusion, the immigration finally worked out well because my colleagues from FINCA seem to maintain good relationships with the airport staff. Three hours later, I was able to leave the airport for downtown Lusaka. I got a warm welcome from the local FINCA team – Priscilla, Josephine, and our driver Joseph – who spent their Sunday on my behalf. Many thanks!

The first day in Lusaka was very relaxing – apart from an early wake-up at 6am when my luggage was delivered. It was Farmers’ Day, a public holiday in Zambia with lots of festivities all around the city. I took the chance to meet some colleagues I was referred to by friends and to have a look at suitable accommodations for the next three months. It seems quite challenging to find an accommodation with all mod cons at affordable rates. But I am very confident that I will find a nice stay for the weeks to come.

My first impression is that Lusaka is a very peaceful city – though its population of about 1.7 million – with very friendly and always smiling inhabitants. August temperatures are moderate as Lusaka is located on the central plateau at an elevation of about 1,300 metres. In weeks and months to come, the city will gradually get warmer and dustier. My first experiences make me eager to get to know better the country, its people and its culture.

I will keep you soon posted with my first experiences at work…


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Only a few days to go before leaving for Zambia

Preparations for my assignment keep me busy as it is only a few days to go before leaving Switzerland for Zambia.

Work days hardly end as I want to ensure a proper hand-over to my team members. I am very grateful that they are ready to take over some extra work load to compensate for my absence. Thank you, Daniela and Matthias!

Laura, Head Microfinance, and Daniela and Matthias from my TeamMy Family at home, celebrating the Swiss National Day

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On August 1st, Switzerland’s National Day, I took the opportunity to say goodbye to my family and friends. First, as a member of the provincial parliament I attended the official ceremony of my home town Rapperswil-Jona. In the evening, I enjoyed a relaxing barbecue with my family in the backyard of my flat.

Now, I am looking forward to getting my luggage ready and taking off for Johannesburg and Lusaka…