Making life simple
Facts, figures and microfinance
"The cost of installing MIS may be high but the cost of not having information
is higher."
V. Chandar Rao
"Information systems development
is not a one-time activity; it is a continuous affair." This
was the message of a computer science engineer to
the ECLOF EurAsia/Pacific Regional Workshop in India.
Drawing on his wide experience with microfinance
institutions in India, Mr. Chandar Rao, outlined
key advice for those involved in running microfinance
programs: "Make your life simple . adopt Information
Technology (IT) in the local situation . acquire
a good Management Information System (MIS) . accomplish
much . at the least cost . and fulfil your mission."
Mr. Rao is Manager - IT Initiatives with BASIX,
a group of companies that operate in ten states covering
10,000 villages in India.
BASIX (www.basixindia.com) , founded in
1996, has so far loaned two billion rupees (approx.
US$44.5 million) to more than 200,000 borrowers.
BASIX promotes sustainable livelihoods through loans
and non-financial services, and works, among others,
with the rural poor and women.
In a presentation on The Role of IT in Microfinance
Institutions (MFIs) - MIS for MFIs , Mr. Rao
stressed that microfinance providers, such as ECLOF,
need a good and reliable MIS. Correct information
at the right time is the key to success, he said.
He added that good management information systems
aid the better management of resources. This key
tool for scaling up operations is needed to analyse
critical operational parameters and to strengthen
financial performance, and plays a vital role in
the making of strategic decisions.
Chandar Rao also told workshop participants that
an MIS would also help an agency like ECLOF plan
to maximise the use of its funds. It would make it
possible to analyse targets versus achievement, expand
client outreach, monitor programme status, pinpoint
areas that require immediate attention, increase
the efficiency of human resources, motivate field
staff and create healthy competition.
Mr Rao discussed the particular information requirements
of those, such as staff, management, government,
funding partners, clients and other partners, who
would be interested in ECLOF's information. A poor
and unreliable MIS, Chandar Rao explained, would
lead not only to wrong information being produced,
but also to decisions being taken on the basis of
it.
He outlined to the Asia/Pacific Workshop the ingredients
of an appropriate MIS, including the principles needed,
steps involved, expectations, sources of information,
and clarification about who will do what.
Chandar Rao challenged ECLOF always to remember
that information systems development is not a one-time
activity but a continuous engagement in which it
is always necessary to learn from experience.
Right
in the palm of your hand
 BASIX field staff use palmtop
computers when they are out of the office,
in order to record disbursements, collections,
and data of clients and others.
The palmtops come with printers
and modems. This means that field staff can
print a client's balance, or other information
requested by the client, right there and then,
whilst they are with a client, even in remote
areas. Then, at the end of each day, field
staff send all data collected during the day
back to their office via their modem and through
any landline telephone line available.
With thousands of clients,
BASIX has found that using palmtops is very
helpful. It also cuts costs to the minimum;
staff no longer need to meet every week to
file their reports.
The program used is secure;
only auditors have access to sensitive data
for purposes of internal control. Who can access
the data is very clearly defined so it is easy
to pinpoint fraud, error or any wrongdoing.
Palmtop computers are not
expensive and are user-friendly. BASIX took
just one week to train field staff to use them. |
Presentation (power) points
In a wide ranging Powerpoint presentation
to ECLOF Asia/Pacific Workshop participants on
the role of information technology in microfinance
organizations, Chandar Rao examined important principles
and practices. Here is a taste of what ECLOF members
heard:
Challenges in microfinance
• high volume of financial transactions;
• majority of financial transactions
are off-site;
• high geographic spread of operations
and low density of customers;
• has to work with poor infrastructure
facilities;
• unsecured lending and no documented
financial history available;
• must met low income group financial
needs;
• all of above lead to high operating
costs.
Why a Management Information System?
• right information at right time is
key to success;
• leads to better management of resources;
• key tool for scaling up operations;
• to analyse critical operational parameters;
• strengthens financial performance;
• aids strategic decision making.
Information requirements of MFIs
• field staff operations information;
• management reporting;
• statutory requirements;
• funding agencies reporting;
• customer MIS.
Information requirements of field staff
• loans appraised/sanctioned + disbursement
particulars;
• daily collection statements;
• loans overdue reports;
• portfolio performance reports.
Management reporting
• operating summaries;
• employee performance reports;
• key portfolio indicators (financial
health).
In search of the (MIS) Holy Grail
No consensus
During his presentation of information technology
(IT) use by microfinance institutions (MFIs), Chandar
Rao addressed the question of whether a standard
management information system (MIS) is available
or even desirable.
Consensus on the issue does not exist, said Mr Rao,
because MFIs operate in a variety of ways. They have
different lending methodologies and do not all calculate
interest in the same way. In addition there are issues
to be considered that relate to scale and the centralisation
or decentralisation of operations, as well as individual
preferences of management and the lack of agreed
standards in the industry.
A number of MIS possibilities exist, from off-the-shelf
systems that are low cost but unlikely to match needs
fully, through to customised but expensive in-house
systems.
From Microfin News
(www.microfin.com/newsletters.htm)
"I have been asked if I would develop an MIS
that all MFIs could use. I have replied that I wouldn't
attempt it if you offered me a million dollars! What
is best for one user may be just barely acceptable
- and perhaps even a disaster - for another. Every
user has specific and unique needs, and only by carefully
evaluating them, then examining the pluses and minuses
of the available products, can a user begin to match
requirements with product capabilities.
Chuck Waterfield, consultant, and former micro-enterprise
director for CARE International.
"Like the Holy Grail, 'a' software, i.e. the
universal MFI information system may be unattainable.
The best microfinance software doesn't exist."
Normand Arsenault
