Resident Advisor DRC – DF Component

2017-11-30 - 2018-11-30

LFS was selected by IFC to provide resident advisory services to a leading microfinance institution (MFI) in the Democratic Republic of the Congo (DRC). The primary objective of the assignment was to implement an overhaul and upgrading of the client’s credit methodology, products, and risk management. The assignment formed part of a larger initiative to support the MFI’s institutional and business model transformation including the ongoing digitization of products and processes as well as the further growth of its agent banking channels. This entailed a refinement of the MFI’s digital finance strategy and alignment the various ongoing digital finance projects within a coherent management framework. The LFS team worked in coordination with additional IFC experts and specialist consultants. After a core on-site period from Dec. 2017 through July 2018, additional support was provided remotely.
Review of the existing credit methodology and reasons for past increases in delinquency rates; Development of tools and processes with the aim of improving the quality and efficiency throughout the credit cycle; Review of the MFI’s risk management and internal control set-up and development of tools and processes to improve it; Support the MFI in reviewing its digital finance and agency banking strategy and the internal organisation of these areas; Support the MFI in conducting a systematic digital financial services readiness gap analysis (DFS-GA) on an institutional and project/product-specific basis Main outcomes for the client The MFI was able to improve its credit quality and overall financial performance substantially during the project period. The rates of portfolio-at-risk greater 1 day (PAR>1) and greater 30 days (PAR>30) decreased from ca. 9% and 7% in early 2018 to 5% and 3% respectively as at 31 March 2019. Management confirmed that the tools, recommendations and training/coaching support provided by the LFS resident advisor were of help to the MFI in achieving these improvements. Other outcomes included: Various tools for use in the day-to-day credit performance monitoring and credit risk management processes DFS readiness gap analysis tool Various trainings and workshops related to the above areas Various papers with recommendations for further action