Micro-Finance Management (FINM4104)

Faculty of Economics and Management Science (FEMS)

Semester: First Semester

Level: 400

Year: 2019

Answers (200 )
THE UNIVERSITY OF BAMENDA
FACULTY OF ECONOMICS AND MANAGEMENT SCIENCES
DEPARTMENT OF MANAGEMENT First Semester Examination: 2018/2019
Course Code: FINM4104 Course Title: MICRO-FINANCE MANAGEMENT
Credit Value:
5 Course Status: E
Course Lecturers: Madam Wokwen Cordelia and Mr Tony Anyangwe
Time:
1pm - 3pm
Date: 7
th
March
2019
SECTION ONE: ANSWER ALL THE QUESTIONS AND GO STRAIGHT TO THE
POINT
Question One: Micro-finance institutions have adopted strategies for their development.
Describe these strategies (20 marks)
Question Two: Describe three models of the group lending approach of micro-finance institutions
(15 marks)
SECTION TWO
Question One (20 marks): You are a Microfinance consultant and have been presented with the
following summary income statements for 3 different MFIs:
Income statement for the period 01/01/18 - 31/12/18
(000XAF)
MFI 'A'
MFI 'B'
MFI 'C'
Interest from loan portfolio
1,143,638
103,622
4,290,218
Interest from investments
68,830
1,200
723,018
Total interest income
1,212,468
104,822
5,013,236
Interest on member savings
798/717
0
0
0
0
1,435,116
Interest on borrowed funds
1,921
14,034
825,992
Total
interest expense
800,638
14,034
2,261,108
Gross financial margin
411,830
90,788
2,752,128
Non-
interest income (fees etc)
245,595
11,345
1,700,124
Total operating income
657,425
102,133
4,452,252
Non-
interest expense (training etc)
12,421
224,581
17,531
Operating expenses: personnel & admin
216,117
50,211
2,413,577
Operating proflt/loss
428,887
-
172,659
2,021,144
Provision for loan losses
303,513
1,243
1,062,410
Income before donations, tax, &
adjustments
125,374
-
173,902
958,734
Taxes
37,612
0
287,620
Donations
1,241
203,122
0
Net profit/loss
89,003
29,220
671,114
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a. Identify, with reason, the possible type of Mb service provider (with respect to ownership)
with each of the income statements.
b. Briefly comment on any 3 peculiarities relating to each of the different MFI service providers
identified in (a) above.
c. Why may the transformation of MFIs from ownership form B to C above be problematic in the
eyes of some stakeholders in the Microfinance industry?
d. Comment on the profitability, efficiency, asset quality, and leverage positions of MFIs A to C
(using at least one ratio in each category), given the following additional information
extracted from the respective MFI balance sheets:
Question 2 (15mks)
You are the Credit manager of Finfirst Savings & Loans Ltd., a-category II MFI located in
Bambili. On March 01, 2019 you approve a XAF450,000 loan for a client, repayable by August
31, 2019 at a monthly interest rate of 1.72%.
a. Prepare the amortization schedule for the client if interest payments are calculated using a Flat
rate method
b. You approve a similar loan for another client, but this time on the condition that she makes
compulsory savings of XAF5,000 per month over the entire loan duration. Prepare the
amortization schedule for this client assuming interest payments are calculated using the
declining balance method.
c. Which in your opinion is a better method of calculating interest payments in the preparation of
client amortization schedules and why?
GOOD LUCK
Balance sheet entries
MFI ‘A’
8,744,936
MFI ‘B’
MFI ‘C’
Gross loan portfolio
Loan loss reserves
1,548,207
14,552,480
1,554,520
766,512
5,521
10,151,97
Total assets
6
1,780,927
16,469,405
Current liabilities
4,747,617
11,578
11,492,061
Long
-term liabilities
2,192,294
821,548
2,304,583
Total equity
capital
3,212,065
947,801
2,672,761
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