Analysis of the Credit Assessment Model of Redavia GmbH

2018-05-31 - 2018-07-31
Germany

Objectives  REDAVIA provides rental solar farms to businesses and communities in West and East Africa. The innovative REDAVIA pay-as-you-go system consists of a pre-configured system containing solar modules and electrical components. Once the container is on-site, REDAVIA-trained local specialists manage the installation, operations and maintenance of each solar farm.   LFS Advisory was contracted by REDAVIA to strengthen its credit scoring tool that is used to assess the payment willingness and payment capacity of REDAVIA’s prospective customers. The highly efficient and comprehensive tool is tailor-suited to the assessment of Small and Medium Enterprises and can be utilized with a minimum level of training. The objective of the assignment was to enhance the credit scoring tool by reviewing its predictive indicators, adding indicators and/or removing indicators as well as by re-calibrating the entire system by changing the weighting of payment predictors. By that, REDAVIA should be enabled to continue its rapid growth path with well controlled risks and external funding.   Scope  The project started with a comprehensive desk review of REDAVIA’s existing credit scoring tool, workflow, products and performance. Based on that review, a diagnostic review was drafted and discussed with REDAVIA and responsAbility. Following the diagnostic review, a full-day workshop was organized to finalize the tool and to define the plan for implementation. A final report was produced to certify that the tool follows best practices from an SME banker’s perspective.   Results   LFS has successfully reviewed and enhanced Redavia’s credit scoring system. Specifically, LFS has developed additional predictive indicators, revised the credit assessment technology by including additional credit risk proxies, enhanced efficiency and productivity by focusing the analysis on critical areas as well as by introducing committees to decide on cases where automated mechanisms produce inefficient results. Redavia has implemented all suggested enhancements globally.  
Diagnostic review of Redavia’s existing credit scoring tool, including an assessment of its strengths and weaknesses and benchmarking the model against best-practice models in similar environments.   Identifying areas where Redavia’s credit scoring model could be improved, drafting relevant recommendations.  Facilitating a full-day workshop with senior staff of Redavia to elaborate a strengthened credit scoring model.   Implementation of a strengthened credit scoring model.