SPECIAL REPORT: SAM Facilitates Long-term Relationship Between Agora Microfinance Zambia, Triple Jump

Team members of Triple Jump, an SAM 2019impact-focused asset manager with offices in the Netherlands and Kenya, and Agora Microfinance Zambia (AMZ), a microfinance institution dedicated to serving low-income, rural households in Zambia, met for the first time at the Investors’ Fair at the 2017 SAM conference in Addis Ababa, Ethiopia. During a speed-dating session, Triple Jump found AMZ to be an interesting prospect because of its rural focus as well as having a smaller, yet high-quality portfolio. In the first quarter of 2018, AMZ borrowed EUR 500,000 (USD 560,000) from Triple Jump for 24 months. Despite the difficult economic times in Zambia due to the effects of high government borrowing levels, AMZ continues to grow in terms of client outreach as well as portfolio size (68 percent in local-currency terms since disbursal of the loan).

In Farmer Laughingterms of social performance, AMZ is committed to the financial inclusion of individuals who are more difficult to serve. Of its nearly 30,000 micro-borrowers, 85 percent are based in rural areas, and 62 percent are women. The MFI’s average loan size is only USD 130. Despite this focus on the “base of the pyramid,” AMZ impressively has managed to keep down both the number of customers experiencing repayment difficulties and the number of people borrowing from multiple institutions. Triple Jump quantified this commitment to social performance via its proprietary assessment tool, on which AMZ scored a “good” 73 percent overall and an “excellent” 83 percent in terms of client protection. Although there is still room for improving how the MFI uses social-performance data for decision making, this is a common issue for an organization of its size, and Triple Jump is confident that AMZ is on the right track.

In the area of technical assistance, AMZ asked Triple Jump for help improving its risk assessment practices as part of restarting agri-lending, which it had discontinued previously after experiencing low repayment rates. In particular, AMZ was keen to use the Agricultural Loan Evaluation System (ALES) tool from the Frankfurt School. This eventually became the first implementation of ALES in Southern Africa. Triple Jump and AMZ acted quickly to set up the project, in partnership with another technical assistance provider, the Grameen Credit Agricole Foundation, in order to be ready for the next planting season.

This time, AMZ targeted five key crops, namely maize, watermelon, soya beans, tomatoes and groundnuts. Loan officers used the ALES software to perform credit assessments and calculate loan amounts and repayment terms based on factors including crop type and acreage. During the pilot period from November 2018 to July 2019, AMZ built up a product port­folio of EUR 75,000 (USD 85,000), reaching 400 farmers and maintain­ing PAR30 at 0.5 percent. The key learnings are that: (1) the loans should be managed only by client officers who are familiar with both ALES and agriculture; and (2) that ALES does not eliminate the need for monitoring clients after loan disbursement. Based on its success, AMZ is expanding the agriculture loans to more of its branches.

Lorraine Indangasi, one of Triple Jump’s investment officers for Africa and the Middle East, summarized the relationship with AMZ as follows: “Through the SAM conference, Triple Jump met AMZ, and this turned out to be an inspiring example, looking at the robust expansion of AMZ, staying close to its mission, and with strong rural outreach and sound products.”

AMZ CEO Susan Chibanga said, “Triple Jump has been extremely supportive in providing debt finance for portfolio growth and technical assistance for the agriculture product pilot. With the technical assistance, ALES has brought efficiency to our appraisals and monitoring. Our rural outreach with targeted focus on smallholder farmers has been greatly enhanced with the introduction of the agriculture product, and we are most grateful to have had input from Triple Jump.”

During the 2019 SAM, Triple Jump’s team expects to further broaden its network by meeting with peer investors and prospective investees as well as industry experts. Triple Jump also will participate in the Investor’s Fair, with the aim of deploying new investments to MFIs in Africa. Through the panels in which Triple Jump team members will participate, Triple Jump will share market knowledge and expertise with various stakeholders. Triple Jump is also sponsoring the SAM conference, with the aim of creating more awareness of its role as an impact investor among all stakeholders present.

ADA, an NGO based in Luxembourg, co-organizes SAM every two years with the support of Luxembourg’s Ministry for Development Cooperation and Humanitarian Affairs. The SAM steering committee members are: ADA, Luxembourg’s Ministry of Foreign and European Affairs, the Microfinance African Institutions Network, the African Rural and Agricultural Credit Association and the Fédération des APSFD de l’Union Economique et Monétaire Ouest Africaine. We invite you to read more about SAM at http://sam.africa.

This vignette is part of a sponsored series demonstrating the value of SAM (the French acronym for African Microfinance Week), a major conference dedicated to financial inclusion in Africa. The first three SAMs were held in Arusha, Tanzania, in 2013; Dakar, Senegal, in 2015; and Addis Ababa, Ethiopia, in 2017. The next SAM will take place October 21-25, 2019, in Ouagadougou, Burkina Faso!

The goal of SAM is to provide a unified platform for addressing issues facing microfinance in Africa by bringing together investors, MFIs, researchers, banks, networks, innovators, governments and other stakeholders.

The 2017 SAM hosted 700 participants from 58 (mostly African) countries, including representatives of 200 MFIs; 25 exhibitors at the Innovation Fair; and 26 investors, who made 170 MFI contacts at the Investor’s Fair. The proceedings also included conference sessions presented by 60 speakers plus a menu of 20 training programs.

Additional Resources

SAM
http://sam.africa/

Additional vignettes and MicroCapital coverage of SAM
http://www.microcapital.org/category/semaine-africaine-de-la-microfinance-sam/

Additional vignettes on SAM en francais
https://www.ada-microfinance.org/fr/evenements/semaine-africaine-microfinance/objectif-sam-2019/paroles-de-nos-participants

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