Regular Microfinance Training Curriculum
Fundamentals and Methodologies of Microfinance
The course offers more than the basics of microfinance. It offers a deeper understanding of the fundamentals and principles of microfinance coupled with an appreciation of various microfinance methodologies – Grameen, ASA, Village Banking and Individual Lending. The course provides the characteristics of microfinance clients and determines the impact of microfinance to poor. Aside from the appreciation of various microfinance methodologies, the course also tackles traditional and innovative microfinance products and services – loans, savings, microinsurance and remittances. It provides a framework in microfinance that includes the participation of microenterprises. The course ends with case studies showcasing successful best practices of microfinance institutions.
Financial Product Design and Development
The financial product design and development course uses market-based or demand-led approaches. The financial product design and development framework outlines research methodologies using participatory rapid appraisal techniques to determine the needs of the market; assess institutional readiness for product development; and assess competitive advantage of product prototypes. The course extends the whole process of product design and development that involves assembling the product development team, design process, product costing and pricing, pilot testing, product launch and commercialization.
Delinquency is one of the major challenges that microfinance institutions face. The course enables participants to understand delinquency by tracing its causes and costs. To hasten appreciation of delinquency, it offers various perspectives on delinquency from the vantage point of the borrowers and the microfinance institution. Participants will also be taught on how to measure delinquency using international standards. The course prescribes report formats integrated in the MFI’s information system to track important information for decision-making. The delinquency management course emphasizes both preventive and curative strategies. Preventive delinquency management strategies include financial shields or prudent financial management practices; growth strategy; and delinquency prevention techniques in microfinance methodologies. Curative delinquency management strategies include loan classification and prioritizing delinquency management measures; remedial management and litigation; crafting incentives system to reduce delinquency; establishing the delinquency task force; loan administration strategies to delinquency management; and crafting delinquency management plan. One of the highlights of the course is the principles and methods of collection.
The financial analysis course starts with understanding basic financial statements and using prescribed chart of accounts for microfinance institutions and the government. The heart of the course is the method for adjusting financial statements to account for subsidies, donations, inflation and adequate loan loss provisioning. Recognizing these adjustments to the financial statement reveals the true financial performance of an MFI. International, local and best practice financial standards are used to determine the quality of the financial performance. These include the PEARLS Monitoring System, COOP-PESOS, EAGLE, Microfinance Standards to all Types of Philippine MFIs, and CAMELS Rating System. Areas for financial analysis include efficiency, portfolio quality, profitability and financial structure. To account for an MFI’s social mission, a discussion on effectiveness is presented.
Microinsurance is defined as insurance for persons who traditionally do not have access to formal sector insurance or long-term savings. The course presents the seven basic principles of insurance and challenges that microinsurance faces. Participants will be able to know existing coping mechanisms of the poor against adversities. The course will differentiate characteristics of informal and formal insurance. Different microinsurance products will be discussed given their relative complexity to implement. Participants will likewise be taught on a framework to assess insurance needs of clients. Calculation of probability of risk occurrence; premium; and assessing financial implications is an integral part of the course. The financial product design and development process will be used as the framework for developing microinsurance products. The course also outlines strategies in implementation such as linking up with formal insurance or being dependent; and making the microinsurance mandatory or voluntary. The prescribed organization structure and minimum human resource requirements will be presented.
Savings and Product Costing
Savings is the postponement of the pleasure of spending. It is a social service that provides benefits to the microfinance clients such as consumption smoothening and reduction of vulnerability to risks. At the same time, savings provides funds for a microfinance institution for its credit products. The savings and product costing course enables participants to determine whether an MFI is ready to mobilize savings. It also provides instructions on how to capture and protect savings. The course uses the product design and development that centers on the market. Thus, design considerations are focused on what clients need most – safety, convenience and returns. A product costing analysis will be used to determine cheaper sources of funds, and allows an MFI to set market driven interest rates and compare this with real rates of return. Savings administration and management that ensures liquidity and improve efficiency will be provided. Marketing campaigns on savings will also be developed in class.
Information Systems for Microfinance
Information system is the foundation for all operations for an MFI. The course offers decision makers specific points in evaluating their existing systems; determining current and future information system needs; and conducting cost benefit analysis when building, modifying or buying software. A framework on developing information system for an MFI will be presented. The framework includes the following aspects – functionality, flexibility and expandability, usability, reporting capabilities, standards and compliance, administration and technical support, security, and costs.
Risk Management and Internal Controls
This course helps microfinance institutions develop and improve the quality of their risk management processes. It focuses on problem prevention, early problem identification and control. The course provides guidelines for establishing operational activities that assist the MFI in identifying vulnerabilities, designing and implementing controls and monitoring the effectiveness of controls. The risk management and internal control is linked with the MFI management information system. It also highlights problem resolution as a means for risk management and internal control. The course also offers how internal and external audit could be used to the advantage of the MFI.
Strategic Planning for Microfinance
The course addresses the issues of strategic and operational planning that are vital to the successful development of microfinance institutions. The right to left planning approach will be used as the framework for the strategic planning process. The course offers various methods in conducting internal and external analysis that aids an MFI in positioning itself in the microfinance industry. One of the highlights of the course is the financial modeling approach. Various forecasting techniques will be used to aid participants in their financial projections.
Managing, Developing and Supervising Staff of MFIs
Microfinance is labor intensive. Human resource is the backbone of any microfinance institution. Creating a leading microfinance institution takes more than charging the right price and knowing how to design a financial offering. The course offers MFIs tools on how to assess skills needed; hiring the right people; designing incentives and compensation package for staff; and creating a work environment that promotes employee commitment. The course centers on the new mandate of human resources – as strategic partner in strategy execution; as administrative expert; as employee champion; and as change agent for continuous transformation