 | |
MFI Websites
 | |
| |
| World Vision Websites
| |
|
Financials
The need for microfinance loans throughout the third world is still vast. Even within our partner organisation, World Vision International, it is estimated that 2.55 million households still need access to microcredit. VisionFund is poised to meet that demand by projecting a global average growth rate of 43.5% per year. In essence, VisionFund will quadruple the number of people we reach in the next five years.
Page Navigation
Structure
Risk Management
Structure
VisionFund has an institutional structure that combines global operations and local know-how. Senior Management staff is based in a central office in the United States, which manages and guides VisionFund as it continues to grow. Our global structure opens up unique opportunities for both VisionFund and each microfinance institution.
Serving as a central point of resource consolidations, we increase the leverage of each individual institution and mitigate the risk inherent in lending operations.
In addition, our microfinance institutions (MFIs) strive to employ qualified nationals who understand microfinance in the local context, building capacity and sustainability. This structure creates a community informed by local know-how and experience that is able to teach one another and enhance overall performance.
By the end of 2006, VisionFund fully owned three MFIs in Cambodia, Georgia and Serbia. Over the next five years VisionFund plans to own all of World Vision’s current and future MFIs where possible. MFIs will be brought into VisionFund as determined under a clear due diligence process.
| VisionFund Financial Statements for Fiscal Year 2008
Assets (in thousands) | All MFI's combined | VFI and Subsidiaries* | |
| Cash and investments | 29,965 | 19,518 | |
| Gross loan portfolio | 397,134 | 165,816 | |
| (allowance for loss on loans) | (8,119) | (3,296) | |
| Net loan portfolio | 389,015 | 162,520 | |
| | | | |
| Accounts Receivable and Other Assets | 26,184 | 7,416 | |
| Total Assets | 445,978 | 189,455 | |
| | | | |
| Liabilities (in thousands) | | | |
| Borrowings | 287,184 | 126,717 | |
| Client Deposits | 11,560 | 217 | |
| Accounts payable and Other Liabilities | 22,640 | 6,595 | |
| Total Liabilities | 321,384 | 133,531 | |
| Net Worth/Equity (in thousands) | | | |
| Zero Interest Borrowing from VisionFund and World Vision International | 15,156 | - | |
| Net Assets | 109,438 | 55,924 | |
| Total Net Worth/Equity | 124,594 | 55,924 | |
| Total Liabilities and Net Worth | 445,978 | 189,455 | |
| *VFI Subsidiaries:
Georgia
Serbia
Cambodia
Montengro
Azerbaijan (acquired in 2008) | | | |
| | | |
|
Risk Management
Life is full of uncertainty, but much risk can be anticipated and eliminated. Doing so lays a solid financial foundation for all the MFI’s owned and controlled by VisionFund, and builds confidence that funds are being well used.
In 2006 VisionFund implemented a number of measures to ensure it controls risk at reasonable levels. A comprehensive quality and risk management system was developed to support all our MFIs in their work with the poor.
- Board of MFIs were strengthened
- Management developed new MFIs governance policies and guidelines, and is rolling out regional training programs for boards and microfinance institution's CEOs.
- A portfolio review tool was put in place to help better manage MFI loan portfolios.
- A number of processes to improve financial controls were put in place or planned: e.g. standardised monthly financial reports, reporting analyses, global quarterly statistical reports, action plans for MFIs with low performance levels, MFI Planning and Forecasting, standardised job descriptions.
- IT systems and support were improved
- The internal audit program has moved from a three year cycle to 12 – 18 month cycle depending upon perceived risk
- External audits are to be done annually.
- New risk management tools were implemented: e.g. Risk Management framework, which identifies areas that need attention before they become big problems, MFI Watch List, which identifies key issues of MFI that may be performing below par, and the acting steps they need to implement.
Credit Risk
MFI’s operate under clear credit policies and procedures for lending funds to the poor. Know-your-client procedures and strict credit decision authority levels are in place.
Loan and payment tracking systems are available and collection reporting provides loan officers with information to recover funds in a timely manner.
Lending to MFIs
Lending through VisionFund to strong MFIs is managed through a well-documented policy. MFI loan applications are submitted to a loan committee consisting of internal and third party microfinance experts who address all financial performance and repayment capabilities and make a recommendation to management to approve or deny credit. Loans must also be within regional portfolio concentration limits. Clear management and board authority levels govern final approval. VisionFund and the respective MFI sign formal commercial loan contracts prepared by internal legal staff, and a reserve for bad debt is established to cover repayment risk although no losses have been experienced.
Interest Rate/Liquidity/Currency Risk
VisionFund currently borrows and lends for fixed terms at prevailing market rates. Long-term funding forecasts are developed for all of the MFIs to determine future cash requirements. Terms are matched and new diversified funding sources will be obtained to ensure liquidity is not a concern. Currency risk is mitigated though the use of US$ lending or foreign currency swaps or options arranged by World Vision’s Treasury to ensure no foreign exchange exposure in VisionFund.
Operational Risk
This is the risk that operational procedures in place are not followed and losses occur as a result. MFIs of size have dedicated internal audits resources whilst smaller ones use regional or central resources. New portfolio audit tools and watch lists have been developed to monitor performance along with improved financial reporting and portfolio analysis to ensure yields are sensible and maintained.
|
|