strømme foundation microfinance as annual report 2008

S T R Ø M M E F O U N D A T I O N M I C R O F I N A N C E D E P A R T M E N T

ANNUAL REPORT 2008

STRØMME MICROFINANCE DEPARTMENT \\ ANNUAL REPORT 20082 STRØMME MICROFINANCE DEPARTMENT \\ ANNUAL REPORT 2008 3

Øyvind Aadland Secretary General

Lars Erik HarvMicrofi nance Director

Kristiansand, 1 June 2009

Contents

Foreword 3

Strømme Foundation Microfi nance Department in brief 4

Strategic guidelines 5 Governance Structure 6 Main activities 75.1 Financial Services 5.2 Non-fi nancial services 5.3 Networking

Activities by geographical distribution, incl. fi nancial statements 96.1 East Africa - SMF EA Ltd 96.2 Asia 106.2.1 SMAGL6.2.2 Bangladesh6.3 SMF Dept. including West Africa end South America 116.4 Summarizing statistics and comments 12 6.5 Global Statistics 13 Highlights and achievements from 2008 14

Challenges in the year to come 14

Appendix I Consolidated Financial Report 15Appendix II Personnel in SMF 15Appendix III Abbreviations 15

Every now and then it is about time to stop, check whether things are working as they as planned and whether the expected results are achieved by the ways and means of interventions. 2008 was such a year and fi lled with processes of evaluation and strategically planning for the future.

2008 started with an organizational review of Strømme Foundation from Norad. Th e fi ve year agreement with Norad had come to an end and before signing a new one, the internal systems and organizational set-up for working in the develop-ment sector were to be evaluated. Th e evaluation confi rmed that the interventions in Microfi nance are professionally taken care of, and that the set-up with local competence and delegation is one of the factors for success. Further, the discussions and the process was a valuable source of input for further development and strategies for the future.

Strømme Foundation also developed the new Master Plan for its work the 5 years to come; more focused geographically and determined to measure results. From now on the focus is not the service delivery and the activities carried out, but rather the change in the lives of the target groups. Change in life of our target group - long-term and sustainable change. Th is is a real challenge. But if we are serious about what we do, we owe our target group to make sure that we reach them and that we actually provide the services they need and demand. Still, the poor is doing the work themselves. Th ey are the ones creating the change in their lives and a whole new world of opportunities for the women and men directly involved, their families and their children.

In November the dormant company Strømme Microfi nance AS was awakened and from 1st January 2009, Strømme Microfi ance Department becomes Strømme Micorfi nance AS, a company limited by shares where Strømme Foundation owns 100 %. Th e vision will not change and the purpose of poverty eradication is not weakened. Th e new company opens new possibilities for funding and further growth.

Foreword – 2008 Planning and structuring


Strømme Foundation (SF) has organised all its involvement in Microfi nance (MF) through the Microfi nance Department (SMF Dept.). Th e global MF activity will further be named as SMF, meaning the MF sector in SF including both the SMF Dept. as well as all Apex institutions. SMF Dept. in Norway serves as a coordinator of all MF activities within SF worldwide and to be a liaison offi ce between the SF microfi nance bodies, the funding partners (like Norad etc) and other stakeholders in the Global North. SMF Dept. is working according to the development policy and vision of SF; Eradicating Poverty.

Aiming for long term partnerships, the SMF relationship to one partner may change and vary from time to time. But generally the partnerships consist of both technical assistance/ capacity building oft en callend non-fi nancial services and fi nancial services such as loans, guarantees, equity holdings or grants. Th is long term partnership and involvement both fi nancially and non-fi nancially is what we call our holistic approach.

Th e essential parts of the SMF strategy within conventional MF are:

1) Financial services – i.e. loans, equity holdings, guarantees etc.2) Non-Financial Services/ Technical Assistance (TA) – i.e. Facilitate and promote training, fund equipment, workshops and participate in developing appropriate tools such as Management Information Systems, reporting standards etc.3) Networking – i.e. partnering and working with appropriate stakeholders, nationally, internationally and both vertically and horizontally to promote best practices etc. and effi cient ways of involving in MF.

SMF’s involvement in Microfi nance is contextualized to each region and generally interventions are split between conventional MF and Community Managed Microfi nance (CMMF) as approaches.

Th e SF Board of Directors discussed and approved the adjusted Microfi nance strategy in January 2007 and decided to promote the following basic guidelines for its MF involvement:

PrinciplesTh e basic principles of Strømme Foundation Microfi nance are:

• Promote building of inclusive fi nancial systems, based on Best Practice Microfi nance, re CGAPs 11 principles of microfi nance.• To emphasize demand-led and pro-poor fi nancial systems. • To work as whole sale lending institutions through partner Micro Finance Institutions (MFI)• To support established and promising partner MFIs through loans and grants for TA. • To aim for the total fi eld structure of entities within Strømme Microfi nance to reach operational sustainability by end of year 2008.

• Create and support a structure of strong regional wholesale lenders / Apex companies in which Strømme Foundation plays the role of majority stakeholder. • Promote a ”holistic approach” implying close, long term responsible relationship with the partners. • Encourage and support strong partnerships and networks, both vertical and horizontal. • Keep a clear poverty orientation, focusing on underserved, rural and other vulnerable groups • Aim to stimulate innovations, fi nd special niches and promote new methods and tools – i.e. provide ”cutt ing edge” microfi nance.

2] Strømme Microfi nance Department (SMF-Dept) in Brief: 3] Strategic guidelines.

Countries of SMF activity

PERU

SRI LANKA

BANGLADESH

SUDAN

KENYA

TANZANIA

UGANDA

BURMA

CAMBODIA

RWANDA

MALI

BURKINA FASO


SMF’s involvement in and approach to Microfi nance can be categorized as conven-tional institutionalised MF and Community Managed Microfi nance (CMMF). Th e conventional MF is used as name for partnership with MFIs and other fi nancial institutions. In such partnerships SMF provides both fi nancial and non-fi nancial support. Community Managed Microfi nance is based on the principle of the participant’s ownership and the loan fund is funded by the savings of the participants. When involved in CMMF, SMF’s role is only providing non-fi nancial services, especially training.

5.1 Conventional MFI) Financial ServicesSMF’s main means of fi nancial intervention have so far been:

• Loans • Guarantees• Equity holdings As such, SMF conducts wholesale lending as one of its main interventions. (Promotion of clients’ savings, however, is of essential importance for the funding and security of the MFIs)

Th e lending activities have increased signifi cantly over the last years. SMF aims at off ering competitive facilities for our partner MFIs, yet without compromising the local fi nancial markets. SMF thus should not subsidize the interest rate, as we believe one of our missions is to promote inclusive, fi nancial markets. Having that said, SMF must also aim at promoting business between local banks and national MFIs.

Guarantees have become more common over the years. It is of great importance for the MFIs to have access to local capital. Th is is all the more possible since com-mercial banks in most of the SMF countries of intervention are over liquid.

A guarantee is needed when there is too much asymmetry between the lender (Bank) and the borrower. Th is is frequently the case when MFIs want to access the commercial fi nancial markets. Th e conventional fi nancing institutions have very limited knowledge of the MF sector. Hence a guarantee from an accepted institution can help the MFI access commercial capital. In this process it is essential that the guarantee should decrease over time (or the loan amount increase) so that the guarantee amount may be leveraged. Th us a certain amount in guarantee will leverage a higher amount in loans. An Apex institution could play a key role in this context. Th at is what SMF wants to do.

Th e organisational chart illustrates the MF organisation of Strømme Foundation. SF has organised its work in the microfi nance sector through a department at the head quarter in Norway. Th e manager of the SMF Dept. is called “Director of Microfi nance”. He/she represents the Secretary General in issues concerning MF.

As the total MF activities diff er in size and complexity in the four southern regions of SF, the microfi nance work has been contextualized to meet needs of our partners. In the regions of South America and West Africa, as well as in a few other cases, the MF portfolio is managed in collaboration between the regional director and the SMF Dept. Th e latt er is serving as credit committ ee for new loans, while the regional offi ce staff s is responsible for identifying, supporting and monitoring MF partners. Th e activities in East Africa, Sri Lanka and in Bangladesh are organised as separate legal and administrative entities. Th e entity in Bangladesh is not yet fully implemented legally. Th ese enities are called Apex institutions providing whole-sale lending according to the holistic and contextualized approach. Each Apex has its own Board of Directors.

Th is is the organisational chart functioning per end 2008. Th e dormant company limited by shares, SMF AS, will replace the SMF Dept. as umbrella institution for all SMF activities from 1st January 2009. Th is will not change the chart apart from the legal aspects of being an AS rather than part of Strømme Foundation. To avoid mission drift and to stay in close relationship with Strømme Foundation, the Board for Directors of Strømme Foundation is automatically elected as BoD of SMF AS. In addition to this, there will be a Finance and Credit Committ ee functioning with delegated power from the BoD to further maintain fi nancial issues and govern the new company.

4] Governance Structure

SF BOARD OF DIRECTORS

SF COUNCIL

SECRETARY GENERAL

OTHER DEPARTMENTS

SMF EAST AFRICA LTD BY SHARES

(UGANDA)

PARTNERMFI

PARTNERMFI

SMF ASIALTD BY GUARANTEE

(SRI LANKA)

MICROENTERPRISEDEVELOPMENTFOUNDATION

(BANGLADESH)

MF-ACTIVITIESWEST AFRICA

MF-ACTIVITIESSOUTH AMERICA

MF-ACTIVITIESASIA (OUTSIDE BANGLADESH & SRI LANKA

Regional MF-activities

Entity with separate Board

PARTNERMFI

PARTNERMFI

PARTNERMFI

PARTNERMFI

PARTNERMFI

PARTNERMFI

PARTNERMFI

PARTNERMFI

PARTNERMFI

PARTNERMFI

MICROFINANCE DEPARTMENTMF Director

5] Microfi nance approach

As a way of supporting the MF sector and build external relationships, SMF has chosen to make direct investments. Th ese equity instruments, when invested in stakeholder companies in the North, open doors of collaboration with international players in the fi eld, give access to information and new networks and let SMF become an international, recognised MF player. When investing in partner MFIs in the South, the rationale could be a need for closer monitoring by having a seat on the Board, a symbolic support to an interesting, growing partner or a fi nancial investment in a strong MFI.

SMF also aims at exploring various quasi equity instruments, such as subordinated loans when involved in this sector. Acknowledging the inadequate capital structure of most NGOs / MF players, the latt er is a challenge calling for innovations.

I I) Non-fi nancial services / technical assistance (TA):By non-fi nancial services and technical assistance, SMF is promoting a number of diff erent services. To SMF this is part of the holistic approach and integrated in MF. Capacity building and non-fi nancial services can be funding of product development, developing manuals and plans for the institutions, institutional capacity building, market development support, applied research, provision of equipment for the MFI etc.

Where applicable and functional, SMF off ers grants to cover defi cits and one-time investments in the MFIs. By building up a strong structure for the MF entities in the regions, concentrating on conducting MF services to MFIs with good governance, strong management, transparency and accountability. Th e grants are increasingly di-rected at the emerging MFIs in the early part of their life cycle. Since all parties should strive to reach at least operational sustainability, the grant element should be limited accordingly and reducing.

I I I) NetworkingTh e involvement in Networking can be further divided according to two categories:

a) Networks for capacity building

SMF acknowledges the importance of strong, national networks within MF, be it on MFI level, Apex level, between diff erent donor agencies or collaboration with governmental bodies, both in the Global South as well as in Norway. Th ese networks vary in quality, functionality and in some countries they are non existent. Uganda and

THE STRUCTURE OF MICROFINANCE WITHIN STRØMME FOUNDATION


Association of Microfi nance Institutions in Uganda (AMFIU), is an example of how the structure of networks can be built and what an important role such networks play in securing a sound, vital development of the MF fi eld. SMF believes, through fi nancial and managerial support, one should support these structures in the chosen countries of intervention.

b) Networks for funding and co-operation

In line with the increasing professionalism and commercialisation of the MF industry, SMF sees an ever growing need to partner up with other, strong entities involved in our playfi eld. Reasons for partnering is both co-funding, sharing of recourses and responsibility in a project as well as strategic co-operation and knowledge sharing. Partners are both traditional donor communities, such as Norad as well as other actors like Oikocredit from Th e Netherlands, SIDI in France etc.

Below is a list of some of the networks where we are affi liated:

Internationally:Microcredit Summit and CGAP, Opportunity International

European level:Th e European Microfi nance Platform in LuxembourgICCO, Oikocredit, Terrafi na Microfi nance, SIDI, OIKOS, EQUITY FOUNDATION

Th e MF involvement in West Africa, South America and parts of Asia, is governed by the SMF structure through the SMF Dept.’s supervision and managed by the Regional Director. Th e regional offi ce is doing the due diligence and all assessments where the SMF Dept. serves as credit committ ee and whole-sale lender.

SMF Department has for various reasons decided to acquire ownership parts in external companies abroad. Overview of investments can be found in Appendix II. Th e loans and equity holdings in the Apexes will appear in the balance of SMF Dept.

BALANCE SHEET (All numbers in NOK) 31.12.08 31.12.07AssetsTotal current assets: 118.340.268 89.046.389Total non-current assets. 8.544.955 7.489.400Total assets 126.885.223 96.535.789

Total current liabilities: 433.372 593.690Total non-current liabilities: 4.466.603 3.209.166Total equity: 121.985.248 92.732.933Total Liabilities and Equity: 126.885.223 96.535.789

Income and Expenses statementTotal operating income 3.392.293 3.009.082 Total fi nancing expenses -179.255 -252.175Provision for loan losses and write-offs -5.636.838 -920.256Total operating expenses -2.994.757 -2.741.905Net income from operations - 5.418.557 -905.254Income taxCurrency (loss)/gain 19.604.032 -10.050.150Total grants received 15.066.841 12.012.029Net income after grants for the period 29.252.316 1.056.625 Key performance indicators:Total number of active partners: 12 13 Total number of clients of partners*: 270 613 254 502Portfolio yield 5,19% 3,32%Assets yield 3,04% 3,06%OSS (Operational sustainability)** 39% 77%

Nationally: Norway: Bistandstorget (Norwegian Development Network)Uganda: Uganda Association of Microfi nance Institutions (AMFIU).Kenya: Association of Microfi nance Institutions (AMFI)Tanzania: Tanzania Association of Microfi nance Institutions (TAMFI).Mali: Association des Praticiens et institutions de la Microfi nance (APIM) Sri Lanka: Donor MF Coordination Network, Microfi nance Practitioners’ Network in Sri LankaBangladesh: INAFI Bangladesh

5.2 Community Managed Microfi nanceCommunity Managed Microfi nance (CMMF), savings led microfi nance, is microfi nance based on groups where the members save together and by their own savings build the loan fund where the members of the group can ask for loans. In the partnerships and methods where SMF is involved, there is no external capital entering the groups and the loan fund. SMF only support partners with capacity building and funds for training new groups and expansion of the model. CMMF is used in East and West Africa.

6) Conventional MF Activities by geographical involvement

6.1 SMF Dept. including West Africa, South America and parts of Asia

*)Total number of clients is partly an estimated number**)OSS is exceptionnaly low in 2008 due to exceptionally high LLPR

I am now eating 3 meals a day


SMF EA Ltd is a company limited by shares, incorporated in 2004. Th e company is located in Kampala, Uganda and including the activities of MF for the East African region (Uganda, Kenya, Tanzania, Rwanda and Sudan). SMF EA is a complete Apex organisation with a local Board of directors, a full set of manuals covering including a Business Plan, and policies for the Board, Accounting, Human Resources management and Operational & Financial issues. SF holds the majority of shares in the company and the Regional Director serves as chairperson of the Board.

BALANCE SHEET (All numbers in NOK) 31.12.08 31.12.07AssetsTotal current assets: 55.022..390 37.468.710Total non-current assets. 152.118 127.698Total assets 55.174.507 37.596.408

Total current liabilities: 1.098.358 673.131Total non-current liabilities: 32.026.060 22.122.281Total equity: 22.050.089 14.800.996Total Liabilities and Equity: 55.174.507 37.596.408

Income and Expenses statementTotal operating income 5.566.643 3.736.295 Total fi nancing expenses -1.335.835 -997.365Provision for loan losses and write-offs -1.510.671 -862.510Total operating expenses -2.194.052 -1.739.922Net income from operations 526.086 136.498Income taxCurrency (loss)/gain -287.737 -62.726Total grants received 4.947.298 3.840.047Net income after grants for the period 238.349 3.913.819 Key performance indicators:Total number of active partners: 22 25Total number of clients of partners: 396.427 501.225Portfolio yield 13% 11,67%Assets yield 11,44% 11,22%OSS (Operational sustainability) 110% 104%

In the Asian region, SMF has set up two diff erent legal entities. Local legislation hinders either one of these from granting loans to other countries in the region. Loans to partners in Myanmar, Cambodia, India, East Timor etc. are therefore included in SMF Dept. Norway.

SMAGL is incorporated under the Companies’ Act no 17 at the Registrar of Companies on January 6th 2006 with SF as the Founding Member. Th e company has taken over all MF activities in Sri Lanka and has its seat in Colombo. A professional board with local resource persons in addition to two members form SMF is governing the processes. Th e SF Regional Director is chairing the board.

BALANCE SHEET (All numbers in NOK) 31.12.08 31.12.07AssetsTotal current assets: 29.023.872 20.017.555Total non-current assets. 47.211 6.053.413Total assets 29.071.083 26.070.968

Total current liabilities: 569.541 632.038Total non-current liabilities: 28.311.015 25.250.300Total equity: 190.527 188.630Total Liabilities and Equity: 29.071.083 26.070.968

Income and Expenses statementTotal operating income 2.063.516 1.542.880Total fi nancing expenses -268.076 -178.763Provision for loan losses and write-offs -1.503.216 - 566.889Total operating expenses -1.263.777 -1.115.894Net income from operations -971.553 -318.667Income tax -202.982 -30.727Currency (loss)/gain Total grants received 174.359Net income after grants for the period -1.174.535 -175.035

Key performance indicators:Total number of active partners: 25 27Total number of clients of partners: 225.297 231.967Portfolio yield 7,94% 7,80%Assets yield 7,37% 7,53%OSS (Operational sustainability) 75% 83%

6.2 East Africa - Strømme Microfi nance East Africa Ltd (SMF EA Ltd) 6.3 Sri Lanka - Strømme Microfi nance Asia Guarantee Limited (SMAGL)

I am now living in a house with proper roofi ng

I am saving for my son´s medicine studies


Th e Apex in Bangladesh is still to be legally approved as a company. Th e virtual Apex is at the time functioning as an Apex governed as a division within the Regional Offi ce in Sri Lanka. BALANCE SHEET (All numbers in NOK) 31.12.08 31.12.07

AssetsTotal current assets: 47.589.783 32.208.236Total non-current assets. Total asset 47.589.783 32.208.236 Total current liabilities: 142.574 144.062Total non-current liabilities: 47.949.272 32.342.400Total equity: -502.063 -278.226Total Liabilities and Equity: 47.589.783 32.208.236

Income and Expenses statementTotal operating income 3.010.818 1.933.347 Total fi nancing expenses -1.281.258 -932.015Provision for loan losses and write-offs -1.107.643 -895.508Total operating expenses -767.102 -385.184Net income from operations -145.185 -279.360Income tax Currency (loss)/gain Total grants received Net income after grants for the period -145.185 -279.360 Key performance indicators:Total number of active partners: 10 10Total number of clients of partners: 1.428.782 1.090295Portfolio yield 7,05% 7,89%Assets yield 6,33% 6,47%OSS (Operational sustainability) 95% 87%

When consolidating the numbers in SMF, Th e SMF Dept. and including all the Apexes and correcting for internal transactions, we may present the following information as per December 31st 2008. Th e fi nancial report is found in Appendix 1:

FINANCIAL EXTRACTS ( in NOK) 31.12.08 31.12.07

Total assets 151.532.647 106.997.279Total equity 143.149.893 102.538.152Gross Loan Portfolio 123.407.408 89.829.050Total operating income 11.220.163 7.874.213Total administrative expenses 7.219.688 5.777.640Total number of MF partners 69 88Total disbursement to partners since inception (2000) 314.264.131 218.562.614

6.4 Bangladesh - Microenterprise Development Foundation (MDF) 6.5 Global statistics

0 50000 100000 150000 2000000 50000 100000 150000 200000

0 500000 1000000 1500000 20000000 500000 1000000 1500000 2000000

Outstanding balance per 31.12.2008

Outreach by our partners

Outreach by our funding

East Africa 48.010.147

West Africa 4.457.376

Asia 68.807.792

South America 1.058.850

East Africa 596 427

West Africa 50 936

Asia 1 663 756

South America 10 000

Total 2 321 119

East Africa 64 936

West Africa 5 094

Asia 170 359

South America 1 361

Total 241 750

I am now meeting the eyes of my neighbours

I am now dreaming again


Appendix II Personnel Appendix III Abbreviations:

Name of Company Country of orig. Descript. Amount in NOKOikos Denmark 133.769

Oikocredit Holland 99.296

SIDI France Wholesale lender 452.790Jamii Bora Kenya Ltd Kenya 2.509.710 Jamii Bora Scandinavia. Ltd Sweden 364.000

Kolibri Kapital Norway Investment fund 20.400SMF EA Ltd Uganda SMF Apex 4.985.388

BOD: Board of Directors

CEO: Chief Executive Offi cer

CGAP: Consultative Group to Assist the Poorest

CMMF: Community Managed Microfi nance

MF: Microfi nance

MIS : Management Information Systems

MFI : Microfi nance Institutions

NGO: Non Governmental Organisation

RD: Regional Director (in SF)

SF: Strømme Foundation

SMF: Strømme Foundation Microfi nance

SMF

Dept.: Strømme Microfi nance Department

TA: Technical Assistance

The executive staff involved in Microfi nance in 2008

are composed of the four Regional Directors (RD) as

well as a number of Microfi nance specialists:

SMAGL

Nimal Martinus (RD Asia), Chairpers.

Upul Batagoda, CEO

Nadeera Sumudu, MF Offi cer

Priyantha Saman Bankara, Oper. Coordinator

Savarimuththu Gnanapragasam, Adm. and Fin. Offi cer

SMF EA Ltd

Priscilla Mirembe Serukka (RD East Africa), Chairpers.

Paul Mayanja, CEO

Elizabeth Naiga, MF Offi cer

Daniel Sentumbwe, MF Offi cer

Denis Okaba, Accountant

Badru Lubega, Driver

Bangladesh

Zahirul Islam, MF specialist

Shakawat Hussam Majumber, MF Offi cer

Daniel Mondal, Accountant

West Africa

Zakariya Abdou, RD West Africa

Samuel Dao, MF Offi cer

South America

Susana Tapia, RD South America

SMF Dept.

Lars Erik Harv, MF Director

Anja Elise Ø. Husebø, MF Advisor

Johannes Sannesmoen, MF Advisor

Heidi Prestbakmo Holtskog, Acc., (1/5 position).

Th e constant strive for identifying and implementing bett er solutions, working effi ciently and developing the industry further will never stop. In a year fi lled with processes where we are planning for the future, it has been time to revise some reporting formats, implement new indicators for Result Based Management and work on the strategy for the future. 7.1 SMF AS is awakened.In the Board of Directors meeting of SF in November, the until then dormant company Stromme Microfi nance AS was awakened. Th e company is fi rst and foremost a tool for risk management in SF. Further it can open new sources of funding and further expansion of the Microfi nance intervention. 7.2 Agreement for Core funding with Norad Aft er ending the evaluation process from Norad concluding that the structure and set-up of Stromme Foundation is an effi cient tool for intervention in develop-ment work, Norad decided to increase the yearly amount donated to SF each year. Given the constraints in Norad’s budget, SF is quite satisfi ed with this increase. Th e evaluation process was a learning process giving good directions for the future as well as confi rming some of the choises that have been taken in the past. Th e new agreement with Norad is also new in the terms of reporting and structure. SF will now report the results of interventions and not so much from the activities as earlier. Further, the core funding means that Norad is focusing on the greater picture and not asking for the details of each country and partner. Th e follow-up of this level is left to SF. 7.3 Result Based ManagementTh e defi nition of successfully implemented development work is not standardized. However, there is a shift in the direction of focussing and measuring change in the target groups’ lives. Th e input and activities are measured directly by outcome and outreach. But the real result is beyond this when we measure change. In 2008 all reporting systems have been geared towards such measures and development of indicators. Measuring change is not done only to prove that the MF is eradicating poverty, but more important to make sure that the intervention is targeted towards the right group of people and that the products off ered are the ones demanded. Result Based management is a useful framework in where to measure results and to improve the intervention. 7.4 Social PerformanceTh e Microfi nance industry is focusing more and more on Social Performance. In 2008 Th e MiX launced the agreed upon indicators for Social Performance Manage-ment alongside with the fi nancial indicators. SMF is following the work and imple-

menting social indicators as part of our on-going monitoring and reporting eff orts . 7.5 Financial Reporting Financial reporting and control is a necessity for long-term sustainability. As 2008 has been the time for structuring for the future, also the fi nancial reporting schemes have been revised. Th e new template includes fi nancial reporting, portfolio reporting and social reporting in one. Th e new format gives more information and tools for measuring the performance of SMF’s work, the work of partners and it has also links to the end clients.

As mentioned in chapter 7, Achievements and highlights, some issues are ever relevant and we should never stop striving for bett er solutions, more effi cient tools and means to eradicate poverty as well as being part of the development of the MF industry. Even though the industry is focusing more and more on the Social Performance, there is still some way to go when it comes to implementing the tools. Th e balance between what we need to have and what is nice to have and whom to target with the information, is a challenge to solve. SMF is continuing to search for good indicators to measure the change, outcome. Th e standardization with Th e MiX has given some good output indicators. However, the change in the target groups’ lives should be our main focus and SMF will continue to work for improved measurement of this. Th e new agreement with Norad challenges SMF on reporting and implies new repor-ting formats and routines. Th ese have to be developed and implemented in 2009. Th is is a chance to improve, but it is very time consuming. In 2006 SF were on the way to establishing a new Apex, together with another partner in Bangladesh. Unfortunately this failed. In 2007 and 2008 SF have been going over alternatives of co-operation and regulations. Even though the process is progressing, there are still issues to be dealt with as there is no similar institution in Bangladesh and the present legal framework does not directly accommodate our version of a wholesale lending institution.. Th e process continues and SF is aiming at fi nishing as soon as possible with the third, fully legal Apex established for wholesale lending. Th e Apex in East Africa, SMF EA ltd. has been consolidating their work as an Apex for some years now. Th ey have reached the point where they both face increased demand from partners for more funding as well as increased capacity internally to take on more portfolio and grow further. Th is is a challenge to SMF AS since we are the majority owners of the company. Searching for funding, not only for East Africa, but for all our interventions in the microfi nance fi eld will be challenge in the year to come. SMF AS will have to develop progressively its role as a facilitator of commercial funding of its partners.

7) Highlights and achievements in 2008

8) Challenges in the year to come

Appendix 1 Consolidated fi nancial report

Appendix II Equity Holdings

Co-operative bank that collects deposits to relend to MFIs in developing countries.Wholesale lending Institution – one of the largest worldwide

MF part of the Jamii Bora Group

Investment fund with purpose of channelling funds for Jamii Bora

Microfi nance Department • Strømme Foundation, June 2009 • Lay-out and graphic design: Strømme Foundation • All photos: Strømme Foundation Th e Strømme Foundation is member of Th e Norwegian Control Comitt ee for Fundraising

Assets 31-12-2008 31-12-2007Total current assets: 147.773.752 103.703.370Total non-current assets. 3.758.894 3.293.909Total assets 151.532.647 106.997.279 Total current liabilities: 782.499 1.249.962Total non-current liabilities: 7.600.256 3.209.165Total equity: 143.149.893 102.538.152Total Liabilities and Equity: 151.532.647 106.997.277

Income and Expenses statementTotal operating income 11.220.163 7.874.213Total fi nancing expenses -251.315 -335.456Provision for loan losses and write-offs -5.145.833 -3.090.564Total operating expenses -7.219.688 -5.777.640Net income from operations -1.396.674 -1.329.446Income tax -202.982 - 28.407Currency (loss)/gain 19.618.288 -10.109.535Total grants received 1.201.987 6.116.439Net income after grants for the period 19.220.619 -5.350.949

Skippergaten 3 • Box 414 • N-4664 Kristiansand Norway Tel +47 38 12 75 00 • Fax +47 38 02 57 10 • Org. no 952 002 139

E-mail: [email protected] • www.stromme.org

strømme foundation microfinance as annual report 2008

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