Description
This is one of a series of reports on experimental activities undertaken by STEP - the Swaziland Training for Entrepreneurs Project.
89
',w ILAND
LI3RARY
,:A iEiterrJtionai in Swaziland
SZ owaziland
Tralnir. for Entrepreneur
ProjecL (STEP)
ED80
E96
EXPERIMENTAL
PROJECT #8
Asikhutulisane
Savings
&Credit Cooperative
Society
Final Report. November 1989
By: Mm.aphefo Aphane
(i -ntrepfrne1Irs
Training for
- .!ID £Coperative Agreemet
No. 645-D227-A-OC-6002-O0
U.S. A. .D.
E c: SWLAZILANL)
LIBRARY
THE SWAZILAND TRAINING FOR ENTREPRENEURS PROJECT (STEP)
This is one of a series of reports on experimental activities
for Entrepreneurs
undertaken by STEP - the Swaziland Training
Project.
STEP was commissioned by USAID (the United States Agency for
International
Development)
and was intended to identify
small business
potentially successful means of stimulating
activities to increase employment and productivity. STEP's
activities included the commissioning of a series of baseline
studies, the undertaking of experimental
activities, the
provision of technical assistance.
The project commenced in 1986 and is due to end in November
1989. Originally, STEP was implemented by Partnership for
International,
a
Productivity,
but was taken over by CARE
development organization, early in 1987. STEP was CARE's
first and (to date) only project in Swaziland.
CARE International in Swaziland
P.O. Box 2266
Man zin i
Swaziland
Telephone 54360/54413
November, 1989
TABLE
OF CONTENTS
I
EXECUTIVE
SUMMARY
....................................................................................
3
.....................................
1.INTRODUCTION
.............................................
3
A. Project Purpose................................................................................
....................................
4
.........
3
B.O bjectives .................................
C.Organizational
Background
...........................................................
5
II. BACKGROUND
.................................................................................................
5
5
A. Initial Organizational
Contact.....................................................
B.Concept Paper....................................................................................
C. Contract Negotiation
And Approval
6
Grant Disbursement
................................................................
7
III.METHODOLOGY....................................................................................................
.. 7
A.Initial..................................................................................................
7
1. Membership................................................................................
7
2. Loan Application
.................................
7
3. Collateral.................................................................................
7
4. Licences.................................
7
5. Loan Repayments
................................................................
8
6. M onitoring...............................................................................
8
7.Shareholding
...........................................................................
8
8. Annual General Meeting ....................................................
8
8
B.After Firstcontact with STEP......................................................
C.Before Grant Disbursment
.............................................................
10
A.Training
For Manager...................................................................
10
B.Application Form.....................................................................................
10
C.Loan Assessments
............................................................................
..t0
D.Monitoring...........................................................................................
I I
E.Site visit to the Cooperative
................................................................
12
V.FINDINGS...............................................................................................................
12
A.Based on Meeting ............................................................................
13
B.Loan Application Process..............................................................
3
C.Financial.....................................................................................................
13
D.Enterprise Development
.................................................................
..14
E.Training................................................................................................
14
F.CLIENT PROFILE..................................................................................
.. 14
I. Linda Abida..........................................................................
15
2. Daphne Mavuso............................
15
3.Hezekial
Dlamini ....................................................................
16
4. Thulani Masina.......................................................................
..16
5. Ivy D lamini .............................................................................
17
6. Alvinah
Nomsa Nkosi...........................................................
.... ........................... ......
18
7. Desmond Miam bo..........................
1
8. Obed N*,la ..........................................................
................................
9. Nonhiantlta
)la im..... ........
.... 1I)
i
101. Desmond Mlambo.....................................................................
19
11. Leonard Mhlongo...................................................................... 20
12. Pauline Vlabuza................................................................... 20
13. Jabulani Ndlovu....................................................................
21
VI. CONCLUSIONS ............................................................................................
22
VII. RECOMMENDATIONS ..............................................................................
24
VIII. APPENDICES....................................................................................................
A. Summary table ofall clients.........................................................
26
B. Balance '"heetsfor all clients.....................................................
27
C. Pie chart of clients by gender......................................................
34
D. Bar chart ofclients by gender and sector............................. 35
E. Disbursements and total repayments..................................... 36
ii
EXECUTIVE
SUMMARY
started in May 1983
Asikhutulisane
Credit and Savings Cooperative
Society was
by a group of eleven people at Bhunya.
As at the end of August 1989, it had a
the country and deposits of E843 930.
membership
of 2200 from allover
From
the money accumulated
throughout
the year, the Cooperative
gives both
As the Cooperative
started as a
consumption
and business
loans to mr.mbers.
are paid
"Christmas
Club" concept, the savings and dividends
from the shares
out early in December,
which effectively
means that all loans should be paid
back by the end of October.
This situation
was not conducive
to the financial
needs of SmallBusiness Enterprises.
The purpose
of this Experimental
Project was to assist a well-managed
Swazi
support
credit and savings Cooperative
play a greater role as a Small Enterprise
done by giving the Cooperative
a grant of E100 000 to
institution.
This was
bridge the financial
gap at the time of the year when savings and dividends
are
This meant that members
could be granted loans with a repayment
paid out.
period longer than 10 months.
Most applicants
had financial
statements
prepared
before their applications
some of the statements
were presented
to the Board. However,
it looked like
Reasons
for
were not considered
when decisions
to grant loans were made.
non-consideration
of the statements
could be: Firstly, the clause in the Grant
Agreement
that all the money should be disbursed
by the endof STEP may
have caused the Board to give out loans as applications
came and not per merit.
Secondly,
the new methodology
adopted was very different
to the previous
one
since applicants
were now requested
to supply information
on their businesses
in order for the Coop. to be in a position
to prepare financial
statements.
Most
people are never keen in giving information
on their financial
standing
and
this process takes longer than before. The Board may have been
moreover
avoiding
a situation
whereby
members
would complain
about not being given
money when they have made contributions
to the Cooperative.
Itwould take
time for members
to adapt to the new methodology.
Thirdly,
it could be a
possibility
that the Board and Manager
could not analyse
the statements
in
relation to the loans requested.
At the beginning,
the Coop. gave what can be termed "bad"loans but with the
held with CARE, which served as training
sessions
for
discussions
that were
them, they gave good loans. From the information
gathered,
it is apparent
that
use the loan mnney for the intended
purposes.
The effect
some clients did not
used for the intended
purposes
is
of the loans on the businesses
where it was
that owner equity increased.
Poor planning
on the part of the owners will.most
probably
create cash problems
for one client that under estimated
the amount
of money she needed to finish building
her 1.lats
Clients have been on schedule with repayments
and have made them on time
except for one late repayment. Time has come for the Cooperative to set a
policy on collateral even if they do not request the kind ofcollateral
that other
financial institutions require.
If the Cooperative
develops an interest in continuing
with the Small Enterprise
Development,
it should look into cheaper ways of monitoring
the activities
of
their clients other than doing site visits which may prove very costly.
Generally,
CARE's experience
with Asikhutulisane
has been very positive; the
Cooperative
is well-managed,
responsive
to new ideas, and itshould play an
enhanced
role in Small Economic
Activity Development
infuture.
1.INTRODUCTION
A. Project Purpose
STEP Experimental
Project 1 8: Asikhutulisane
Savings and Loan Cooperative
small enterprise support was to assist a well-managed
Swazi consumer savings
and credit cooperative play agreater role as a small enterprise support
institution.I
Agrantof E100 000.00 was tobe given to the organization
to increase its
portfolio of small enterprise loans with repayment periods of longer than 10
months. The intentionof the grantwas to provide a financial base to bridge the
period in the year when most depositors withdraw their funds.
Asikhutulisane
had its origins in the"Christmas Club" concept, whereby most
depositors withdraw theirfunds inNovember/December
and beginsaving again
in January / February. This has meant that all loans, including those tosmall
months at the maximum.
enterprises, must be repaid within a perid of 10
Rapid repayments
are not conducive to the financial needs of most small
enterprises.
B. Objectives
,as
STEP's learning objectives were expressed in theform of hyphotheses
2
follows:
- A well-managed
consumer credit and savings cooperative
can move into an
effective, sustainable small enterprise supportfunction with an appropriately
conceived package offinancial assistance.
- Well-managed
indigenous
institutions
can effectively
identify and meet their
own needs for appropriate
tecnical support to their small business members
with little outside technical assistance.
- Repayment
of small business loans will not vary substantially
from the
normal repayment
patterns of a well-managed
consumer credit and savings
a society on borrowers.
cooperative
due to thecontrols exerted by such
- Close monitoring
of individual
small business performance
is not necessary
in
order for a well-managed
cooperative
to stimulate small enterprise
activity.
Prnect prnposa! nf Nnvemher
2A !')S
Prnect prnposal uf Nu.,v hex" 2.1 1')IM
I
The small enterprise lending ac'ivities of a credit and savings cooperative can
-
be sustainably
maintained
with interest income sufficient to pay for the
additional
cost of this specialized
lending function.
C.Organizational
Background
"Asikhutulisane
Credit and Savings Co-operative
Society Limited is a free
It is registered
association
of people who save and lend money to one another.
under the Co-operatives
Act of 1964 and has its head office in Bhunya.
are employed
by the Usutu Pulp Company
Swaziland.
Most of its members
However,
due to its essential
Limited and the Swaziland
FruitCanners Limited.
service, it now attracts people from Manzini,
Mbabane,
Mankayane
and other
places within these radii".
1
Asikhutulisane
was started in May 1983 by a group of eleven people who
As at August 15, 1989 the
worked in the accounts section of Usutu Pulp Co.
cooperative
has 2,200 members
and E843 930 in deposits, splitasfollows:
savings E342 850, shares E501.080.
The Cooperative's
Board of Directors comprises
of 7 members,
of which the
Chairman,
Secretary
and Treasurer
are amongst founder members of the
They are all
Cooperative.
and have been re-elected
tothe Board every year.
employed
by the Usutu Pulp Company
as Accountants
in different
departments.
The full-time Manager
holds aB'Comm Degree which he has
recently acquired - May 1989.
With their Accounting
background,
they have been able tobuild and improve
the Cooperative
through wise investments
of thefunds entrusted
to them by
the members.
They have been able to produce the Financial
Statement
of the
The purchase
of
Cooperative
every year during the Annual General Meeting.
property
in Malkerns
which comprises
of a shopping complex
and flats worth
E290,000
has been one of the major investments
of the Cooperative.
The
property was purchased
outof money the Cooperative
has accumulated
from
month, which the
share capital. Presently
it is being leased out for E3,127 a
Coperative
uses to pay salaries to their full time staff.
Asikhutulisane
generally
makes personal
consumption
loans toits members,
however,
it also makes some short-term
business loans.
.e rpet
pertlive tn CARE
pcs [rnm doctiment5 .sip!iaedby the tCo
I
II. BACKGROUND
A. Initial Organizational Contact
Asikhutulisane Credit and Savings Co-operative was brought to the STEP
Directors attention via talks with colleagues about indigenous organizations
which worked closely with small businesses. He contacted thecooperative to
express his interest in the organization and this led to a meeting between
Asikhutulisane and CARE onJanuary 30 1988 at the CARE offices. The modus
operandi of both organisations and potential areas of cooperation and assistance
were discussed at length. Asikhutulisane expressed its needs asfollows:
1.An office.
2. Technical assistance.
3. Capitalization of a long-term loan scheme in benefit of its members.
4. Research on the activities of thecooperative.
In respect to technical assistance, Asikhutulisane felt that the time had come for
them to have their own computer. They had been using the Usutu Pulp Co.
computer, which they had on a 'gentlemans' agreement and were fearful that a
change in management would cause them to lose that privilege. Asikhutulisane
has, in the past, given business loans for a limited period but didn't have
qualified personnel toappraise and monitor such loans,nor was it able to give
management advice to the recipients.
Asikhutulisane explained that the nature of their operation was notconducive
to long-term small business loans because a major portion of its funds are in the
form of savings, which must be returned at the end of the year.
Asikhutulisane also expressed a need for a survey to look into the past and
future activities of the society,and, for this venture, they required financial
assistance.
STEP requested that Asikhutulisane submit a concept paper from which a
project paper would be written. During the preparation of the concept paper
CARE held a meeting with Asikhutulisane to help prioritize its needs.
B. Concept Paper
Asikhutulisane stated a need for professional credit management. in particular
business credit. The coopevative felt it needed monetary assistance to enable it
to finance the following:
1.Salary for aqualified person io appraise and monitor business loans.
.o two
2. Increase the funds to enable the society to give business loans for up
years.
3. A personal computer to enable them to keep accurate records and produce
timely reports,
4. Training programmes
to stimulate entrepreneurship
among its members. The
cooperative
is committed to promoting self-reliance among the members.
C.Contract Negotiation
And Approval:
GrantDisbursement.
Whilst the concept paper was still in preparation,
the Project Director had
started verbal negotiations
with the donor, USAID. On November 24, 1988 a
request for approval ofSTEP Experimental
Project #8: Asikhutulisane
Credit and
Savings Cooperative
smallenterprise support was submitted to USAID.
In April 1989 the STEP Director was verbally informed that the project was
approved; a contract between CARE International
inSwaziland and
Asikhutulisane
Credit and Savings was drawn up and submitted to USAID on
April 26, 1989. On May 2, 1989 a revised contract linking the grant period to
the length of the STEP Project was submitted to USAID for its review. A
condition of the grant was that all the E00000 be disbursed in loans prior to
the end ofSTEP, which was originally toSeptember 30, 1989, butwhich was
subsequently
extended to November
30, 1989.
A project approval letter was received by CARE from USAID on May 2, 1989.
Asikhutulisane
was immediately
informed of the approval and a copy of the
A meeting to determine the methodology
to
grant agreement was sent to them.
be used by thecooperative
in issuing long-term loans and monitoring
the loan
recipients'
businesses
was held in late May at Bhunya by CARE and
Asikhutulisane
personnel.
On June 8, 1989 a cheque issuing and grantagreement
signing ceremony
was held at the Swazi Inn. Amongst the
between CARE and Asikhutulisane
guests were the US Ambassador
to Swaziland,
the Deputy Director of USAID, the
Minister ofJustice, in hiscapacity as acting Minister ofCommerce,
the Minister
of Finance-and
the Director of Co-operatives
of the Ministry of Agriculture.
The
ceremony was covered by all media in the country.
IlI .METHODOLOGY
A. Initial
1. Membership
Membership was initially opened to employees ofthe Usutu Pulp Company.
Later in 1983, eligibility for membership wasextended toemployees of the
Swaziland FruitCanners. People applied for membership and, on acceptance by
the Board, had to pay a joining fee to be afully paid-up member.
2. Loan Agplication
Once a member was fully paid up, he/she could borrow money from the
Cooperative. The lending pattern was not guided by the member's worth in
termsof savingswith the Cooperative. This was, however, in contrastwith the
Cooperatives Act, which states thata member ofany cooperative may receive a
loan from the cooperative of not more than twice the member's savings with
the cooperative.
Asikhutulisane
gave both consumption and business loans to its members.
There was no question inthe loan application form as to the useof the loan, but
the Board verbally questioned the recipients as to the use of the loan money.
3. Collateral
Members who borrowed money from the Cooperative were not requested to
provide collateral against the loan they received.
Asikhutulisane
once asked Usutu Pulp Company to allow them to take members'
salaries as security, but this was refused by the company because it claimed
that thiswould inc.-ease administrative
work for them.
4. Licences
Asikhutulisane
did not enquire about the availability and validity of licences
from the members who applied for and were granted business loans, except in
certain cases such as Transport and General Dealers.
5. Loan Repavments
Loans were to be repaid in monthly instalments of principal and interest, the
interest depending on theloan period. All money borrowed from the
Cooperative, both for personal consumption and business, was to be repaid by
tile end of October each year.
Some members who joined at Asikhutulisane's
formation defaulted on their
loan repayments.
Agreat number of the defaulters have recently come forth
and paid off tlheir balances, wit. teBoard having come to a decision that a
great part of the penalties would be written off.
7A
6. Monitorinsz
Asikhutulisane did not monitor the businesses to which they had disbursed
loans. The cooperative did not discover whether the business loans were in fact
used for the intended purpose or for some other purpose, such as personal
consumption.
7.Shareholding
InNovember 1985, Asikhutulisane
introduced and sold shares for the first time
per share with the minimum
to its members. The shares were sold at El
shareholding at 10 per member. Members were allowed to buy as many shares
as theywanted to. At the end of the year when savings were paid back to
members, dividends from the shares were also paid out.
In November 1988, Asikhutulisane
decided to raise the minimum number of
shares per member to 200 inorder to build reserves. Amember can only sell
back shares to the Cooperative when she/he resigns.
8. Annual General Meeting
The meeting is held early in December every year at Bhunya Hall. During the
meeting, the Cooperative's yearly report is delivered by the Executive. Copies
of the Cooperative's financial standing are handed out to members and new
office bearers are elected. Finally, yearly savings plus interest and dividends
are paid to the members.
B. After Firstcontact with STEP
At the first meeting of Asikhutulisane
and the STEP Director emphasis was put
on small enterprise support and it was resolved that Asikhutulisane
submit a
concept paper. In the report Asikhutulisane
was asked to provide a financial
breakdown by sector. This excercise saw the introduction of a new loan
application form, which included the reason(s) for the loan.
C. Before GrantDisbursment
Between grant approval and disbursment, CARE and Asikhutulisane
held a
meeting at Bhunya to discuss the methcdology that the Cooperative will use to
disburse the loans from the grant. The major points discussed at the meeting
were:
1. Shares:
A.;ikhutulisane explained thatit was going to take into consideration the
number of sharc a member has in the Cooperative and would give out loans
not more than three times the share investment. However, they did mention
that there woulc be exceptions in the case of members who have established a
good record with previous loans.
2. Counter Signatures:
Every loan applicant had to have another member countersign for them on the
application form. This, however, did not preclude the right of thecounter-
signer to borrow money for themselves from the Cooperative, but rather meant
thatthey would assist the Cooperative to recover its money in case of the loan
recipient's default.
3. Financial Tools:
CARE expressed its interest in the use of financial tools to evaluate all the small
businesses thatwere to be granted the loans under this experimental project.
CARE requested thatthe Asikhutulisane Manager prepare Opening Balance
Sheets, Income &Expenditure Statements, and Cash Flow Projections covering
the life of the loan. Monthly Balance Sheets and Income &Expenditure
Statements were to be prepared for all loan recipients.
4. Site Visits:
Asikhutulisane mentioned thatit would encounter great difficulty in doing site
visits to small business loan applicants and recipients because of lack of
transport. CARE offered to have its Extension Officer accompany the
Asikhutulisane Manager oii the site visits in a CARE vehicle.
'D.Grant
Agreement
The Statement ofWork in the Grant Agreement states the following:
The Grantee is to use the grantof ElO0.O00 to grantloans
with repaymentperiods longer than 10 months to its
members to promote the development of small enterprises.
The Grantee shall maintaincomplete records of loans
granted, repaymentof principalandinterest,andoperating
costs.
The Grantee shall provide 'theGrantorwith monthly
financial and statistical summaries concerning loans
granted.
The Grantee shall provide the Grantoraccess to itsrecords.
andshall cooperate in providing any additional information
thatmay be requiredby the Grantor.
The Grantee shall ensure thatthe recipients of loans
grantedby tbe Grantee agree, as a condition of receiving
such loans, to provide all information thatmay be required
by the Grantorandthe Grantee.
9
IV. IMPLEMENTATION
A. Training For Manager.
Asikhutulisane requested CARE to familiarise their Manager with the process of
loan appraisals and monitoring of the recipients businesses. The Manager
spent a week at CARE working with Extension Officers who are involved in
Credit Training (Another STEP experimental project rundirectly by CARE). He
did site visits and prepared some financial statements for the projects he
visited. He went through some of the clientfiles reaLing the assessments that
the Credit Training Extension Officers prepare for the STEP Director, to assist
him to make a decision on whether the loan should be granted.
B. Application Form.
The application form was changed to a more legally binding document which
would allow theCooperative to take legal action in case of default. Incases of
married women, husbands have to co-sign theforms for loans requested.
C.Loan Assessments.
The Manager is responsible for loan assessments and preparation of financial
statements such as the Opening Balance Sheet, Income and Expenditure
Statements and Cash Flow Projections. He assigns certain duties to the
applicant such as bringing in records, their licenses, or their budgets showing
how the requested loans will be used. He makes initial site visits tothe
businesses where he is better able to prepare Balance Sheets, failing which he
relies on theinformation given to him by the member. If and when he feels
that all the required information about the business is obtained, he then
prepares a brief write-up outlining important issues about the particular
business to the Board.
Occasionally, the assessments were done by the Board itself. Thesewere on
instances such as when the Manager was doing hisfamiliarisation tour at CARE,
D. Monitoring.
After the loans have been disbursed, theCooperative's Manager together with
a CARE Extension Officer do site visits to the different businesses. The site
visits are to confirm the information given by the members about their
activities, and also to find out if the loan money was all used in the business for
the intended purposes.
The members are encouraged to keep some records so as to facilitate the
preparation of financial statements of their businesses every month. This
exercise wil! he!p both the cooperative and themselves in determining the
position of :he actvities as far as progress is concerned.
10
E. Site visit to the Cooperative.
On July 11 1989, the CARE Extension Officer made the first visit to the
Cooperative after the grant disbursement. At that time, the Cooperative had
already disbursed 7 loans.
During a subsequent discussion where the Project Director, the Assistant and
the Extension Officer were discussing the loans disbursed by the Cooperative
and the methodology used, itwas unanimously agreed that a meeting should
be held withthe representatives of the Cooperative to help them in appraising
the loans.
Ameeting was held with the Asikhutulisane Chairman and Treasurer and the
following points were discussed: the Cooperative's methodology in appraising
the loans comparing the proposed and actual methodologies, the minimum
periods for business loans as per the Grant Agreement, the loans disbursed on
both their strong andweak points. This sessionwas infact a training excercise
for the Cooperative's representatives aimed at improving their methodology,
and wasfollowed by similar monthly meetings.
11
V. FINDINGS
A. Based on Meeting
Loan Period,
It is stated in the Grant Agreement that loans granted are tobe for periods of
longer thnl0 months and therefore two of the initial seven loans disbursed,
which were for EIO 000 each, had to be withdrawn from the Grantfund
because theywere for periods shorter than10 months. Subsequent loanswere
granted for periods longer than the minimum specified.
Loan Agoraisals.
Itwas fel
.
by CARE that based on the initial seven loans, there was a needfor
Asikhutulisane to be more critical ofwhatever the members presented.
Because the Cooperative has to prove itself as acapable institution in running a
Small Enterprise Development project,it therefore needs to be convinced about
the viability of a project and thatit is likely to suceed before a loan is given.
CARE also felt thatthe Cooperative has the moral duty of making the members
understand whatis expected ofthem to be better able torun their businesses
succesfully, and thisrequires that both the Board members and the Manager
understand each members' business and help him develop a plan which should
be followed.
Members Credibility.
The Cooperative haa proposed that the amount of loans members will receive
for their businesses was to be determined by theirworthwith theCooperative,
or the relationship theyhave had with the Cooperative in the past particularly
concerning their past loans and repayments. On looking at theloans that were
disbursed then, mostof the members were not worth whatthey had borrowed
from the Cooperative; some of those who had received loans in the past were
not particularly punctual in repayments and,in fact, did notpay within the
agreed period but have now been given larger loans.
Security.
No collateral was taken on any of the initial seven loans. The argument the
so
Cooperative has, is that members will complain that they joined the Coop.
that they get the help that they do not receive from the commercial institutions
since they cannot put up the collateral required.
The Cooperatives representatives were ,zade aware that they do not have to
ask for the sort of collateral that the commercial institutions required. but
rather something that the Cooperative could take in the case of default.
Examples of securities they could take were the fixed assets that are bought
with !oan money, or any other thing that the member owned and valued. In
this regard. the Society.. agreed to discnurage members who want to risk its
money wtthL.,t neartng any risk themselves.
B. Loan Application Process
Under normal circumstances. loan appraisals are done by the Project Manager,
but because of the short period the Cooperative had to disburse the grant. the
Board members were the ones responsible for the appraisals whilst the
Manager spent a week at CARE. In these instances, most of the financial
statements that CARE requested to be prepared prior to loan approvais were
not done.
There are two reasons for this. Firstly, the fact that the Board was itself not
clear as to the use of the financial tools in appraising the loans, and, secondly,
the fact that the members of the Board have full-time jobs and are merely
doing Cooperative work after working hours which does not give them much
time to look into the previous records of the members concerned.
In the loan approval stage, the Manager is not involved in the discussions, and
that has its own repercussions as he is the one who researches on the
applications, and assigns certain duties to the applicants. He is therefore well
informed and can clear up uncertainties during such discussions.
C. Financial
Financial tools to determine the actual amount of money needed, and the
period the business can take in repaying the loan have not yet been fully
utilised by the Board and Manager.
The Manager has prepared these statements for almost all the members' loar
assessments, but the loan repayment periods were not always appropriate, and
the Board did rot make its decisions based on the financial statements.
D. EnterpriseDevelopment
Before the Grant to the Cooperative, the Board used to approve loans for
business purposes far beyond a member's worth. There was no monitoring to
determine whether the loans were used for stated purposes and whether they
benefited the recipients or not. Members do not understand why they now
have to go through a long process before getting their loans approved and be
monitored during the life of the loan, as is the case under this Experimental
Project.
Some clients did not finish the tasks assigned to them before the loans were
disbursed, and the Board somehow feels duty bound to disburse the money
quickly if the members claim to be in a hurry. From the Board's point of view,
they feel obliged to act fast because they say they have been entrusted with
members monies and can therefore not delay since members will start
complaining about ther monies invested with the Cooperative. This point is
nevertheless cancelled by the fact that only one loan recipient has
shareholdings that are siightly higher than half his loan- (illustrated in the
individual loans). This problem was compounded by the late approval of ',his
project, its consequent short duration, and the requirement for the Cooperative
to disburse all the grant before the end of STEP.
E. Training.
The meetings that have been held between CARE and the Cooperative's Board
members together with the Manager have helped them a great deal in
understanding how to deal with their members in business terms. The Board
has in fact requested thatother people from the Cooperative attend the
sessions because their constitution allows for new office bearers to be elected
every year,and therefore as many people as possible should know inwhat
direction theCooperative is moving. However, due to iLe fact that all the
meetings have been held in the evenings, some members have had other
committments and have been unable to attend the sessions.
From the sessions CARE has had with theCooperatives' representatives, there
has been the observation thatthey are open to criticism and change. The loans
thatwere given after each session showed great improvementfrom the
previous ones and they are certainly getting more confident.
The Cooperative is presently trying to find cheaper ways inwhich they can
train their members in running their businesses successfully. They have been
contemplating organising serminars and requesting people who have sound
knowledge in areas of importance, tovolunteer their services to teach their
members how to run their businesses successfully and how to tackle certain
problems.
F. CLIENT PROFILE.
Summary table of all clients attached as an appendix.
1. Linda Abida.
Abida is a soft goods hawker and lives in Zakhele, Manzini. She applied for,
and was granted a loan of El0 000 from the Cooperative, from which she was
to purchase a motor vehicle worth E6 000 and stock worth E4 000 from S.A..
Abida has shares and savings with the Cooperative worth E550 and El50
respectively. She has, in the past, borrowed moneyfrom the Cooperative and
made her repayments on time.
After loan disbursement. it took Abida some time to purchase the motor
vehicle and when she finally did, she bought one in Swaziland worth E9 000
and this decapitalised her business. She did not insure the vehicle and has
sincc had an accident which she c'aims is minor. Repair costs were not catered
for in the cash-flow forecast. and the repairs have further decapitilized her
business. She has come up with a suggestion that theCooperative gives her
another loan to capitilize her business. The Board has not made a final decision
I,!
as there were two viewpoints: some suggested that she should be given more
money for stock, and others suggested that should sell the car, pay back a
greater portion of the loan to the Co-op. and buy whatever stock she needs
with the balance. On the other hand. when the Asikhutulisane Manager made a
site visit to her home, he discovered that she is in the process of extending the
house she lives in which could be another reason for decapitalization.
Abida has not been particularly helpful to the Manager in supplying requested
information. She is very difficult tofind at home since she is a hawker and
has, in mostcases, notkept appointments made with the Manager. She showed
up after buying the car, when she wanted to introduce the subject of a second
loan. She has made her two repayments and is still on schedule as far as
repayments are concerned.
From the financial statements, it canbe observed thatowner equity has
decreased due to the drastic change in stock.
2. Daohne Mavuso.
Daphne operates a Restaurant inNgwenya Border Post and requested a
E10 000 loan to purchase a bakkie which she was to use mainly for stock
purchases. A loan of El10 000 was given to herfor a period of 4 months. CARE
pointed out that this loan could not begiven from the STEP grant because it did
notconform with the Grant Agreement which states that all loans should befor
a period of 10 months or more.
3. Hezekial Dlamini.
Hezekial operates a Record shop in Bhunya. He is a full-time employee of
Usutu Pulp Company and has afemale employee tobe in charge of the shop.
He has, in the past, borrowed for business purposes from the Cooperative, and
has been punctual with his repayments. He keeps receipts from stock
purchases,cash sales and a debtors record book, fromwhich theCooperative's
Manager was able to compile an opening Balance sheet and also make future
projections.
Hezekial sells to some of his customers on credit and gives them between one
and two months to pay depending on their purchases. This excercise tied down
his working capital to debtors and made it impossible for him to make his
purchases monthly. The loan has made it possible for him to increase stock
and subsequently his collections, thus making it possible for him to make
monthly purchases.
Hezekial is very cooperative and supplies the Manager with information
whenever requested even if he cannot make it on the specified date. He is
presently worth more than half his loan with the society with both his shares
and savtng at E3 500 and E)10 respectively
Aloan of E5 0(0 was disbursed to Ihim for stock purchases with a repayment
period of 15 months at E396.66 per month split as follows: Principal E333.33
and interest E63.33. He is on schedule with his repayments. Owner equity has
increased.
4. Thulani Masina.
Thulani is an attorney and has his office in the Liqhaga Building in Manzini. He
a loan of E15 000 for a period of 24 months which
requested and was granted
was his firstloan with the Cooperative. He was to use E7 000 in buying Office
furniture and some books and E8 000 to cover administrative expenses. Of the
administrative expenses, he included non-business items such as house rent
and a salaryof E2 000 per month which was felt by STEP to be too high.
Thulani has other loans which he is servicing concurrently with this one. He
has a balance of E6 000, withthe Swazi Bank, E12 000 with Union Bank and
El 500 with a relative. He claims to have used these loans for setting up the
office and for purchasing a motor vehicle.
He has shares and savings of E200 and El 10 respectively. The Cooperative did
not request security on the loan. Thulani's repayment is E800 per month split
as follows: Principal E625 and interest E175.
During the first discussion we had with the Coops.' representatives after the
Grant, itwas brought to their attention that members like Thulani were a risk
to the Coop. because he is too indebted. He has not offered any collateral and
the amount he draws as a salary is too high for a business thatcannot support
itself and that moreover he has his other loans and house rent paid for from
the business. This is an indication that this member, is notwilling to risk his
own money.
Information was supplied though usually not on time. He is on time with his
loan repayment and has made all paymens on time. The loan was used for the
intended purpose and has helped the business increase owner equity.
5. Ivv Dlaminli.
Ivy is a Distributor who sells cleaning chemicals and health care products
purchased from a company in South Africa. She purchases the stock at a
certain discount and sells at prices controlled by the Company. She applied for
and was granted a !oanof E6 000 to purchase stock. The loan period is 24
months and ler repayment is E320 per mnt,,split as follows: Principal E250
Interest E70.
1vy has -liares .)IE.00 and savings of E3q() ,\ Cash Flow Projection was
sums of positive cash
prepared lor her at the initial stage and it showed huge
balancer at the eno of each montn w*h,,icn is an:indication that either the loan
.\L
period was t.oo long or :he amount borrowed was too much for her monthly
purchases.
With regard supplying information on her business to the Cooperative, she has
never voluntarily submitted it, but does so if and when the Manager makes a
site visitor telephone contact. She has made all her repayments and was
punctual.
The loan has helped her increase her working capital.
6. Alvinah Nomsa Nkosi.
Alvinah runs a Pre-School in .Manziniand applied for a loan of El0 000 to
finish the construction of an extra classroom. She has shares of E360 and
savings of E20. She had an overdue balance of E850 from a previous loan with
the Cooperative.
The construction of the extra classroom was started with a loanfrom Barclays
Bank, but she subsequently claimed that the cost was underestimated by the
builder. The Cooperative requested her to make a listof items, and their
prices, she needed for thecompletion of the room plus labour costs. Itwas
established that the bank balance of the loan was E3 500. The Cooperative
Board discussed with Alvinah that it would be difficult for her to service two
loans concurrently and therefore unanimously decided that she be given a loan
which included the bank balance so that she clears thebank debt. She was,
however, requested to clear from Pre-School funds, the existing debtwith the
Cooperative before shecould be granted the current loan. One of the
conditions of the loan was that Alvinah pays back the bank loan as soon as she
got the money from the Cooperative.
On monitoring, it was discovered that all the finances of the Pre-school were
controlled byher husband and getting information was always very difficult.
She did not keep seperate bank accounts for the home and Pre-school and
therefore it was difficult to account for all the school income of the previous
terms. it was uncovered from ner expenditure list that she had included the
E850, which 3as the amount owing from the previous loan with the
Cooperative and that the Bank loan was not repaid. Also included in her
current payments were overaue wages for the school teachers and the house
maid. There were no receipts for most of the items claimed to have been
bought with the loan money, and Aivinah claimed she did not know where her
husband kept business records. An effort of giving her a list of items
requested from her husband was made and it proved futile as the information
given to the Asikhutulisane Manager was a!ways not what was requested from
her.
Prior to loan disbursement. her husband sent acopy of"a stop order to the
Cooperat'e tn effect ioan renayments. However. he s;ent personal cheques to
*heCooperative for the first and second instalments before the bank could
effect the stop order. The third instalment was missed, which indicates that
the original of the stop order was probably not returned to the bank to be
effected. All in all. the loan helped increase owner equity.
7. Desmond Mlambo.
Desmond is a contractor and has been granted loans in the past tohelp him
purchase material for different projects. His loans have always been short-
term due to the nature of his activity that is guided by the length of each
project. He has always been on schedule with his loan repayments. He has
recently applied for a ElO 000 loan to purchase material for a 4 month project
and wants to pay back the loan within the life of this project.
He was granted aEIO 000 loan payable in 4 months at E2 700 a month split as
follows: Principal E2 500 and Interest E200. This loan, however, had to be
transfered from the Grant money tothe Cooperative's funds due tothe fact that
it does not conform to the Grant Agreement, which states that all loans have to
be repaid over10 months or more.
8. Obed Mpila.
Obed isafull time employee ofUsutu Pulp Company and runs a small grocery
shop in Siphocosini which is a few kilometers from Bhunya towards Mbabane.
He has received business loans in the past and his repayment record is good.
He requested a loan of E12,000 from which he was to purchase a cash register,
a counter refrigerator and stock. He was granted a loan of E7 000 toclear the
balance of the previous loan, to .:urchase a cash register and stock.
During the site visit, it was discovered that the shop isrelatively empty and it
is doubtful that all the money was used in purchasing stock, and that the cash
register was not bought. (The major problem in knowing whether there was an
increase in stock or not is that this loan was appraised by the Treasurer who
did not prepare an opening Balance Sheet.) He has employed two males and
one female as shop assistants. One of1 the male assistants is in charge of the
shop is responsible for the cash takings. He takes the cash to Vlpila at home
every evening. He is paid a wage of E120 and the other two are paid ElO0
each per month. The staff are individually responsible for certain portions of
stock and at the end of'each day they record available stock and the records
are sent to Mpila with the daily cash.
Obed has been asked by the Manager to-give an explanation as to why lie has
not purchased acash reg'ster as he seemed hard pressed for it during the loan
apDiicati in
He is ouctudi v lt reoavmen,"and .s oin time w th loan renaynment schedulle.
9. Nonh!anh!a Dlamini.
Nonhlanhla is full time employed by Langa Bricks, does soft goods hawking on
a part-time basis and also has a taxi operating at the Manzini Bus Rank by an
employee. She bought a second hand car from hawking proceeds and started
operating it as a taxi in December 1988. She uses her uncle's Road Transport
Permit. Her car broke down and she took itin for a major service. During the
non-operational
period, she applied for a EIO 000 loan from the Cooperative to
purchase a good second hand car from South Africa with the intention of selling
the older one as soon as it was out of the garage.
Nonhlanhlas shares and savings stood as follows at the time of the loan
application: Shares E300 and savings E450. She was granted a loan of E9 000
payable in 12 months. It was agreed that she gives as security the car's blue
book and the comprehensive
insurance certificate. During the discussion
between CARE and the Cooperatives' represantatives,
it was highlighted that
the Cooperative should have requested Nonhlanhla to get a letter from her
uncle permitting her to use the permit and that being in possessionof the blue
book does not, in itself,give the Cooperative the right to take the t. : in the
case of defaulting on the loan.
She purchased the car and has registered it in her name. She now encounters
problems with the insurance company which cannot insure her car as a taxi
because it is registered in her name and uses a different name on the Road
Transportation
Permit.
There is not much comment on the effect of the loan on the business since she
has recently receivtd it, other than that it was used for the intended purpose.
10. Desmond Mlambo.
Desmond is the contractor who was granted the 4 month loan. He paid his loan
off because !1ewas fast in completing his contract and has now applied for a
E20 00; .uanto purchase a truck. He is going to pay this through profits from
the two jobs he has recently won tenders for, worth E98 000 and E104 000.
He was granted a loan of E20 000 for 12 months and his repayment is El 937
split as follows: Principal El 667 and Interest E267 per month. He purchased
the truck from Mondi Timbers at an auction sale. He is currently using the
truck but still has to fix the minor faults it has, and take it for a roadworthy
test before he can register it in his naine and be in a position to insure it. The
Asikhutulisane
Manager has requested Desmond to give himself time toattend
to the truck because there is a condition of having the truck insured in the loan
agreement.
He lade his Ifirst repavment on time and has been cooperative with the
Manager vhere Iriirmation gathe'in is c('incet'ned.
1I.Lenard
.hlh!' ngo.
Leonard is a full-time employee
of the Usutu Pulp Company, and operates a
canteen in one of the .Matsaphafactories, and has a poultry project in Ngcoseni
which is his country place. He has now taken up a shop at Ngcoseni
(Mankavane),
next to his poultry project, which was runby an old relative of
his.
The shop is situated next to a school, and a bus station,where most commuters
change buses, and these are his targetfor the market. He applied and was
granted a loan of E6 000 to purchase stock, which he supplemented
with E2
000 which he claims to be proceeds from the canteen.
He has employed one male and one female as shop assistants
and pays them
E80 and E60 respectively.
They work every day from 6am to 6pm. The shop
started operating
under Leonard onl September1989,
and they have been
making dailytakings between E250 and E475. The male employee is in charge
and he keeps all the cash until Leonard comes from Bhunya to collect it, which
they say is at least twice a week. He gets a list of items they h,verun low on
and the ones thathave been requested by customers and make purchases at a
wholesaler
in Manzini.
The available stock shows that Leonard used the loan money to make
purchases.
Itwas observed
that he did not take into account te low spending
power of people in the rural arease.g. he bought items inbig packages which
are moving slowly, and also purchased
what can be termed as luxury itemsfor
his market. The shop assistants have realised the mistake in purchasing
items
in bigger packages and claim to have asked Mr Mhlongo to negotiate changing
them for smaller packages at the wholesale.
The loan was used for the intended purpose and has increased owner equity
and created two jobs.
12. '-'.e Mabuza.
Pauline is involved in property building at Ngwane Park. She and her husband
have another block of 9 flats also at Ngwane Park which they are letting out
and are currently building a block of I1 one-bedroom
flats. When she
approached
the Cooperative
for a loan. they were almost at the roofing stage
and no longer had enough funds to continue with the construction
of the block.
Pauline has E2 370 in Shares and E2 380 in savings. She has had previous
loans with the (Co)per'ative
anc her repayment
pattern was per schedule She
applied for a loan of El 5(I and was granted this amount for a period of I0
months. Her repayment
will be El 7it)ner month. The repayments
will be
made from the rental fee 'rmn both biocks at the rate oif Ei00'each per month.
From the E15 00O0 loan, they are not going to be able to do the electrical wiring,
and plumbing fees were also not catered for. At the moment they are not sure
if the rentals from the finished block will cater for these expenses.
13. labulani Ndlovu.
Jabulani operates abutchery in Luyengo and is full-time in the business. He
has received business loans from the Cooperative in the past and the Board
feels he is one person who has always received such loans but keeps coming
back for more loans with no sign ofimprovement in his activity. The purpose
of his last loan was for him to purchase cattle and keep them so as to avoid
running out of meat in the butchery, but he has again come back to the
Cooperative for a loan before he cleared his past debt.
Jabulani applied for a El0 000 loan to purchase avan for buying cattle to
replace the one that was stolen. His balance from the previous loaln is E2 990
and he has been struggling to pay it off. This loan application was discussed
between CARE and Asikhutulisane representatives. There were different
opinions to this issue as some people feltthat the Cooperative canrather lose
E2 990, whichwas the balance owing, than risk a further El0 000 and others
felt thatjabulani is an honest person who will pay back his loan if the
Cooperative could help him out of the capital problem. Eventually, the
Asikhutulisane representatives agreed thathe had a problem managing the
cash of the business and therefore theywere going to give him money for
buying cattle only and then teach him cash management of his business.
He was granted a loan of E8 400 from which the balance of the previous loan
was deducted and the balance he was to use for buying cattle. They estimated
that he would be in a position to purchase at least 4 beasts and also have some
working capital. His repayment is E656 per month split as follows: Principal
E560 Interest E106. He has E770 in shares and E170 in savings.
21
.VT. CONCLUSIONS
From the information
we have on the loan recipients,
it is apparent that some
members did not use the loans for the intended purposes.
After the Grant
time they got
-
signing ceremony,
some members
may have thought itwas
themselves
large sums of money from the grant money under the disguise
thatthey were business
loans.
The repayment
rate of loans given from the grant has continued
to be high,
-
usedfor the intended
purpose.
irrespective
ofwhether
the loans were
Perhaps this is an indication
thaton the basis of members'
relationship
developed
with the Cooperative,
they feel a commitment
to repay.
- Where sufficient information
is available,
during the short period the
Cooperative
has been disbursing
loans from the grant,business recipients
have generally
shown an increase inowner equity (i.e. the businesses
have
grown.)
- The monthly discussions
thatCARE has had with the Cooperatives'
representatives,
have been aform of informal
training for them and they
have greatly improved
in implementing
their methodology.
The Cooperative
has to identifywith other organisations
that dealwith small business people
and share ideas with them. From this Experimental
Project, itcan be
observed
thatwithout the time pressure
theywere working under and with
more interaction
with people who have working experience
with the Small
Business
community,
Asikhutulisane
has the potential
to run a Small Business
Credit Scheme.
Even though
Time has come for the Cooperative
to set a policy on collateral.
he Cooperative
does not ask for the kind of collateral
thatother Financial
Institutions
require, they do have to bear in mind thatwhen they give out
loans to members
whose worth with the Society is very little, they are
An example
of the collateral
theycould ask
-
risking other members
monies.
with the loan money or any movable
for are the assets that one buys
property
that a member
has but has been fully paid for.
- It ,s still a problem in our country
to get small business
men and women.
who
in most cases are illiterate
or have little education,
to understand
why using
financial
tools is important.
From the look of things, it will take
some time toget its members
to adapt to the situation
Asikhutulisane
have to disclose their business
financial
status in order for
whereby
tie.
them to be helped develop
the activities.
22
- The Board now has to be extra careful when admitting new members because
some will join the Cooperative for the purpose of borrowing large sums of
money which they do not intend to pay back.
- The Board is convinced that the default rate will be minimal considering the
current repayment rate from both the consumption and business loans they
have given to members before the grant.
- From CARE's experience, Asikhutulisane is a well-managed Cooperative, with
a Board comprised of commited people who are very responsive to newideas.
TheCooperative has considerable potential for future development,
particularly in thefield of Small Economic Activity Development.
2.3
.VII. RECOMMENDATIONS
- The monthly sessions between CARE and the Cooperatives' representatives
should be continued at the end of STEP project because the Board has shown
signs of great improvement in appraising their loans and have gained
confidence in dealing with the different loan applicants and recipients.
=All loans should be appraised by the Manager and not members of theBoard.
This will reduce Cooperative work load for the Board members as they have
full-time jobs and do not have enough time to prepare all the required pre-
loan financial statements for the loan applicants. It will also help eliminate
people who are always on the look outfor Administrative weak points,and
may realise thatthrough members of the Board one isnever required to
bring in all the requested documents before their loans are assessed.
Another important aspect thatis overlooked by the Board members is that.
the Cooperative members need to build confidence in the Manager who
happens to be a newfigure inthe Society's Administration. As such, the
Manager's objectivity and lack of previous knowledge of individual member,
can complement the Board's relationship with members developed since the
beginning of theCooperative.
- The Manager should be involved in the loan application discussions with the
Board.
- The Cooperative must explore ways ofensuring that the loan money is used
for the intended purposes and thatthe amount of money paid outfor assets
is reasonable.
- If the Cooperative is to develop its activities in Small Enterprise Development,
ithas to request the members to volunteer their skills wherever needed in
order to minimise the cost ofrunning such a project.
- The Cooperative should continue using the methodology theyhave now
adapted on business loans even after the life of the Grant Agreement.
- The Cooperative should continue with the training preparations for their
members. They should identify the needsfirst and then prioritise them so
they can get positive results from their sesssions. The use of volunteers from
members can save the Cooperative a lot of money.
- Consideration should be given to an assistance program that facilitates
Asikhutulisane's development particularly in the field of Small Economic
Activity Developiment.
2I
APPENDICES
A.Summary table of all clients.
B. Balance Sheets for allclients.
C. Pie chart of clients bygender.
D. Bar chart of clients by gender and sector.
E. Disbursements
and total repayments.
25
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l:!:ilC.,.,.A A_
L-frent Asseth805
Inventory
Debtors
Appendix B
AEIDA LiNCA .HAVwiER'
P..ance Sh]eet
.
tember 1, ..
... .."'"..
ASSETS
:.Pre--a
142
7.187
TotalCurreft Assets
8,134
!FixedAssets
Furniture
0
Equipment
0
Velk-e
0
Total Fixed Assets
0
TOWal As-ets
8.134
.... . . .............
Pos-Loan
438
320
' 200
3,558
0
0
9,500
9500
13.058
L&AIfflS &OWNVER E(QUITY
"e-L Poi-Lo'a
0 547
Amounts Payable
0 10.306
Loan Asilihutuisane
0 100053
TotalLiabilities
Owfer-Eqit
8. 134i
Toa 1'al b']ities & Own.er-Equ;Ivty
8.134 13,058
...... .....
... .. ...... .... .....
.......
. ..... .
Change
(367)
178
(4,27
(4,576)
0
0
9,500
9 500
4,924
CaBage
547
10.306
10.853
5,291
4.924
....
% Cange
-46)h
1250/o
61
-56'-/o
:
0-/0
0o/
0/
00A,
610/o
% ChaAge
OC/o
00/0
OW "
-730hj
610/0 :
'..
27
.E7'KIAL DLAM!N! (RECORD BAR)
:aJance Sheet I
: . . . .
September 9,1989
. . .. .. ..
. . . ". " "
ASSETS
Pie-Loaa Post-LA, Cange %ZCage
Lzwent A.s.t-
Cash
500 1,780
Inventory
Debtors
800
0
9,572
0
Total Current Assets
1,300 11,352
FiredAssets
Furniture
0
0
Equipment
Vehicle
0
7,000
0
7,000
Total Fixed Assets
7.000 7,000
Tota A. sets
8,300 18,352
LIABILITIES & OWNER EQUITY
Pre-LoaA Post-L-'aA
Liab'liie
5,859 6,073
Amounts Payable
81100 21.267
Loan Asilthutulisane
Total Liabilities
13.959
27,340
OwnAer Eqaity
20,241 51 '2759
34,300
78,699
T'1taL.iabift'e5
& OCherEquit"
1,280
8.772
0
10,052
0
0
0
0
10,052
ChaAge
21,
13,167
13,381
118
44,399
2560/6
10970/o
0
7730/o
00/0
00/o
00/0
0O/o
121oA
5'5' Caiage
1630/0
96/O
1521 [
1-99
0
/a
2:
28
i
THLILANI MAS!NA - (ATT'-RNEY'
Balance Sheet
.
AL.G!.
AI-'-T
T,3.,
08. 1989
. •~~~ .......... i. .
if::: 'ASSETS
ASS eSLo Pc6I-Ck2Ai Chauge %L~aige
5..15.5
iG.'urteutAsst
l ash5155
4,37- 563%
Iety0 0 0 OOV'
Debtors
IM 4 !60 1493 490/a ::
• uT rentA5eLc
3,844 9,715 5,871 153, [
3,500 4,130 630 1Dwo
Furniture
0 2,207 2,207 00/0
Equipment
'ehi1e
16,000 16,000 0 0
0
/
Total Fixed Assets
19,500 22837 150/0
Assets
_Total 32.052 8.708 370/0
23.344
. . .
. . . . . .. . . . .. . . . . . .
LrA.:IrL=ioS & EQUIY ooR r
Fre-Loait Post-Laan Change %Change
Amounts Payable
.:Loan AsikhutuianeiUnion
2a-nk
19.262
2 6.262 220/A
33::.
Total Liabilities
19,862 26,375 6,513
• wnerEquity
3.482Z7
9 63o/o
32.052 8.708 37(/ r
:T"taI L'abilities& ,-,er Equity
23.344
29
Iv,, Dtamirli rri0ributcOr)
. . . . . . . . . . . .
1m
ASSETS
Pre-Lcan Thq-L-cve
p C"age% ag
C.arrentA!.fet-s
5,000 4,512 (488) -100/3
cash
t,
AAssdS
:ixe
4,989 1,989 660/0
tn~toy3,000
.1 .. ... "..... .... .
This is one of a series of reports on experimental activities undertaken by STEP - the Swaziland Training for Entrepreneurs Project.
89
',w ILAND
LI3RARY
,:A iEiterrJtionai in Swaziland
SZ owaziland
Tralnir. for Entrepreneur
ProjecL (STEP)
ED80
E96
EXPERIMENTAL
PROJECT #8
Asikhutulisane
Savings
&Credit Cooperative
Society
Final Report. November 1989
By: Mm.aphefo Aphane
(i -ntrepfrne1Irs
Training for
- .!ID £Coperative Agreemet
No. 645-D227-A-OC-6002-O0
U.S. A. .D.
E c: SWLAZILANL)
LIBRARY
THE SWAZILAND TRAINING FOR ENTREPRENEURS PROJECT (STEP)
This is one of a series of reports on experimental activities
for Entrepreneurs
undertaken by STEP - the Swaziland Training
Project.
STEP was commissioned by USAID (the United States Agency for
International
Development)
and was intended to identify
small business
potentially successful means of stimulating
activities to increase employment and productivity. STEP's
activities included the commissioning of a series of baseline
studies, the undertaking of experimental
activities, the
provision of technical assistance.
The project commenced in 1986 and is due to end in November
1989. Originally, STEP was implemented by Partnership for
International,
a
Productivity,
but was taken over by CARE
development organization, early in 1987. STEP was CARE's
first and (to date) only project in Swaziland.
CARE International in Swaziland
P.O. Box 2266
Man zin i
Swaziland
Telephone 54360/54413
November, 1989
TABLE
OF CONTENTS
I
EXECUTIVE
SUMMARY
....................................................................................
3
.....................................
1.INTRODUCTION
.............................................
3
A. Project Purpose................................................................................
....................................
4
.........
3
B.O bjectives .................................
C.Organizational
Background
...........................................................
5
II. BACKGROUND
.................................................................................................
5
5
A. Initial Organizational
Contact.....................................................
B.Concept Paper....................................................................................
C. Contract Negotiation
And Approval
6
Grant Disbursement
................................................................
7
III.METHODOLOGY....................................................................................................
.. 7
A.Initial..................................................................................................
7
1. Membership................................................................................
7
2. Loan Application
.................................
7
3. Collateral.................................................................................
7
4. Licences.................................
7
5. Loan Repayments
................................................................
8
6. M onitoring...............................................................................
8
7.Shareholding
...........................................................................
8
8. Annual General Meeting ....................................................
8
8
B.After Firstcontact with STEP......................................................
C.Before Grant Disbursment
.............................................................
10
A.Training
For Manager...................................................................
10
B.Application Form.....................................................................................
10
C.Loan Assessments
............................................................................
..t0
D.Monitoring...........................................................................................
I I
E.Site visit to the Cooperative
................................................................
12
V.FINDINGS...............................................................................................................
12
A.Based on Meeting ............................................................................
13
B.Loan Application Process..............................................................
3
C.Financial.....................................................................................................
13
D.Enterprise Development
.................................................................
..14
E.Training................................................................................................
14
F.CLIENT PROFILE..................................................................................
.. 14
I. Linda Abida..........................................................................
15
2. Daphne Mavuso............................
15
3.Hezekial
Dlamini ....................................................................
16
4. Thulani Masina.......................................................................
..16
5. Ivy D lamini .............................................................................
17
6. Alvinah
Nomsa Nkosi...........................................................
.... ........................... ......
18
7. Desmond Miam bo..........................
1
8. Obed N*,la ..........................................................
................................
9. Nonhiantlta
)la im..... ........
.... 1I)
i
101. Desmond Mlambo.....................................................................
19
11. Leonard Mhlongo...................................................................... 20
12. Pauline Vlabuza................................................................... 20
13. Jabulani Ndlovu....................................................................
21
VI. CONCLUSIONS ............................................................................................
22
VII. RECOMMENDATIONS ..............................................................................
24
VIII. APPENDICES....................................................................................................
A. Summary table ofall clients.........................................................
26
B. Balance '"heetsfor all clients.....................................................
27
C. Pie chart of clients by gender......................................................
34
D. Bar chart ofclients by gender and sector............................. 35
E. Disbursements and total repayments..................................... 36
ii
EXECUTIVE
SUMMARY
started in May 1983
Asikhutulisane
Credit and Savings Cooperative
Society was
by a group of eleven people at Bhunya.
As at the end of August 1989, it had a
the country and deposits of E843 930.
membership
of 2200 from allover
From
the money accumulated
throughout
the year, the Cooperative
gives both
As the Cooperative
started as a
consumption
and business
loans to mr.mbers.
are paid
"Christmas
Club" concept, the savings and dividends
from the shares
out early in December,
which effectively
means that all loans should be paid
back by the end of October.
This situation
was not conducive
to the financial
needs of SmallBusiness Enterprises.
The purpose
of this Experimental
Project was to assist a well-managed
Swazi
support
credit and savings Cooperative
play a greater role as a Small Enterprise
done by giving the Cooperative
a grant of E100 000 to
institution.
This was
bridge the financial
gap at the time of the year when savings and dividends
are
This meant that members
could be granted loans with a repayment
paid out.
period longer than 10 months.
Most applicants
had financial
statements
prepared
before their applications
some of the statements
were presented
to the Board. However,
it looked like
Reasons
for
were not considered
when decisions
to grant loans were made.
non-consideration
of the statements
could be: Firstly, the clause in the Grant
Agreement
that all the money should be disbursed
by the endof STEP may
have caused the Board to give out loans as applications
came and not per merit.
Secondly,
the new methodology
adopted was very different
to the previous
one
since applicants
were now requested
to supply information
on their businesses
in order for the Coop. to be in a position
to prepare financial
statements.
Most
people are never keen in giving information
on their financial
standing
and
this process takes longer than before. The Board may have been
moreover
avoiding
a situation
whereby
members
would complain
about not being given
money when they have made contributions
to the Cooperative.
Itwould take
time for members
to adapt to the new methodology.
Thirdly,
it could be a
possibility
that the Board and Manager
could not analyse
the statements
in
relation to the loans requested.
At the beginning,
the Coop. gave what can be termed "bad"loans but with the
held with CARE, which served as training
sessions
for
discussions
that were
them, they gave good loans. From the information
gathered,
it is apparent
that
use the loan mnney for the intended
purposes.
The effect
some clients did not
used for the intended
purposes
is
of the loans on the businesses
where it was
that owner equity increased.
Poor planning
on the part of the owners will.most
probably
create cash problems
for one client that under estimated
the amount
of money she needed to finish building
her 1.lats
Clients have been on schedule with repayments
and have made them on time
except for one late repayment. Time has come for the Cooperative to set a
policy on collateral even if they do not request the kind ofcollateral
that other
financial institutions require.
If the Cooperative
develops an interest in continuing
with the Small Enterprise
Development,
it should look into cheaper ways of monitoring
the activities
of
their clients other than doing site visits which may prove very costly.
Generally,
CARE's experience
with Asikhutulisane
has been very positive; the
Cooperative
is well-managed,
responsive
to new ideas, and itshould play an
enhanced
role in Small Economic
Activity Development
infuture.
1.INTRODUCTION
A. Project Purpose
STEP Experimental
Project 1 8: Asikhutulisane
Savings and Loan Cooperative
small enterprise support was to assist a well-managed
Swazi consumer savings
and credit cooperative play agreater role as a small enterprise support
institution.I
Agrantof E100 000.00 was tobe given to the organization
to increase its
portfolio of small enterprise loans with repayment periods of longer than 10
months. The intentionof the grantwas to provide a financial base to bridge the
period in the year when most depositors withdraw their funds.
Asikhutulisane
had its origins in the"Christmas Club" concept, whereby most
depositors withdraw theirfunds inNovember/December
and beginsaving again
in January / February. This has meant that all loans, including those tosmall
months at the maximum.
enterprises, must be repaid within a perid of 10
Rapid repayments
are not conducive to the financial needs of most small
enterprises.
B. Objectives
,as
STEP's learning objectives were expressed in theform of hyphotheses
2
follows:
- A well-managed
consumer credit and savings cooperative
can move into an
effective, sustainable small enterprise supportfunction with an appropriately
conceived package offinancial assistance.
- Well-managed
indigenous
institutions
can effectively
identify and meet their
own needs for appropriate
tecnical support to their small business members
with little outside technical assistance.
- Repayment
of small business loans will not vary substantially
from the
normal repayment
patterns of a well-managed
consumer credit and savings
a society on borrowers.
cooperative
due to thecontrols exerted by such
- Close monitoring
of individual
small business performance
is not necessary
in
order for a well-managed
cooperative
to stimulate small enterprise
activity.
Prnect prnposa! nf Nnvemher
2A !')S
Prnect prnposal uf Nu.,v hex" 2.1 1')IM
I
The small enterprise lending ac'ivities of a credit and savings cooperative can
-
be sustainably
maintained
with interest income sufficient to pay for the
additional
cost of this specialized
lending function.
C.Organizational
Background
"Asikhutulisane
Credit and Savings Co-operative
Society Limited is a free
It is registered
association
of people who save and lend money to one another.
under the Co-operatives
Act of 1964 and has its head office in Bhunya.
are employed
by the Usutu Pulp Company
Swaziland.
Most of its members
However,
due to its essential
Limited and the Swaziland
FruitCanners Limited.
service, it now attracts people from Manzini,
Mbabane,
Mankayane
and other
places within these radii".
1
Asikhutulisane
was started in May 1983 by a group of eleven people who
As at August 15, 1989 the
worked in the accounts section of Usutu Pulp Co.
cooperative
has 2,200 members
and E843 930 in deposits, splitasfollows:
savings E342 850, shares E501.080.
The Cooperative's
Board of Directors comprises
of 7 members,
of which the
Chairman,
Secretary
and Treasurer
are amongst founder members of the
They are all
Cooperative.
and have been re-elected
tothe Board every year.
employed
by the Usutu Pulp Company
as Accountants
in different
departments.
The full-time Manager
holds aB'Comm Degree which he has
recently acquired - May 1989.
With their Accounting
background,
they have been able tobuild and improve
the Cooperative
through wise investments
of thefunds entrusted
to them by
the members.
They have been able to produce the Financial
Statement
of the
The purchase
of
Cooperative
every year during the Annual General Meeting.
property
in Malkerns
which comprises
of a shopping complex
and flats worth
E290,000
has been one of the major investments
of the Cooperative.
The
property was purchased
outof money the Cooperative
has accumulated
from
month, which the
share capital. Presently
it is being leased out for E3,127 a
Coperative
uses to pay salaries to their full time staff.
Asikhutulisane
generally
makes personal
consumption
loans toits members,
however,
it also makes some short-term
business loans.
.e rpet
pertlive tn CARE
pcs [rnm doctiment5 .sip!iaedby the tCo
I
II. BACKGROUND
A. Initial Organizational Contact
Asikhutulisane Credit and Savings Co-operative was brought to the STEP
Directors attention via talks with colleagues about indigenous organizations
which worked closely with small businesses. He contacted thecooperative to
express his interest in the organization and this led to a meeting between
Asikhutulisane and CARE onJanuary 30 1988 at the CARE offices. The modus
operandi of both organisations and potential areas of cooperation and assistance
were discussed at length. Asikhutulisane expressed its needs asfollows:
1.An office.
2. Technical assistance.
3. Capitalization of a long-term loan scheme in benefit of its members.
4. Research on the activities of thecooperative.
In respect to technical assistance, Asikhutulisane felt that the time had come for
them to have their own computer. They had been using the Usutu Pulp Co.
computer, which they had on a 'gentlemans' agreement and were fearful that a
change in management would cause them to lose that privilege. Asikhutulisane
has, in the past, given business loans for a limited period but didn't have
qualified personnel toappraise and monitor such loans,nor was it able to give
management advice to the recipients.
Asikhutulisane explained that the nature of their operation was notconducive
to long-term small business loans because a major portion of its funds are in the
form of savings, which must be returned at the end of the year.
Asikhutulisane also expressed a need for a survey to look into the past and
future activities of the society,and, for this venture, they required financial
assistance.
STEP requested that Asikhutulisane submit a concept paper from which a
project paper would be written. During the preparation of the concept paper
CARE held a meeting with Asikhutulisane to help prioritize its needs.
B. Concept Paper
Asikhutulisane stated a need for professional credit management. in particular
business credit. The coopevative felt it needed monetary assistance to enable it
to finance the following:
1.Salary for aqualified person io appraise and monitor business loans.
.o two
2. Increase the funds to enable the society to give business loans for up
years.
3. A personal computer to enable them to keep accurate records and produce
timely reports,
4. Training programmes
to stimulate entrepreneurship
among its members. The
cooperative
is committed to promoting self-reliance among the members.
C.Contract Negotiation
And Approval:
GrantDisbursement.
Whilst the concept paper was still in preparation,
the Project Director had
started verbal negotiations
with the donor, USAID. On November 24, 1988 a
request for approval ofSTEP Experimental
Project #8: Asikhutulisane
Credit and
Savings Cooperative
smallenterprise support was submitted to USAID.
In April 1989 the STEP Director was verbally informed that the project was
approved; a contract between CARE International
inSwaziland and
Asikhutulisane
Credit and Savings was drawn up and submitted to USAID on
April 26, 1989. On May 2, 1989 a revised contract linking the grant period to
the length of the STEP Project was submitted to USAID for its review. A
condition of the grant was that all the E00000 be disbursed in loans prior to
the end ofSTEP, which was originally toSeptember 30, 1989, butwhich was
subsequently
extended to November
30, 1989.
A project approval letter was received by CARE from USAID on May 2, 1989.
Asikhutulisane
was immediately
informed of the approval and a copy of the
A meeting to determine the methodology
to
grant agreement was sent to them.
be used by thecooperative
in issuing long-term loans and monitoring
the loan
recipients'
businesses
was held in late May at Bhunya by CARE and
Asikhutulisane
personnel.
On June 8, 1989 a cheque issuing and grantagreement
signing ceremony
was held at the Swazi Inn. Amongst the
between CARE and Asikhutulisane
guests were the US Ambassador
to Swaziland,
the Deputy Director of USAID, the
Minister ofJustice, in hiscapacity as acting Minister ofCommerce,
the Minister
of Finance-and
the Director of Co-operatives
of the Ministry of Agriculture.
The
ceremony was covered by all media in the country.
IlI .METHODOLOGY
A. Initial
1. Membership
Membership was initially opened to employees ofthe Usutu Pulp Company.
Later in 1983, eligibility for membership wasextended toemployees of the
Swaziland FruitCanners. People applied for membership and, on acceptance by
the Board, had to pay a joining fee to be afully paid-up member.
2. Loan Agplication
Once a member was fully paid up, he/she could borrow money from the
Cooperative. The lending pattern was not guided by the member's worth in
termsof savingswith the Cooperative. This was, however, in contrastwith the
Cooperatives Act, which states thata member ofany cooperative may receive a
loan from the cooperative of not more than twice the member's savings with
the cooperative.
Asikhutulisane
gave both consumption and business loans to its members.
There was no question inthe loan application form as to the useof the loan, but
the Board verbally questioned the recipients as to the use of the loan money.
3. Collateral
Members who borrowed money from the Cooperative were not requested to
provide collateral against the loan they received.
Asikhutulisane
once asked Usutu Pulp Company to allow them to take members'
salaries as security, but this was refused by the company because it claimed
that thiswould inc.-ease administrative
work for them.
4. Licences
Asikhutulisane
did not enquire about the availability and validity of licences
from the members who applied for and were granted business loans, except in
certain cases such as Transport and General Dealers.
5. Loan Repavments
Loans were to be repaid in monthly instalments of principal and interest, the
interest depending on theloan period. All money borrowed from the
Cooperative, both for personal consumption and business, was to be repaid by
tile end of October each year.
Some members who joined at Asikhutulisane's
formation defaulted on their
loan repayments.
Agreat number of the defaulters have recently come forth
and paid off tlheir balances, wit. teBoard having come to a decision that a
great part of the penalties would be written off.
7A
6. Monitorinsz
Asikhutulisane did not monitor the businesses to which they had disbursed
loans. The cooperative did not discover whether the business loans were in fact
used for the intended purpose or for some other purpose, such as personal
consumption.
7.Shareholding
InNovember 1985, Asikhutulisane
introduced and sold shares for the first time
per share with the minimum
to its members. The shares were sold at El
shareholding at 10 per member. Members were allowed to buy as many shares
as theywanted to. At the end of the year when savings were paid back to
members, dividends from the shares were also paid out.
In November 1988, Asikhutulisane
decided to raise the minimum number of
shares per member to 200 inorder to build reserves. Amember can only sell
back shares to the Cooperative when she/he resigns.
8. Annual General Meeting
The meeting is held early in December every year at Bhunya Hall. During the
meeting, the Cooperative's yearly report is delivered by the Executive. Copies
of the Cooperative's financial standing are handed out to members and new
office bearers are elected. Finally, yearly savings plus interest and dividends
are paid to the members.
B. After Firstcontact with STEP
At the first meeting of Asikhutulisane
and the STEP Director emphasis was put
on small enterprise support and it was resolved that Asikhutulisane
submit a
concept paper. In the report Asikhutulisane
was asked to provide a financial
breakdown by sector. This excercise saw the introduction of a new loan
application form, which included the reason(s) for the loan.
C. Before GrantDisbursment
Between grant approval and disbursment, CARE and Asikhutulisane
held a
meeting at Bhunya to discuss the methcdology that the Cooperative will use to
disburse the loans from the grant. The major points discussed at the meeting
were:
1. Shares:
A.;ikhutulisane explained thatit was going to take into consideration the
number of sharc a member has in the Cooperative and would give out loans
not more than three times the share investment. However, they did mention
that there woulc be exceptions in the case of members who have established a
good record with previous loans.
2. Counter Signatures:
Every loan applicant had to have another member countersign for them on the
application form. This, however, did not preclude the right of thecounter-
signer to borrow money for themselves from the Cooperative, but rather meant
thatthey would assist the Cooperative to recover its money in case of the loan
recipient's default.
3. Financial Tools:
CARE expressed its interest in the use of financial tools to evaluate all the small
businesses thatwere to be granted the loans under this experimental project.
CARE requested thatthe Asikhutulisane Manager prepare Opening Balance
Sheets, Income &Expenditure Statements, and Cash Flow Projections covering
the life of the loan. Monthly Balance Sheets and Income &Expenditure
Statements were to be prepared for all loan recipients.
4. Site Visits:
Asikhutulisane mentioned thatit would encounter great difficulty in doing site
visits to small business loan applicants and recipients because of lack of
transport. CARE offered to have its Extension Officer accompany the
Asikhutulisane Manager oii the site visits in a CARE vehicle.
'D.Grant
Agreement
The Statement ofWork in the Grant Agreement states the following:
The Grantee is to use the grantof ElO0.O00 to grantloans
with repaymentperiods longer than 10 months to its
members to promote the development of small enterprises.
The Grantee shall maintaincomplete records of loans
granted, repaymentof principalandinterest,andoperating
costs.
The Grantee shall provide 'theGrantorwith monthly
financial and statistical summaries concerning loans
granted.
The Grantee shall provide the Grantoraccess to itsrecords.
andshall cooperate in providing any additional information
thatmay be requiredby the Grantor.
The Grantee shall ensure thatthe recipients of loans
grantedby tbe Grantee agree, as a condition of receiving
such loans, to provide all information thatmay be required
by the Grantorandthe Grantee.
9
IV. IMPLEMENTATION
A. Training For Manager.
Asikhutulisane requested CARE to familiarise their Manager with the process of
loan appraisals and monitoring of the recipients businesses. The Manager
spent a week at CARE working with Extension Officers who are involved in
Credit Training (Another STEP experimental project rundirectly by CARE). He
did site visits and prepared some financial statements for the projects he
visited. He went through some of the clientfiles reaLing the assessments that
the Credit Training Extension Officers prepare for the STEP Director, to assist
him to make a decision on whether the loan should be granted.
B. Application Form.
The application form was changed to a more legally binding document which
would allow theCooperative to take legal action in case of default. Incases of
married women, husbands have to co-sign theforms for loans requested.
C.Loan Assessments.
The Manager is responsible for loan assessments and preparation of financial
statements such as the Opening Balance Sheet, Income and Expenditure
Statements and Cash Flow Projections. He assigns certain duties to the
applicant such as bringing in records, their licenses, or their budgets showing
how the requested loans will be used. He makes initial site visits tothe
businesses where he is better able to prepare Balance Sheets, failing which he
relies on theinformation given to him by the member. If and when he feels
that all the required information about the business is obtained, he then
prepares a brief write-up outlining important issues about the particular
business to the Board.
Occasionally, the assessments were done by the Board itself. Thesewere on
instances such as when the Manager was doing hisfamiliarisation tour at CARE,
D. Monitoring.
After the loans have been disbursed, theCooperative's Manager together with
a CARE Extension Officer do site visits to the different businesses. The site
visits are to confirm the information given by the members about their
activities, and also to find out if the loan money was all used in the business for
the intended purposes.
The members are encouraged to keep some records so as to facilitate the
preparation of financial statements of their businesses every month. This
exercise wil! he!p both the cooperative and themselves in determining the
position of :he actvities as far as progress is concerned.
10
E. Site visit to the Cooperative.
On July 11 1989, the CARE Extension Officer made the first visit to the
Cooperative after the grant disbursement. At that time, the Cooperative had
already disbursed 7 loans.
During a subsequent discussion where the Project Director, the Assistant and
the Extension Officer were discussing the loans disbursed by the Cooperative
and the methodology used, itwas unanimously agreed that a meeting should
be held withthe representatives of the Cooperative to help them in appraising
the loans.
Ameeting was held with the Asikhutulisane Chairman and Treasurer and the
following points were discussed: the Cooperative's methodology in appraising
the loans comparing the proposed and actual methodologies, the minimum
periods for business loans as per the Grant Agreement, the loans disbursed on
both their strong andweak points. This sessionwas infact a training excercise
for the Cooperative's representatives aimed at improving their methodology,
and wasfollowed by similar monthly meetings.
11
V. FINDINGS
A. Based on Meeting
Loan Period,
It is stated in the Grant Agreement that loans granted are tobe for periods of
longer thnl0 months and therefore two of the initial seven loans disbursed,
which were for EIO 000 each, had to be withdrawn from the Grantfund
because theywere for periods shorter than10 months. Subsequent loanswere
granted for periods longer than the minimum specified.
Loan Agoraisals.
Itwas fel
.
by CARE that based on the initial seven loans, there was a needfor
Asikhutulisane to be more critical ofwhatever the members presented.
Because the Cooperative has to prove itself as acapable institution in running a
Small Enterprise Development project,it therefore needs to be convinced about
the viability of a project and thatit is likely to suceed before a loan is given.
CARE also felt thatthe Cooperative has the moral duty of making the members
understand whatis expected ofthem to be better able torun their businesses
succesfully, and thisrequires that both the Board members and the Manager
understand each members' business and help him develop a plan which should
be followed.
Members Credibility.
The Cooperative haa proposed that the amount of loans members will receive
for their businesses was to be determined by theirworthwith theCooperative,
or the relationship theyhave had with the Cooperative in the past particularly
concerning their past loans and repayments. On looking at theloans that were
disbursed then, mostof the members were not worth whatthey had borrowed
from the Cooperative; some of those who had received loans in the past were
not particularly punctual in repayments and,in fact, did notpay within the
agreed period but have now been given larger loans.
Security.
No collateral was taken on any of the initial seven loans. The argument the
so
Cooperative has, is that members will complain that they joined the Coop.
that they get the help that they do not receive from the commercial institutions
since they cannot put up the collateral required.
The Cooperatives representatives were ,zade aware that they do not have to
ask for the sort of collateral that the commercial institutions required. but
rather something that the Cooperative could take in the case of default.
Examples of securities they could take were the fixed assets that are bought
with !oan money, or any other thing that the member owned and valued. In
this regard. the Society.. agreed to discnurage members who want to risk its
money wtthL.,t neartng any risk themselves.
B. Loan Application Process
Under normal circumstances. loan appraisals are done by the Project Manager,
but because of the short period the Cooperative had to disburse the grant. the
Board members were the ones responsible for the appraisals whilst the
Manager spent a week at CARE. In these instances, most of the financial
statements that CARE requested to be prepared prior to loan approvais were
not done.
There are two reasons for this. Firstly, the fact that the Board was itself not
clear as to the use of the financial tools in appraising the loans, and, secondly,
the fact that the members of the Board have full-time jobs and are merely
doing Cooperative work after working hours which does not give them much
time to look into the previous records of the members concerned.
In the loan approval stage, the Manager is not involved in the discussions, and
that has its own repercussions as he is the one who researches on the
applications, and assigns certain duties to the applicants. He is therefore well
informed and can clear up uncertainties during such discussions.
C. Financial
Financial tools to determine the actual amount of money needed, and the
period the business can take in repaying the loan have not yet been fully
utilised by the Board and Manager.
The Manager has prepared these statements for almost all the members' loar
assessments, but the loan repayment periods were not always appropriate, and
the Board did rot make its decisions based on the financial statements.
D. EnterpriseDevelopment
Before the Grant to the Cooperative, the Board used to approve loans for
business purposes far beyond a member's worth. There was no monitoring to
determine whether the loans were used for stated purposes and whether they
benefited the recipients or not. Members do not understand why they now
have to go through a long process before getting their loans approved and be
monitored during the life of the loan, as is the case under this Experimental
Project.
Some clients did not finish the tasks assigned to them before the loans were
disbursed, and the Board somehow feels duty bound to disburse the money
quickly if the members claim to be in a hurry. From the Board's point of view,
they feel obliged to act fast because they say they have been entrusted with
members monies and can therefore not delay since members will start
complaining about ther monies invested with the Cooperative. This point is
nevertheless cancelled by the fact that only one loan recipient has
shareholdings that are siightly higher than half his loan- (illustrated in the
individual loans). This problem was compounded by the late approval of ',his
project, its consequent short duration, and the requirement for the Cooperative
to disburse all the grant before the end of STEP.
E. Training.
The meetings that have been held between CARE and the Cooperative's Board
members together with the Manager have helped them a great deal in
understanding how to deal with their members in business terms. The Board
has in fact requested thatother people from the Cooperative attend the
sessions because their constitution allows for new office bearers to be elected
every year,and therefore as many people as possible should know inwhat
direction theCooperative is moving. However, due to iLe fact that all the
meetings have been held in the evenings, some members have had other
committments and have been unable to attend the sessions.
From the sessions CARE has had with theCooperatives' representatives, there
has been the observation thatthey are open to criticism and change. The loans
thatwere given after each session showed great improvementfrom the
previous ones and they are certainly getting more confident.
The Cooperative is presently trying to find cheaper ways inwhich they can
train their members in running their businesses successfully. They have been
contemplating organising serminars and requesting people who have sound
knowledge in areas of importance, tovolunteer their services to teach their
members how to run their businesses successfully and how to tackle certain
problems.
F. CLIENT PROFILE.
Summary table of all clients attached as an appendix.
1. Linda Abida.
Abida is a soft goods hawker and lives in Zakhele, Manzini. She applied for,
and was granted a loan of El0 000 from the Cooperative, from which she was
to purchase a motor vehicle worth E6 000 and stock worth E4 000 from S.A..
Abida has shares and savings with the Cooperative worth E550 and El50
respectively. She has, in the past, borrowed moneyfrom the Cooperative and
made her repayments on time.
After loan disbursement. it took Abida some time to purchase the motor
vehicle and when she finally did, she bought one in Swaziland worth E9 000
and this decapitalised her business. She did not insure the vehicle and has
sincc had an accident which she c'aims is minor. Repair costs were not catered
for in the cash-flow forecast. and the repairs have further decapitilized her
business. She has come up with a suggestion that theCooperative gives her
another loan to capitilize her business. The Board has not made a final decision
I,!
as there were two viewpoints: some suggested that she should be given more
money for stock, and others suggested that should sell the car, pay back a
greater portion of the loan to the Co-op. and buy whatever stock she needs
with the balance. On the other hand. when the Asikhutulisane Manager made a
site visit to her home, he discovered that she is in the process of extending the
house she lives in which could be another reason for decapitalization.
Abida has not been particularly helpful to the Manager in supplying requested
information. She is very difficult tofind at home since she is a hawker and
has, in mostcases, notkept appointments made with the Manager. She showed
up after buying the car, when she wanted to introduce the subject of a second
loan. She has made her two repayments and is still on schedule as far as
repayments are concerned.
From the financial statements, it canbe observed thatowner equity has
decreased due to the drastic change in stock.
2. Daohne Mavuso.
Daphne operates a Restaurant inNgwenya Border Post and requested a
E10 000 loan to purchase a bakkie which she was to use mainly for stock
purchases. A loan of El10 000 was given to herfor a period of 4 months. CARE
pointed out that this loan could not begiven from the STEP grant because it did
notconform with the Grant Agreement which states that all loans should befor
a period of 10 months or more.
3. Hezekial Dlamini.
Hezekial operates a Record shop in Bhunya. He is a full-time employee of
Usutu Pulp Company and has afemale employee tobe in charge of the shop.
He has, in the past, borrowed for business purposes from the Cooperative, and
has been punctual with his repayments. He keeps receipts from stock
purchases,cash sales and a debtors record book, fromwhich theCooperative's
Manager was able to compile an opening Balance sheet and also make future
projections.
Hezekial sells to some of his customers on credit and gives them between one
and two months to pay depending on their purchases. This excercise tied down
his working capital to debtors and made it impossible for him to make his
purchases monthly. The loan has made it possible for him to increase stock
and subsequently his collections, thus making it possible for him to make
monthly purchases.
Hezekial is very cooperative and supplies the Manager with information
whenever requested even if he cannot make it on the specified date. He is
presently worth more than half his loan with the society with both his shares
and savtng at E3 500 and E)10 respectively
Aloan of E5 0(0 was disbursed to Ihim for stock purchases with a repayment
period of 15 months at E396.66 per month split as follows: Principal E333.33
and interest E63.33. He is on schedule with his repayments. Owner equity has
increased.
4. Thulani Masina.
Thulani is an attorney and has his office in the Liqhaga Building in Manzini. He
a loan of E15 000 for a period of 24 months which
requested and was granted
was his firstloan with the Cooperative. He was to use E7 000 in buying Office
furniture and some books and E8 000 to cover administrative expenses. Of the
administrative expenses, he included non-business items such as house rent
and a salaryof E2 000 per month which was felt by STEP to be too high.
Thulani has other loans which he is servicing concurrently with this one. He
has a balance of E6 000, withthe Swazi Bank, E12 000 with Union Bank and
El 500 with a relative. He claims to have used these loans for setting up the
office and for purchasing a motor vehicle.
He has shares and savings of E200 and El 10 respectively. The Cooperative did
not request security on the loan. Thulani's repayment is E800 per month split
as follows: Principal E625 and interest E175.
During the first discussion we had with the Coops.' representatives after the
Grant, itwas brought to their attention that members like Thulani were a risk
to the Coop. because he is too indebted. He has not offered any collateral and
the amount he draws as a salary is too high for a business thatcannot support
itself and that moreover he has his other loans and house rent paid for from
the business. This is an indication that this member, is notwilling to risk his
own money.
Information was supplied though usually not on time. He is on time with his
loan repayment and has made all paymens on time. The loan was used for the
intended purpose and has helped the business increase owner equity.
5. Ivv Dlaminli.
Ivy is a Distributor who sells cleaning chemicals and health care products
purchased from a company in South Africa. She purchases the stock at a
certain discount and sells at prices controlled by the Company. She applied for
and was granted a !oanof E6 000 to purchase stock. The loan period is 24
months and ler repayment is E320 per mnt,,split as follows: Principal E250
Interest E70.
1vy has -liares .)IE.00 and savings of E3q() ,\ Cash Flow Projection was
sums of positive cash
prepared lor her at the initial stage and it showed huge
balancer at the eno of each montn w*h,,icn is an:indication that either the loan
.\L
period was t.oo long or :he amount borrowed was too much for her monthly
purchases.
With regard supplying information on her business to the Cooperative, she has
never voluntarily submitted it, but does so if and when the Manager makes a
site visitor telephone contact. She has made all her repayments and was
punctual.
The loan has helped her increase her working capital.
6. Alvinah Nomsa Nkosi.
Alvinah runs a Pre-School in .Manziniand applied for a loan of El0 000 to
finish the construction of an extra classroom. She has shares of E360 and
savings of E20. She had an overdue balance of E850 from a previous loan with
the Cooperative.
The construction of the extra classroom was started with a loanfrom Barclays
Bank, but she subsequently claimed that the cost was underestimated by the
builder. The Cooperative requested her to make a listof items, and their
prices, she needed for thecompletion of the room plus labour costs. Itwas
established that the bank balance of the loan was E3 500. The Cooperative
Board discussed with Alvinah that it would be difficult for her to service two
loans concurrently and therefore unanimously decided that she be given a loan
which included the bank balance so that she clears thebank debt. She was,
however, requested to clear from Pre-School funds, the existing debtwith the
Cooperative before shecould be granted the current loan. One of the
conditions of the loan was that Alvinah pays back the bank loan as soon as she
got the money from the Cooperative.
On monitoring, it was discovered that all the finances of the Pre-school were
controlled byher husband and getting information was always very difficult.
She did not keep seperate bank accounts for the home and Pre-school and
therefore it was difficult to account for all the school income of the previous
terms. it was uncovered from ner expenditure list that she had included the
E850, which 3as the amount owing from the previous loan with the
Cooperative and that the Bank loan was not repaid. Also included in her
current payments were overaue wages for the school teachers and the house
maid. There were no receipts for most of the items claimed to have been
bought with the loan money, and Aivinah claimed she did not know where her
husband kept business records. An effort of giving her a list of items
requested from her husband was made and it proved futile as the information
given to the Asikhutulisane Manager was a!ways not what was requested from
her.
Prior to loan disbursement. her husband sent acopy of"a stop order to the
Cooperat'e tn effect ioan renayments. However. he s;ent personal cheques to
*heCooperative for the first and second instalments before the bank could
effect the stop order. The third instalment was missed, which indicates that
the original of the stop order was probably not returned to the bank to be
effected. All in all. the loan helped increase owner equity.
7. Desmond Mlambo.
Desmond is a contractor and has been granted loans in the past tohelp him
purchase material for different projects. His loans have always been short-
term due to the nature of his activity that is guided by the length of each
project. He has always been on schedule with his loan repayments. He has
recently applied for a ElO 000 loan to purchase material for a 4 month project
and wants to pay back the loan within the life of this project.
He was granted aEIO 000 loan payable in 4 months at E2 700 a month split as
follows: Principal E2 500 and Interest E200. This loan, however, had to be
transfered from the Grant money tothe Cooperative's funds due tothe fact that
it does not conform to the Grant Agreement, which states that all loans have to
be repaid over10 months or more.
8. Obed Mpila.
Obed isafull time employee ofUsutu Pulp Company and runs a small grocery
shop in Siphocosini which is a few kilometers from Bhunya towards Mbabane.
He has received business loans in the past and his repayment record is good.
He requested a loan of E12,000 from which he was to purchase a cash register,
a counter refrigerator and stock. He was granted a loan of E7 000 toclear the
balance of the previous loan, to .:urchase a cash register and stock.
During the site visit, it was discovered that the shop isrelatively empty and it
is doubtful that all the money was used in purchasing stock, and that the cash
register was not bought. (The major problem in knowing whether there was an
increase in stock or not is that this loan was appraised by the Treasurer who
did not prepare an opening Balance Sheet.) He has employed two males and
one female as shop assistants. One of1 the male assistants is in charge of the
shop is responsible for the cash takings. He takes the cash to Vlpila at home
every evening. He is paid a wage of E120 and the other two are paid ElO0
each per month. The staff are individually responsible for certain portions of
stock and at the end of'each day they record available stock and the records
are sent to Mpila with the daily cash.
Obed has been asked by the Manager to-give an explanation as to why lie has
not purchased acash reg'ster as he seemed hard pressed for it during the loan
apDiicati in
He is ouctudi v lt reoavmen,"and .s oin time w th loan renaynment schedulle.
9. Nonh!anh!a Dlamini.
Nonhlanhla is full time employed by Langa Bricks, does soft goods hawking on
a part-time basis and also has a taxi operating at the Manzini Bus Rank by an
employee. She bought a second hand car from hawking proceeds and started
operating it as a taxi in December 1988. She uses her uncle's Road Transport
Permit. Her car broke down and she took itin for a major service. During the
non-operational
period, she applied for a EIO 000 loan from the Cooperative to
purchase a good second hand car from South Africa with the intention of selling
the older one as soon as it was out of the garage.
Nonhlanhlas shares and savings stood as follows at the time of the loan
application: Shares E300 and savings E450. She was granted a loan of E9 000
payable in 12 months. It was agreed that she gives as security the car's blue
book and the comprehensive
insurance certificate. During the discussion
between CARE and the Cooperatives' represantatives,
it was highlighted that
the Cooperative should have requested Nonhlanhla to get a letter from her
uncle permitting her to use the permit and that being in possessionof the blue
book does not, in itself,give the Cooperative the right to take the t. : in the
case of defaulting on the loan.
She purchased the car and has registered it in her name. She now encounters
problems with the insurance company which cannot insure her car as a taxi
because it is registered in her name and uses a different name on the Road
Transportation
Permit.
There is not much comment on the effect of the loan on the business since she
has recently receivtd it, other than that it was used for the intended purpose.
10. Desmond Mlambo.
Desmond is the contractor who was granted the 4 month loan. He paid his loan
off because !1ewas fast in completing his contract and has now applied for a
E20 00; .uanto purchase a truck. He is going to pay this through profits from
the two jobs he has recently won tenders for, worth E98 000 and E104 000.
He was granted a loan of E20 000 for 12 months and his repayment is El 937
split as follows: Principal El 667 and Interest E267 per month. He purchased
the truck from Mondi Timbers at an auction sale. He is currently using the
truck but still has to fix the minor faults it has, and take it for a roadworthy
test before he can register it in his naine and be in a position to insure it. The
Asikhutulisane
Manager has requested Desmond to give himself time toattend
to the truck because there is a condition of having the truck insured in the loan
agreement.
He lade his Ifirst repavment on time and has been cooperative with the
Manager vhere Iriirmation gathe'in is c('incet'ned.
1I.Lenard
.hlh!' ngo.
Leonard is a full-time employee
of the Usutu Pulp Company, and operates a
canteen in one of the .Matsaphafactories, and has a poultry project in Ngcoseni
which is his country place. He has now taken up a shop at Ngcoseni
(Mankavane),
next to his poultry project, which was runby an old relative of
his.
The shop is situated next to a school, and a bus station,where most commuters
change buses, and these are his targetfor the market. He applied and was
granted a loan of E6 000 to purchase stock, which he supplemented
with E2
000 which he claims to be proceeds from the canteen.
He has employed one male and one female as shop assistants
and pays them
E80 and E60 respectively.
They work every day from 6am to 6pm. The shop
started operating
under Leonard onl September1989,
and they have been
making dailytakings between E250 and E475. The male employee is in charge
and he keeps all the cash until Leonard comes from Bhunya to collect it, which
they say is at least twice a week. He gets a list of items they h,verun low on
and the ones thathave been requested by customers and make purchases at a
wholesaler
in Manzini.
The available stock shows that Leonard used the loan money to make
purchases.
Itwas observed
that he did not take into account te low spending
power of people in the rural arease.g. he bought items inbig packages which
are moving slowly, and also purchased
what can be termed as luxury itemsfor
his market. The shop assistants have realised the mistake in purchasing
items
in bigger packages and claim to have asked Mr Mhlongo to negotiate changing
them for smaller packages at the wholesale.
The loan was used for the intended purpose and has increased owner equity
and created two jobs.
12. '-'.e Mabuza.
Pauline is involved in property building at Ngwane Park. She and her husband
have another block of 9 flats also at Ngwane Park which they are letting out
and are currently building a block of I1 one-bedroom
flats. When she
approached
the Cooperative
for a loan. they were almost at the roofing stage
and no longer had enough funds to continue with the construction
of the block.
Pauline has E2 370 in Shares and E2 380 in savings. She has had previous
loans with the (Co)per'ative
anc her repayment
pattern was per schedule She
applied for a loan of El 5(I and was granted this amount for a period of I0
months. Her repayment
will be El 7it)ner month. The repayments
will be
made from the rental fee 'rmn both biocks at the rate oif Ei00'each per month.
From the E15 00O0 loan, they are not going to be able to do the electrical wiring,
and plumbing fees were also not catered for. At the moment they are not sure
if the rentals from the finished block will cater for these expenses.
13. labulani Ndlovu.
Jabulani operates abutchery in Luyengo and is full-time in the business. He
has received business loans from the Cooperative in the past and the Board
feels he is one person who has always received such loans but keeps coming
back for more loans with no sign ofimprovement in his activity. The purpose
of his last loan was for him to purchase cattle and keep them so as to avoid
running out of meat in the butchery, but he has again come back to the
Cooperative for a loan before he cleared his past debt.
Jabulani applied for a El0 000 loan to purchase avan for buying cattle to
replace the one that was stolen. His balance from the previous loaln is E2 990
and he has been struggling to pay it off. This loan application was discussed
between CARE and Asikhutulisane representatives. There were different
opinions to this issue as some people feltthat the Cooperative canrather lose
E2 990, whichwas the balance owing, than risk a further El0 000 and others
felt thatjabulani is an honest person who will pay back his loan if the
Cooperative could help him out of the capital problem. Eventually, the
Asikhutulisane representatives agreed thathe had a problem managing the
cash of the business and therefore theywere going to give him money for
buying cattle only and then teach him cash management of his business.
He was granted a loan of E8 400 from which the balance of the previous loan
was deducted and the balance he was to use for buying cattle. They estimated
that he would be in a position to purchase at least 4 beasts and also have some
working capital. His repayment is E656 per month split as follows: Principal
E560 Interest E106. He has E770 in shares and E170 in savings.
21
.VT. CONCLUSIONS
From the information
we have on the loan recipients,
it is apparent that some
members did not use the loans for the intended purposes.
After the Grant
time they got
-
signing ceremony,
some members
may have thought itwas
themselves
large sums of money from the grant money under the disguise
thatthey were business
loans.
The repayment
rate of loans given from the grant has continued
to be high,
-
usedfor the intended
purpose.
irrespective
ofwhether
the loans were
Perhaps this is an indication
thaton the basis of members'
relationship
developed
with the Cooperative,
they feel a commitment
to repay.
- Where sufficient information
is available,
during the short period the
Cooperative
has been disbursing
loans from the grant,business recipients
have generally
shown an increase inowner equity (i.e. the businesses
have
grown.)
- The monthly discussions
thatCARE has had with the Cooperatives'
representatives,
have been aform of informal
training for them and they
have greatly improved
in implementing
their methodology.
The Cooperative
has to identifywith other organisations
that dealwith small business people
and share ideas with them. From this Experimental
Project, itcan be
observed
thatwithout the time pressure
theywere working under and with
more interaction
with people who have working experience
with the Small
Business
community,
Asikhutulisane
has the potential
to run a Small Business
Credit Scheme.
Even though
Time has come for the Cooperative
to set a policy on collateral.
he Cooperative
does not ask for the kind of collateral
thatother Financial
Institutions
require, they do have to bear in mind thatwhen they give out
loans to members
whose worth with the Society is very little, they are
An example
of the collateral
theycould ask
-
risking other members
monies.
with the loan money or any movable
for are the assets that one buys
property
that a member
has but has been fully paid for.
- It ,s still a problem in our country
to get small business
men and women.
who
in most cases are illiterate
or have little education,
to understand
why using
financial
tools is important.
From the look of things, it will take
some time toget its members
to adapt to the situation
Asikhutulisane
have to disclose their business
financial
status in order for
whereby
tie.
them to be helped develop
the activities.
22
- The Board now has to be extra careful when admitting new members because
some will join the Cooperative for the purpose of borrowing large sums of
money which they do not intend to pay back.
- The Board is convinced that the default rate will be minimal considering the
current repayment rate from both the consumption and business loans they
have given to members before the grant.
- From CARE's experience, Asikhutulisane is a well-managed Cooperative, with
a Board comprised of commited people who are very responsive to newideas.
TheCooperative has considerable potential for future development,
particularly in thefield of Small Economic Activity Development.
2.3
.VII. RECOMMENDATIONS
- The monthly sessions between CARE and the Cooperatives' representatives
should be continued at the end of STEP project because the Board has shown
signs of great improvement in appraising their loans and have gained
confidence in dealing with the different loan applicants and recipients.
=All loans should be appraised by the Manager and not members of theBoard.
This will reduce Cooperative work load for the Board members as they have
full-time jobs and do not have enough time to prepare all the required pre-
loan financial statements for the loan applicants. It will also help eliminate
people who are always on the look outfor Administrative weak points,and
may realise thatthrough members of the Board one isnever required to
bring in all the requested documents before their loans are assessed.
Another important aspect thatis overlooked by the Board members is that.
the Cooperative members need to build confidence in the Manager who
happens to be a newfigure inthe Society's Administration. As such, the
Manager's objectivity and lack of previous knowledge of individual member,
can complement the Board's relationship with members developed since the
beginning of theCooperative.
- The Manager should be involved in the loan application discussions with the
Board.
- The Cooperative must explore ways ofensuring that the loan money is used
for the intended purposes and thatthe amount of money paid outfor assets
is reasonable.
- If the Cooperative is to develop its activities in Small Enterprise Development,
ithas to request the members to volunteer their skills wherever needed in
order to minimise the cost ofrunning such a project.
- The Cooperative should continue using the methodology theyhave now
adapted on business loans even after the life of the Grant Agreement.
- The Cooperative should continue with the training preparations for their
members. They should identify the needsfirst and then prioritise them so
they can get positive results from their sesssions. The use of volunteers from
members can save the Cooperative a lot of money.
- Consideration should be given to an assistance program that facilitates
Asikhutulisane's development particularly in the field of Small Economic
Activity Developiment.
2I
APPENDICES
A.Summary table of all clients.
B. Balance Sheets for allclients.
C. Pie chart of clients bygender.
D. Bar chart of clients by gender and sector.
E. Disbursements
and total repayments.
25
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E
S
E
t
o
6
0
0
)
0
(
4
%
D
V
1
,
0
1
c
:
X
0
0
0
0
0
0
0
0
0
-
L
O
t
o
I
t
o
0
0
f
.
0
D
M
C
0
0
0
0
0
8
~
L
L
-
C
O
c
o
:
3
O
C
C
C
W
C
X
1
i
I
a
i
m
a
I
0
22
0
3
"-: "
I;"~~~~~. :-
. .
l:!:ilC.,.,.A A_
L-frent Asseth805
Inventory
Debtors
Appendix B
AEIDA LiNCA .HAVwiER'
P..ance Sh]eet
.
tember 1, .. ... .."'"..
ASSETS
:.Pre--a
142
7.187
TotalCurreft Assets
8,134
!FixedAssets
Furniture
0
Equipment
0
Velk-e
0
Total Fixed Assets
0
TOWal As-ets
8.134
.... . . .............
Pos-Loan
438
320
' 200
3,558
0
0
9,500
9500
13.058
L&AIfflS &OWNVER E(QUITY
"
e-L Poi-Lo'a0 547
Amounts Payable
0 10.306
Loan Asilihutuisane
0 100053
TotalLiabilities
Owfer-Eqit
8. 134i
Toa 1'al b']ities & Own.er-Equ;Ivty
8.134 13,058
...... .....
... .. ...... .... .....
.......
. ..... .
Change
(367)
178
(4,27
(4,576)
0
0
9,500
9 500
4,924
CaBage
547
10.306
10.853
5,291
4.924
....
% Cange
-46)h
1250/o
61
-56'-/o
:
0-/0
0o/
0/
00A,
610/o
% ChaAge
OC/o
00/0
OW "
-730hj
610/0 :
'..
27
.E7'KIAL DLAM!N! (RECORD BAR)
:aJance Sheet I
: . . . .
September 9,1989
. . .. .. ..
. . . ". " "
ASSETS
Pie-Loaa Post-LA, Cange %ZCage
Lzwent A.s.t-
Cash
500 1,780
Inventory
Debtors
800
0
9,572
0
Total Current Assets
1,300 11,352
FiredAssets
Furniture
0
0
Equipment
Vehicle
0
7,000
0
7,000
Total Fixed Assets
7.000 7,000
Tota A. sets
8,300 18,352
LIABILITIES & OWNER EQUITY
Pre-LoaA Post-L-'aA
Liab'liie
5,859 6,073
Amounts Payable
81100 21.267
Loan Asilthutulisane
Total Liabilities
13.959
27,340
OwnAer Eqaity
20,241 51 '2759
34,300
78,699
T'1taL.iabift'e5
& OCherEquit"
1,280
8.772
0
10,052
0
0
0
0
10,052
ChaAge
21,
13,167
13,381
118
44,399
2560/6
10970/o
0
7730/o
00/0
00/o
00/0
0O/o
121oA
5'5' Caiage
1630/0
96/O
1521 [
1-99
0
/a
2:
28
i
THLILANI MAS!NA - (ATT'-RNEY'
Balance Sheet
.
AL.G!.
AI-'-T
T,3.,
08. 1989
. •~~~ .......... i. .
if::: 'ASSETS
ASS eSLo Pc6I-Ck2Ai Chauge %L~aige
5..15.5
iG.'urteutAsst
l ash5155
4,37- 563%
Iety0 0 0 OOV'
Debtors
IM 4 !60 1493 490/a ::
• uT rentA5eLc
3,844 9,715 5,871 153, [
3,500 4,130 630 1Dwo
Furniture
0 2,207 2,207 00/0
Equipment
'ehi1e
16,000 16,000 0 0
0
/
Total Fixed Assets
19,500 22837 150/0
Assets
_Total 32.052 8.708 370/0
23.344
. . .
. . . . . .. . . . .. . . . . . .
LrA.:IrL=ioS & EQUIY ooR r
Fre-Loait Post-Laan Change %Change
Amounts Payable
.:Loan AsikhutuianeiUnion
2a-nk
19.262
2 6.262 220/A
33::.
Total Liabilities
19,862 26,375 6,513
• wnerEquity
3.482Z7
9 63o/o
32.052 8.708 37(/ r
:T"taI L'abilities& ,-,er Equity
23.344
29
Iv,, Dtamirli rri0ributcOr)
. . . . . . . . . . . .
1m
ASSETS
Pre-Lcan Thq-L-cve
p C"age% ag
C.arrentA!.fet-s
5,000 4,512 (488) -100/3
cash
t,
AAssdS
:ixe
4,989 1,989 660/0
tn~toy3,000
.1 .. ... "..... .... .