• 1994 CFA Devaluation
  - 35-40% Inflation - Decapitalized many loan portfolios
• Government reforms
• Institutional models
  - Credit union - NGOs
• Challenge to sustainability

• Economically relatively well off
  - GDP per Capita is $ 780
• Mostly Muslim
• Very active informal sector
• Rural population
• 49 Year Life Expectancy

• Rural beginnings, expanded to urban
  - 1985 - Small loan program
  - USAID Community Enterprise Development project
• Additional donor funding
• 1987 - Private NGO
• 1988 External Audit

• 1993 - Licensed as credit union
  - AID project ends
  - Able to lend from own resources
• 1996 - Redefined Objectives
  - Provide credit and savings services
  - Promote social and economic development
  - Develop financial services network
  - Cooperatively manage activities

• Adopted new microfinance techniques since founding
• Modest staff salaries
  - Incentive structure that emphasizes loan quality

• Rural/urban
• Upper end microentrepreneurs
  - Lack access to formal financial institutions
  - Expanding business-owners
  - Low level of outreach
• Serves 4,000-5,500 clients depending on source

• Exclusively individual loans to continuing businesses
• Collateral and credible credit reference required
• Graduated
• New loans granted only after previous loans paid off
• Almost half of clients receive multiple loans

• Interest rate - 17% plus 1% for admin. costs
• 12-18 month term
• $20,000 Loan ceiling
• $5 million outstanding

• Loan acceptance:
  - Based on personal knowledge and client evaluation by ACEP rep.
  - Approved by regional committee of ACEP execs
• Average loan balance is around $1,600 (depending on source)
• From 1996-1997 loan portfolio grew 49%
• More than 99% recovery rate

• No compulsory savings requirement
• Two types of savings collected since 1993
  - 4.5% fixed rate of deposit interest
  - Project savings
  - Business savings
  
• 10% of repayments go to savings account
• Grew by 514% from 1996-1997
• No widespread voluntary deposits to general public

• Achieved operational and financial sufficiency
• 1995 transitioned from level II to level III
• Positive impacts on sufficiency:
  - Strong management
  - Institutional changes

• Effective donor assistance
• Clarity of mission and goals
• Clear credit administration operations
• Efficient management and loan monitoring
• Strong financial management

• Supports mainly trade activities, not enough production
• Only 5% market penetration
• Reaches small percentage of women
  - 20-30% of borrowers

• Relatively young among successful examples
• Only program without deep outreach
• Very high average loan size and long loan term
• Exhibits success in developing self-sufficiency
• High administrative costs and low efficiency
• Interest rate and return on assets is low in comparison
• Very high rates of loan loss

• Focus on institution strengthening
  - Increase transparency
  - Standardize application procedures
  - Improve loan portfolio recovery
• Continue moderate expansion rate
  - Increase depth of outreach
  - Offer savings to non-borrowers
• Target addressing client demand and reducing transaction costs

ACEP: Mayoro Loum Director General 35 Avenue Bourguiba B.P. 5817 Dakar, SENEGAL Tel: 221-8-25-29-32/3 Fax: 221-8-25-29-35 Email: acep@telecom_plus.sn

Slide Presentation: Jessica Jacobson 1209 North Taft Street, #5 Arlington, VA 22201 USA jessica_jacobson@jsi.com Wendy Shapiro 1751 Willard St. NW #3 Washington D.C. 20009 wshapiro@hotmail.com