SILVERMAN PRICING: A DIFFERENT APPROACH TO PRICING

Introduction Over the past few months, I carried a brief analysis on my website and noticed that the most-read article ever written by me is – How to Price Your Products and Services. It receives 338 reading over the year. This is followed by a relatively new article – the Capital Adequacy of Banks and MFIs which received 165 readerships. Overall, 2,755 readers were polled through various channels. As an author, I see what people are interested in reading and would like to evoke my strategy. But before I do so, I would like you to read just two of the […]

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YOUR BOTTOM-UP PLANNING APPROACH

Introduction There are two approaches to handling annual budgets of institutions. We have what we call the Top-Down Approach and Bottom-Up Approach. Top-Down Approach With this approach, the budget is set at the Senior Management level and imposed on the various units and departments to deliver. In order words, the Senior Management decides the budget and the down/line managers must deliver according to the direction. Bottom-Up Approach This is the opposite of the above. With this approach, line managers in consultation with their staff sit down and decide their budget. This budget is submitted to Senior Management for approval. The […]

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MICROFINANCE: A Textbook of Microfinance for Schools, Colleges and Practitioners

Microfinance has been used over the years in fighting rural poverty and removal of ignorance. As a tool of poverty alleviation, and adopted by the World Bank and other donor assisted funds, its operation cannot be over-emphasised. But the topics in microfinance are not easy to digest and cannot be traced to one coherent, comprehensive and concise source. Learners and practitioners have to use various research materials to be able to elicit what they need. More often than not, most research materials are either too deep or just inadequate for learners. The middle is always the short-cuts, that is, points […]

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THE MICRO-FINANCE TEXTBOOK: A BACKGROUND REFLECTION

In April this year, one of the South East Asian countries was terribly hot when arrived there for a programme.  But on top of that, a little surprise was added to it….! The teaming Buddhist youth lined up on the streets with water cannons or buckets of water. The purpose? To pond you! It was a Water Festival time throughout all the Buddhist nations. So in order to avoid being ponded or baptized, I went into hiding for two weeks. This two weeks of hiding offered me reflections on my life. From my step-mother’s kenkey business in my okra-village to […]

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COLLATERAL MANAGEMENT – Part 1

Introduction Collateral management is not very popular in the microfinance sector. This is due to the fact that, the loan sizes are small and clients are largely expected to be in groups. Where individual methodology is applied, other methods of collateralisation – receivables or inventories from clients are used instead of fixed assets. Collateral management is common in the mainstream banks and other big financial institutions. They have the resources, expertise and systems to monitor and manage collaterals for their clients. On the whole, MFIs that take collateral also experience large defaults on their loans. This is due to three […]

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THE HUMAN RESOURCE FUNCTION OF THE MFI

Introduction At the right-hand side of every MFI’s wing is human resources and administration. These two functions are effectively combined or separated depending on the size and nature of the organisation. While the human resources and administration function could be described as the engine oil that ensures that the engine is effectively running, the operations unit is seen as the engine in charge of the production. MFIs must begin to formalise their systems as the organisation grows. Job descriptions must be developed and revised as new positions are added and responsibilities multiply. Branch and head office structures evolve to support […]

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THE CENTRE: ACCOUNTING AND FINANCE ROLE OF THE MFI

Introduction At the centre of every institution are finance and accounting functions. As the ‘receivers and payers’ in every institution, the finance and accounting cannot be overlooked even into the foreseeable future where people are advocating machines, robots and the rest. Finance and accounting roles can never depart from any institution, it shall only revolve, evolve and adapt to the changing needs of the time. As one of the oldest administrative and back-office roles, this function can be described in the microfinance and banking sectors as the planners, executors of the plans and back-stoppers in relation to risk management. In […]

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SOCIAL PERFORMANCE IN THE MFIs

Introduction One of the ways of gauging the social mission and vision of the MFI to the operations of the organization is called Social Performance Management. Definition Social performance is defined as “the effective translation of an institution’s mission into practice in line with accepted social values.” In other words, social performance is about making an organization’s social mission a reality, whatever that mission is (Source: Social Performance Task Force). Social performance management (SPM) refers to the systems that organizations use to achieve their stated social goals and put customers at the center of strategy and operations. A provider’s social performance refers to […]

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FINTECH IN THE MICRO-FINANCE SECTOR

Introduction After carefully considering the Risk Management and issues associated with staff fraud, we now turn our attention to how MFIs can improve their institutions and deliver services to their clients in affordable yet efficient manner. One such tool is the application of technology for both front-end and back-end. At the front end, where clients are served either directly or indirectly, we shall look at Fintech. There are still two billion unbanked people around the world. According to the Global Findex Report, as many as 72 per cent of these live in South Asia, East Asia and the Pacific and […]

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STRATEGIES FOR FRAUD DETECTION & PREVENTION

Introduction Last week, we looked at the introduction of risk management and we gave hints on employee frauds, a significant cause of most institutions’ failures. We looked at the fraud triangle and link them to the MFI and banking sector. Today we shall look at how we could prevent the fraud and also how to detect them by putting in place controls, procedures, and policies. Employee fraud is a significant problem faced by organizations of all types, sizes, locations, and industries. While everyone would like to believe employees are loyal and working for the benefit of the organization (and most of […]

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