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FSP Exploratory Study Case Study Report - WEDCO


1, Introductory details

Name Jane Odhiambo

    Location of household Mbale

    Age 39 years

    Client of which organisation WEDCO

    Current occupation Clerk

    Business for which FSP service obtained Secretarial Bureau

    thDate of interview 6 December 1999

2, Narrative

    Jane was born in 1960, attended primary school, joined Ngiya Girls High School in 1974 and completed fourth form in 1977. After school, she trained as a shorthand copy typist and in 1985 she got a job with the post office as a clerk. Jane married in 1986 in Maragoli. She has five children, three boys and two girls. Unfortunately her husband passed away in 1993. Other than her own kids, she has also adopted her stepbrother’s son. She also takes care of her parents

    (she’s her mother’s only child) and took care of her stepmother before she died.

    Apart from her clerical job at the post office, Jane has a business. The business is a secretarial bureau comprising computer and manual typing, lamination, and selling stationery. She started her business in 1996 with one photocopy machine and later got a second. She used to have only two employees but at the moment she has six including herself, her son, and a nephew all fully paid. She has opened a second branch in Chavakali town. In terms of income, she also hires pieces of land, grows crops mainly for consumption by the family mainly maize and beans worth about Kshs.2,000 every month. Her main business, the bureau, was doing well but from this September, it has suffered a substantial loss of business due to power rationing in Mbale town. There have not been any major changes in her life though she says that now she’s paying a lot of money as school fees for her children.

    Jane’s major social asset is her women’s group, Ukweli women’s group. In fact she first heard about WEDCO from one of the members who had a relative working with WEDCO. At that time the MFI was trying to make headway in Mbale town. She first got a loan of Kshs.20,000 in the form of a revolving fund involving fifteen business people.

    She bought a laminator worth Kshs.15,000 using the first loan to harmonize with her photocopying business. Her decision on how to spend the money was not influenced by anybody else. She used the balance of Kshs.5,000 to stock her business with stationery.

    She took a second loan of Kshs.150,000, which she will clear by January 2000, then apply for an individual loan. She used Kshs.60,000 to clear a bill of a photocopy machine she had taken on hire purchase from Copycat. She used the rest of the money, Kshs.90,000, to stock her shop with stationery. It was during this time that she expanded by opening another branch in Chavakali and took the old photocopier to that branch. She had been paying the loan comfortably until the power

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FSP Exploratory Study Case Study Report - WEDCO

    rationing started and her business went down. This has made it hard to pay back in time. Jane has got savings with WEDCO and she pays Kshs.100 every month when the group meets.

    Jane complains that the loan repayment period of 18 months is too short and says it should be spread over a longer period, say 24 to 30 months. This short repayment period forced her at one time to take Kshs.15,000 from her own savings and use it to help one of her group members whose business was in the red.

    She suggests that WEDCO should be flexible so that it can give its active non-defaulting members more loans before they complete the previous loans (something close to an overdraft). The main lesson Jane has learnt from the MFI is that one has to work hard so as to pay the loan and also make ends meet. She is considering quitting her job at the Post Office to concentrate full-time in business.

    Jane’s sales amount to Kshs.30,000 monthly. After deducting business expenses like Kshs.500 for license, Kshs.2,500 to pay the manager, another Kshs.2,500 to pay herself, Kshs.9,000 for the rest of the staff and Kshs.2,000 for rent and electricity, she takes home Kshs.13,500 as her monthly gross profit. Her household expenditure for the last full month, excluding school fees (she pays all her school fees with her salary) was Kshs.11,944. This leaves her with Kshs.1,556.

    Jane’s future plans include taking her son to college for an electronics course so that he may take charge of the Chavakali outlet. Jane would like to opt for early retirement so that she can concentrate full-time on business. Should she get the individual loan of between Kshs.500,000 and one million, she would like to buy two computers and a new copier machine. She would also like to increase stock in her business and buy a pick-up for transportation of stationery and also use it to transport maize from people’s farms and sell them in their local market. Her major obstacle is increased expenses especially school fees which has been increased. She firmly believes her association with WEDCO would go a long way in influencing her future plans. She also hopes the MFI will train her on book keeping.

3, Analysis of the case against hypothesis

3.1 Impact on the poor

    Micro- finance services have been taken up by a highly diverse range of clients including many who are poor and many women.

Indicators of her own wealth

Household status

; Total monthly household expenditure: Kshs. 23,378

    ; Household expenditure per adult equivalent: Kshs. 4,175

    ; Poverty status (%deviation from urban food poverty line):250

Other indicators

; Has built a permanent house in her rural home

    ; Owns a gas cooker, a T.V set and two sets of sofa seats.

    ; Her children are well educated, she supports relatives including her stepbrother’s son. Total

    amount spent on education last year, Kshs.105,000.

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FSP Exploratory Study Case Study Report - WEDCO

    Impact on others

; Employs five full time employees three in Mbale and two in Chavakali.

    ; Before she got the loan she was employed as a clerk in the Post Office at the same time

    struggling to run a bureau. After she got the loan she has been able to expand her business

    and employ people.

    ; She had two employees right from the beginning but with expansion of her business she

    engaged more (a result of the loan).

3.2 Business improvement

    Loans have helped some clients to diversify their business activities, to increase the capital invested in their business, to increase paid business employment, to increase business profitability and generally to decrease vulnerability of their business to shocks.

a) Diversify business activities

    ; Initially she only had a typing bureau but with the loan she has been able to add lamination

    and photocopying.

    ; She has opened a second branch to cover two locations. She intends to buy a computer with

    a future loan.

b) Increase capital invested in business

; She used the loan to increase capital in the business.

    ; The first loan of Kshs.20,000 was used to buy the laminator (Kshs.15,000) and increase the

    stationery stock (Kshs.5,000).

    ; The second loan of Kshs.150,000 used to clear a balance on a photocopier machine

    previously taken from Copycat at hire purchase price and the remaining Kshs.90,000 was

    used to restock the business.

c) Increased paid business employment.

; She has five fully employed workers (six including herself)

    ; The manager earns Kshs.2,500 per month and the rest of the staff earns a total of Kshs.

    9,000 per month that is Kshs.1,500 each.

    ; She also pays herself Kshs.2,500 per month in addition to the profits she uses in the


    ; With expansion of her business to a new location, she employed two new employees.

d) Increase business profitability

; Her profits total to about Kshs.13,000 per month.

    ; This she attributes to the additional facilities she added after the second loan.

    Her previous profit figures are not available however she sees this as an increase. She attributes this to the additional services and equipment.

e) Decrease business vulnerability to shocks

; The business has not experienced a major shock in the last two years.

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FSP Exploratory Study Case Study Report - WEDCO

    ; However the business has been able to survive the power rationing which has affected it


3.3 Household livelihood improvements

    The income of some clients and clients’ household has gone up enabling them to increase expenditure on food, health services, education, shelter and household assets and to cope with livelihood shocks.

a) Income of clients’ household has gone up

    ; Her income has improved, she takes an average of Kshs.13,000 per month as profits from the


    ; This has enabled her to use her salary to pay fees for her children and will enable her to send

    her son to college.

    ; Takes care of her parents and her stepbrother’s son.

    ; Of the total household expenditure standing at Kshs.23,378, the business pays for Kshs.

    14,628 and the rest, which is school fees, comes from her salary.

3.4 Reduced household vulnerability

    The vulnerability of clients and clients’ households has been reduced by the increased security of income from business activities or the creation of accessible financial asset to protect against risks and cope with livelihood shocks.

    ; She contributes Kshs.100 per month to her women’s group, which helps her, when she is in a

    crisis. She has not had a major crisis for more than four years.

    ; The income she gets reduces her vulnerability because she saves some of it and uses it to

    offset her monthly contributions to the group at times like this when business is low. ; She now has a number of different sources of income, which lowers her vulnerability.

3.5 Increase in paid employment

    Loans have facilitated expansion of some micro enterprises (which may be owned by non- poor clients) increasing the paid employment for the poor people.

    ; There is an increase in fully paid employment in her business. Before the loan she had two

    employees now she has three more in the two branches, she also pays electricity and other

    services on her machines like maintenance and repairs.

    ; With the loan, she was able to stock her new branch and to hire more employees.

3.6 Enhancing women’s status and livelihood

    Access to micro-finance services has helped to strengthen the status and livelihood of women

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FSP Exploratory Study Case Study Report - WEDCO

    ; Her husband passed away in 1993 and since then the loans have helped her to survive and

    to provide a good living for her dependents.

    ; Her loans repayment record has made her group members elect her as the secretary

    therefore in a way the loan has given her social integrity and recognition. ; Given that she personally made a decision on what to do with the loans and she succeeded,

    she now has a lot of confidence. Indeed, she plans to take a loan of Kshs.500,000 or one

    million in the future.

    3.7 Impact on the poor and on women can be improved through developing the range and terms of financial services available.

    Impacts, particularly on the poor and on women can be improved through further developments of the range and terms of financial services on offer

Going by her suggestion:

    ; The repayment period for loans should be lengthened from 18 months to 24 months. ; Clients should be given access to emergency loans or overdrafts.

    ; WEDCO should train people in bookkeeping.

4, Overall conclusion

    Jane is now a relatively wealthy woman by local standards, and this has partly been as a result of her access to WEDCO loans, rather than a precondition of receiving them. Her ability to start a business came from having enough initial capital that she had saved up from her salary as a clerk and from the skills she learnt at college and experience at work. It appears that having these skills, and a business idea with demand, she was a good prospect as a borrower. The membership she had with the women’s group made her likely to succeed because it is through the women’s group that she gets the loans to help her in her business.

    The expansion of her business has also led to an increase in paid employment, in that she now employs five people other than herself. This has come partly from diversification, but mainly from expansion into another location. The salaries paid to these staff are significant for the area.

    She has clear plans for the future and a strategy as to how to achieve them, but she needs assistance in terms of education in bookkeeping, and longer repayment periods. Jane had said (in the narrative) that WEDCO should give them more education in business management and bookkeeping.

    Overall her access to WEDCO services has helped to better the lives of herself and her dependents, and her employees and their dependents.

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    FSP Exploratory Study Case Study Report - WEDCO

    5, Key Data

     Name: Jane Odhiambo C3.10 Change in working capital since 2 E.6 Any current savings with the MFI: Yes years ago: Increased A1 Sex: Female C3.11 Most valuable business asset : E.7 Any other loans other than with the Photocopy machine MFI above: Yes A2 Age: 39 Years C3.12 Current value: Kshs 250,000 E.8 From whom? Pride and Post Bank. A3 Locality: Urban C3.13 Total sales per month: E.9 Advant. Of MFI compared to Kshs.30,000 mentioned sources: None A4 Region: Western C3.14 Change in sales since 2 years ago: E10 Disadvantage of MFI over mentioned Increased sources: Loans are too small, no grace period, weekly repayment, doesn’t insist on registered groups. A5 Client of which MFI: WEDCO C3.15 Main business costs per month: E.11 Since joining MFI ever saved money Kshs. 16,500 with anyone else?: Yes A6 Code of REME: None C3.16 Gross profit per month :shs.13,500 E.12 Saved with whom? Pride A7 Interval between this and REME: Not C3.17 Change in profit since 2 years ago: E.13 Advantage of MFI over mentioned applicable Gone up. source: None A8 Marital status: Widowed C4.1 Value of home produced food E.14 Main disadvantage of MFI over Pride: consumed pm: Kshs.1,950 Have not got my shares back since I stopped the loans. A9 Education: Form 4 then secretarial C4.2 Cash food expenditure pm E.15 Any insurance policy?: Yes training. Completed college Ksh s.7,500 A10 Interview Status: Successful C4.3 Goods expenditure pm: Kshs. E.16 Type and where from: For shop 3,795 against fire and theft C1.1 House hold size: 07 C4.4 Transport expenditure pm: E.17 Effect of MFI on relation with hh Kshs. None members: For the better. C1.2 Adult women in household: 01 C4.5 Personal goods expenditure pm: E.18 Effect of MFI services on no. can turn Kshs. 800 to for help: Increased. C1.3 Adult men in household: 02 C4.6 Medical expenditure based on last E.19 Effect of MFI on no. of people who year: Kshs. 7,000 come for help: Increased. C1.4 Adults earning income: 02 C4.7 Education expenditure based on last E.20 Wealth of hh members since year: Kshs. 105,000 involvement with MFI: Better off C1.5 Adults retired not working: 00 C4.8 Total hh expenditure: E.21 Personal wealth since involvement Kshs. 23,378 with MFI: Better off. C1.6 No of children 5-15 years: 04 C4.9 Calculated contribution business z1 Household size (number of adult makes to hh expenses: 173 equivalents): 5.6 C1.7 No of children 0-4 years: 00 C5.1 Own house? No z2 Actual earner to dependency ratio (percent): 29% C2.1 Any salary earned by member of hh : C5.2 Has working electricity? Yes z3 Potential earner to dependency ratio Yes (percent): 14% C2.2 Any income in past 12 months from C5.3 Main form of fuel: Charcoal z4 Verify the main business profit: kshs. rents or rooms: No 13,500 C2.3 Income pensions, saves, invests in C5.4 Quality of house compared with two z5 Return on working capital (%): 9% past 12 months: Yes years ago : No change C2.4 Any other source of income not C5.5 Explain difference: No difference z6 Working capital to paid employment mentioned: n/a ratio (shillings per full-time equivalent paid worker): 25,000 C2.5 Hh status compared with 2 years ago: C5.6 Most valuable hh asset: T.V z7 Working capital to total employment No change ratio (shillings per full-time equivalent worker): 25,000 C3.1 Main business activity: C5.7 Value of most valuable hh asset: z8 Verify total monthly household Secretarial Bureau Kshs.10,000 expenditure (%): 23,378 C3.2 Main business: Services C5.8 Dwelling type: Formally constructed z9 Verify ratio of main business profit to house household expenditure: 57.7% C3.3 Years of operation: 04 C5.9 Neighborhood: Semi Rural z10 Household expenditure per adult equivalent: 4,175 C3.4 Any other business: No C5.10 Type of roof Corrugated iron sheets z11 Poverty status (% deviation from urban food poverty line): 250% C3.5 Description of other business: n/a C5.11 Wall material: Cement blocks

    C3.6a Paid employees: 06 E1 Months since first loan: 12 Unpaid employees: 00 E2 Total no. of loans so far from MFI: 02 C3.6bb C3.7 Employee no. compared with 2 years E.3 Largest loan received: ago: Increased Kshs. 150,000 C3.8 Reason for change: Opened E.4 Any outstanding debts: No new branch

    C3.9 Working capital Kshs. 150,000 E.5 Any overdue loan repayments: No

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