Social performance management: partner UGAFODE in Uganda
Ugafode Microfinance (MDI) is one of the beneficiaries of the social performance management programme. At the beginning of programme, Ugafode’s loan portfolio was shrinking with a high PAR of about 12% and profitability was going downhill. This is because UGAFODE had lost focus of its initial social mission and also its original target clients which are economically active poor, women, rural populations and groups.
During the programme, Ugafode refocused their original social mission and adopted it once again. To reach to its original target clients; women and rural populations, UGAFODE first established rural branches. It then relocated its head office from the financial district of Uganda’s capital, Kampala, to a more accessible location for clients. It then recruited a manager to review and amend the group lending policy which saw Ugafode’s share in group lending grow from 34% to 69% of total clients.
Ugafode negotiated insurance cover to support its clients during times of hardship, introduced voluntary savings schemes and also reviewed its zero tolerance policy on loan repayments. These changes resulted in over 13,000 new savings accounts and more clients taking out insurance. It then trained its staff on loan rescheduling and assessment of client ability to pay rather than focusing on collateral. This resulted into UGAFODE’S portfolio at risk of defaulting dropping from 12% to 3% and customer numbers increased from around 9,000 to 24,000.
Remode through social performance mentoring has been able to focus on a nearby slum community through a group-based approach to lending that has attracted new clients as opposed to their earlier approach of only focusing on urban youth.