Development Ratings

MicroLoan Foundation is essentially both a UK charity and a Malawian MFI.

2008 has seen a sharp rise in income coupled with higher fundraising costs. This followed 2007 which was a year of consolidating not only Malawian controls and process but of change and development in the UK. Newly added UK salaries required for the full-time appointments increased administrative expenses and fundraising costs. The fundraising emphasis may increase medium-term income. The change of management and hiring of full-time staff depressed the programme ratio in 2007 to well below where we were comfortable but it has now moved up towards best practice. Strong reserve growth is generated by continued surplus income. Reserves can be used to support the cost of opening new country offices and branches, as well as expanding the MicroLoan Malawi loan book.

MicroLoan has grown significantly in a short time and continues to concentrate on reconciling the fine balance between raising new funds with very limited UK resources, whilst aiming to service the huge need for its work in Africa. MicroLoan is at a crucial stage in its development in taking bold steps to invest in fundraising activities to raise the income it requires operationally, whilst remaining efficient in its use of resources. Currently the administration ratio continues to disappoint at 16%. Annual income of £907,000 in 2008 was achieved with only five UK staff and fundraising costs of £113,000. For the year end 2009 its staff in the UK has grown to seven with an expected annual income of £1.2m while maintaining the same level of fundraising spend as in 2008 (increasing fundraising efficiency to below 10p).

In terms of the loan portfolio quality for MicroLoan Malawi, the maintenance of the repayment rate at 99% reflects the tightening up of controls. According to MicroRate, the average for African village banks is 97%. With the expansion in branches, the expansion in active borrowers is on track.