Page 1

Triple Jump Annual Review 2009


Bosnia-

Morocco

Mexico

Haiti

Guatemala Honduras El Salvador Nicaragua

Senegal

Mali

Burkina

Costa Rica Colombia

Ghana

Ecuador

Brazil Peru Bolivia Paraguay


The Netherlands Ukraine Kazakhstan Moldova Herzegovina Serbia Georgia Montenegro Kosovo Kyrgyzstan Macedonia Albania Azerbaijan Armenia Tajikistan

Mongolia

Lebanon Palestine Egypt

India

Niger

Philippines

Sudan

a Faso Nigeria Benin

Cambodia Ethiopia Sri Lanka

Uganda Rwanda

Vietnam

Kenya

Indonesia

Tanzania Angola

Mozambique

Triple Jump Head Office Triple Jump Regional Office Triple Jump Office Countries where Triple Jump worked in 2009


Triple Jump manages and advises several microfinance investment funds, each with a specific target group and different risk and return objectives. This mix of funds allows Triple Jump to serve microfinance institutions (MFIs) throughout their entire life cycle. Our clients range from NGOs receiving their first non-subsidized loans to regulated banks which intermediate savings and serve hundreds of thousands of borrowers.

Triple Jump Advisory Services helps growing MFIs jump to the next business level by providing cost-sharing grants and technical assistance. Our service areas focus on strengthening governance, technology (mobile banking, management information systems) product development and social performance management.

Triple Jump investment figures 2007

2008

2009

Committed Capital

EUR 126.3 M

EUR 158.2 M

EUR 222.1M

Invested Capital

EUR 101.4 M

EUR 135.1 M

EUR 146.3 M

130

149

197

98

111

132

7

7

4

Number of Investments Number of Clients Number of MFIs “jumping� to Commercial Funds

Capital committed and invested in millions of Euros 250 200 150 100 50 Committed 0

Invested 2006

2007

2008

2009


Triple Jump Annual Review 2009


“Microfinance can make the difference between hope and despair for billions of people living in dehumanizing poverty.” Sir Fazle Hasan Abed, founder of BRAC Bangladesh Dr Abed was guest of honour at the Triple Jump launch in December 2006. BRAC is a long-time partner of Oxfam Novib. Today the BRAC microfinance programme has over 6.4 million clients in Bangladesh. In 2006 BRAC launched the BRAC Africa Loan Fund to finance the establishment of microfinance institutions in Uganda, Tanzania and Southern Sudan. By December 2009, these MFIs had grown to serve over 200,000 clients – exclusively women – through 234 branches, with an average loan size of USD 133. Triple Jump has participated in the BRAC Africa Loan fund with both the ASN-Novib and the Oxfam Novib Funds.

6 Triple Jump Annual Review 2009


Contents 9 Foreword 11 Management Review 15 Our Company 19 Investment Management 22 Results 2009 31 Investment Funds 39 Triple Jump Advisory Services 47 Organization


1

Foreword


Foreword The year 2009 will be remembered mostly as the second year of the world economic crisis, the year when the effects of the crisis reached many of the world’s poorest. As the world’s poorest have been affected, so have the Micro Finance Institutions (MFIs) that cater to them, often leading to deteriorating portfolio quality and a slow-down in growth. In the face of these poor odds, the Triple Jump portfolio has proven its resilience. For the microfinance sector as well as for Triple Jump, 2009 was a year of consolidation. Investments managed by Triple Jump increased by almost 8% to over EUR 146 million, with a stronger diversification both in terms of countries and number of MFIs. Our strong focus on quality and risk management over the years has clearly paid off, resulting in very low arrears. As we have been unwilling to compromise on the prudency of our lending methods, this has led to a higher level of liquidity and slightly lower return to investors. We believe that this strategy pays off in the long run. Our investment team continues to develop and now includes 22 staff based in Amsterdam, Lima and Macedonia. In 2009 Triple Jump Advisory Services expanded its local presence to Senegal and Georgia, and grew the team to 4 professionals. The team provided 42 technical assistance projects to 25 MFI partners, doubling our activities since 2008. In 2009 the Board of Directors convened five times to discuss strategy, planning and results, and to agree on a new 3-year business plan with ambitious targets. An important goal is to broaden our large client base with the ultimate goal to increasing our outreach to low income entrepreneurs.

<<

I would like to thank our shareholders, stakeholders and clients for their continued support and cooperation. We greatly appreciate the dedication and commitment of the members of the Board of Directors and the Supervisory Board to Triple Jump’s work. Finally, I would like to extend a word of gratitude to Kim Kiszelnik for serving as board member of the Triple Jump Advisory Services Supervisory Board. We thank Ms. Kiszelnik and the DOEN Foundation for their important contribution and support in the first three years of our Advisory Services’ existence. Mrs. Ey Onn Punthea has been in the coffee shop business for almost 20 years now. She started borrowing from the microfinance institution Thaneakea Phum Cambodia (TPC) in 2004. She has moved from accessing group loans to individual loans and from local currency loans to USD-denominated loans. All her children are studying. When asked why she continues to borrow from TPC when she could be borrowing from a bank, she smiles and says in a typical Khmer metaphor – “You can get coffee beans everywhere in Cambodia, but if you know where the good aroma is coming from, then you stay there.’ TPC is a client of Triple Jump through the ASN-Novib and Calvert Funds. (Photo: TPC)

We are confident that our shareholders, stakeholders and clients will continue to support our responsible approach to increasing access to finance for under-served entrepreneurs and low-income households. Ab Engelsman, Chairman of the Board May 2010

The Board of Directors of Triple Jump: Ab Engelsman, Bart Hartman and Esha van der Hulst The Supervisory Board of Triple Jump Advisory Services: Ab Engelsman, Bart Hartman and Esha van der Hulst

9 Triple Jump Annual Review 2009


2

Management Review


Management Review Triple Jump In this period of economic crisis and turmoil in the financial sector, our primary goal was to continue to serve MFIs while protecting the funds entrusted to us by institutional investors and private individuals. Overall, the funds managed by Tripe Jump performed well in 2009. Triple Jump increased its portfolio of investments by 8% to EUR 146 million in 2009, while maintaining a good portfolio quality. Triple Jump Advisory Services expanded its field presence in Africa and Central Asia, increasing the number of MFIs benefitting from technical assistance on a cost-sharing basis.

Microfinance Market The economic crisis that followed the financial crisis did impact the microfinance industry considerably. Lower remittances, declining economic growth, unstable currencies and overborrowing all caused serious challenges for MFIs and their clients, leading to limited portfolio growth. In the first quarter of 2009, lenders were cautious and MFIs faced a shortage of funding, but by the second quarter most MFIs had slowed their rate of growth. Meanwhile, microfinance investment vehicles (MIVs) continued to grow as investors were drawn by the positive results from 2008, leading to high liquidity and renewed pressure to disburse. This resulted in the uncommon situation where higher perceived investment risk was accompanied by declining spreads. Given these difficult circumstances, overall performances of MFIs were again more resilient than many expected. Performances differed across the regions, with Central America, Eastern Europe and Central Asia being most affected by the crisis. We found that MFIs with traditional microfinance lending models generally outperformed MFIs with a higher proportion of consumer and SME lending.

Funds In 2009, our investments allowed MFIs to reach over 390.000 clients, 78% of whom were women, a priority target group for Triple Jump. In total, our clients serve over 9.5 million micro and small entrepreneurs around the world. We worked with 132 MFIs (2008: 111) ranging from NGOs to regulated banks. The total commitments for the ASN-Novib Fund grew by 40% to EUR 123 million. In spite of the crisis, investors continued to demonstrate their commitment to socially responsible investing and were rewarded with a healthy return of 4.1%.

<<

Mrs. Hanni lives in Indonesia and is a proud mother of three children. Thanks to a small loan from an MFI, Mrs. Hanni was able to start duck breeding, and today she has over 200 ducks, kept in a compound next to her house. The microfinance institution is a client of Triple Jump. (Photo: Triple Jump)

The Oxfam Novib fund again fulfilled a catalyst role in adverse times by providing capital to lower, often rural, market segments. The local currency portion of the fund increased to 60%, mitigating an important risk factor for emerging MFIs. Total investments grew by 30% to EUR 31 million, while the average investment was maintained at around EUR 0.35 million.

11 Triple Jump Annual Review 2009


â&#x20AC;&#x153;Triple Jump really knows how to select promising MFIs in the early stages of their development and guide them to the next stage. This is exactly what we had in mind when we set up Triple Jump in May 2006.â&#x20AC;? Farah Karimi Executive Director Oxfam Novib, a Dutch NGO fighting for a just world without poverty


The NOTS fund was launched late in the year and a first investment was made in Peru. The fund focuses on TIER 3 MFIs and has substantial appetite for local currency investments. Dutch development bank FMO has taken on a catalyst role, committing a substantial amount of subordinated capital to the fund. The investments Triple Jump managed as sub-advisor for Calvert and the SNS Institutional Microfinance funds I & II performed well. Our asset selection ensured good returns to investors and excellent portfolio quality.

Highlights from 2009 – Active in 51 countries, 78% of clients reached were women – ASN-Novib Fund generates 4.1% return to investors (6.6% including tax credit) – Acquired mandate for NOTS fund – Expanded the regional offices and strengthened the investment and operations departments – Obtained SAS-70 II compliant qualification for second year running

Our company 2009 was an important year for Triple Jump. Reaching a critical mass enabled us to increase in-house specialisation to boost service quality and delivery time. We strengthened both our commercial team and our operations department with the hiring of new staff. During the year we further developed our risk-management policies. In this regard, we have seen our diversification policies and strict monitoring systems pay their rewards in these adverse times. Our focus on responsible lending is greater than ever. Trainings were organised for staff in the areas of treasury management and social performance. The in-depth social performance tool that was developed in 2008 was used consistently. We are very proud to have brought together such an excellent team of professionals and would like to take the opportunity to thank our staff and the members of our external investment committees for their efforts.

Outlook The microfinance sector in general will face a year full of challenges in 2010. Our clients have proven their resilience during the past year, but will continue to face an adverse economic environment. Our main goal is to continue providing high quality financial services to our (prospective) clients, while maintaining a very good portfolio quality. In spite of difficult market circumstances, we are encouraged by the promising signs we have observed and are confident we will attain our goals. We extend our gratitude to all our partners for their continued support in 2009. Mark van Doesburgh and Steven Evers Managing Directors, Triple Jump

Triple Jump Advisory Services 2009 was a year of expansion for Triple Jump Advisory Services, as the foundation expanded its regional and country focus and built a local presence by hiring staff based in the region. Additionally, we increased the number of MFIs receiving support to 25, of which 12 were new partnerships. We had a growing demand for our services from new and current partners and hence in 2009 we completed 42 projects. Responding to demand from both MFIs and investors, we added social performance management to our focus service areas. We also continued launching innovative mobile banking projects to increase financial access and reduce costs, among many other potential benefits. For 2010 we anticipate an increase in demand and growth in our support to MFIs for our customised, practical advice and technical assistance. Carol Caruso Managing Director, Triple Jump Advisory Services

13 Triple Jump Annual Review 2009


3

Our Company


Our Company Story Triple Jump emerged as an independent organization in 2006, when Oxfam Novib spun off the management of the ASN-Novib Fund. Nine months later, in March 2007, the Oxfam Novib Fund was also transferred to Triple Jump. Though we were founded as recently as 2006, our origin as part of Oxfam Novib means that we can trace our activities in microfinance back to the 1990s.

Name Triple Jump takes its name from the Olympic sport, which is characterized by speed, power, rhythm, and resilience. The three stages of the jump reflect our ambition to help microfinance institutions progress through the three stages of their development.

Vision Large groups of the population in developing countries are still being excluded from taking an active part in society. One of the reasons is limited access to the financial services that would allow them to provide for their families and meet business needs. Triple Jump is convinced that growth and reinforcement of the microfinance sector is an important precondition to the socialeconomic development of these groups. We work with MFIs to realize their full potential through: – Advisory services to improve the performance of the institution – Equity to strengthen the capital base – Loans to enlarge the microfinance portfolio MFIs go through various stages in their development: from emergence to expansion and maturity. Triple Jump supports MFIs during all these stages using a tailor-made approach to suit the individual situation of the MFI. Thanks to the Oxfam Novib and NOTS Funds as well as our Advisory Services, we are able to help MFIs in the emerging and expanding stages. The range of funds we manage allows us to grow with our maturing clients and provide the added value they need.

<<

Mario Valdivia Guillén is a farmer in Southern Peru. He started borrowing money from the microfinance institution Fondesurco nine years ago. ‘Thanks to Fondesurco my capital has increased and I was able to send my daughters to school. Fondesurco really has helped me a lot!’ Fondesurco is a client of Triple Jump through the Oxfam Novib and NOTS Funds. (Photo: Fondesurco)

Triple Jump operates at the interface of commercial and development work. On the one hand, we see ourselves as entrepreneurs with a strong focus on results and solutions. We are constantly on the lookout for new, promising MFIs, which we can help to grow and become more professional. On the other hand, we never lose sight of our social objectives and integrity. This is reflected in the high international business standards we uphold, in the transparency of our activities, and in the importance we attach to equality in the relationship with our stakeholders. Sustainable development is our goal. Sustainable development for small entrepreneurs in developing countries, for MFIs, for our stakeholders and for ourselves.

15 Triple Jump Annual Review 2009


Client Perspectives

“Without Triple Jump we would be nowhere!” Gulnara Shamshieva General Manager Bai Tushum serves nearly 40,000 clients and is one of the largest non-bank microfinance institutions in Kyrgyzstan. Triple Jump started working with Bai Tushum in 2008, first as a lender and since 2009 as a shareholder through the ASN-Novib Fund, with a 15% share in the MFI’s capital and a representative of Triple Jump in the Board. “In 2010 the microfinance company Bai Tushum & Partners will celebrate its 10th anniversary. We can say with certainty that this is a mature and successful organization and one of Central Asia’s leading MFIs. In 2009 Bai Tushum had to increase its capital to allow for further growth of its loan portfolio. Bai Tushum approached several social investors, including Triple Jump as advisor to the ASN-Novib Fund. Triple Jump was the only social investor who could process our request on time and who was willing to invest prior to Bai Tushum obtaining its deposittaking license. Thanks to the investment from the ASN-Novib Fund, Bai Tushum could continue to grow its loan portfolio and attract additional financial resources from several microfinance lenders. We clearly express our gratitude to Triple Jump and the ASN-Novib Fund for a timely investment and for the risk which they were willing to take. We are aware that being the first is not always easy, but at the same time the first ones can also receive some benefits: notwithstanding the financial crisis of 2009, Bai Tushum remained very profitable.”


Mission Our mission is to improve access to financial services for small entrepreneurs in developing countries by supporting the expansion of viable microfinance institutions in all stages of development though providing capital and advisory services. Triple Jump focuses on MFIs which are committed to: – reducing poverty in their society; – reaching low-income and vulnerable groups, particularly women; – respecting society and the environment; – achieving maximum efficiency, financial sustainability and outreach.

By helping MFIs to grow, Triple Jump helps improve access to financial services for the world’s poor.

SNS Institutional Microfinance Fund ASN-Novib Fund Calvert MicroPlace NOTS Oxfam Novib Fund Triple Jump Advisory Services

emerging

Different stages of MFI development

expanding

mature

17 Triple Jump Annual Review 2009


4

Investment Management


Investment Management Introduction Triple Jump Investment Management specializes in managing and advising microfinance investment funds. Through the funds entrusted to us, Triple Jump targets MFIs in all stages of development, though we view emerging and expanding MFIs (tier 2 and 3) as our niche. Supporting MFIs in the early stages of their development allows us to grow with them. Triple Jump’s approach is based on MFIs “graduating” or “jumping” from fund to fund, as they go through the different phases of their development. To this end, each of the funds that Triple Jump works with has a specific investment profile.

Our Approach Triple Jump serves as an intermediary between capital markets and MFIs in developing countries. We focus on offering high quality and results-oriented services to our funders and our clients. Our approach entails a combination of the following:

Professional Services At Triple Jump, we are committed to offering our stakeholders the highest possible level of service, with a consistently professional approach to clients in all tiers of the microfinance market. This means combining thorough analyses, clear processes and transparent communication with tailor-made solutions. As a flexible investment manager, Triple Jump is attentive to the needs of its stakeholders and strives to minimize delivery time.

Market Knowledge We consider it vitally important to have a thorough knowledge of the markets we work in and to keep abreast of recent developments. We feel it is essential to know our clients and be able to respond to their needs as they arise. Our carefully selected team combines dynamism with solid experience in microfinance, banking and development across several continents. We remain close to clients throughout the life of our investments, with regular monitoring of their financial and social performance.

Local Presence In 2009, Triple Jump expanded the regional office in Lima, Peru to oversee all client relationships in Latin America and to strengthen our market knowledge and increase local presence. We also have a regional office in Skopje, Macedonia.

Social Performance

<<

The Kidigi market in Rwanda. Many MFIs, such as our partner Vision Finance Company, have clients working in this market. (Photo: VFC)

Triple Jump firmly believes that with the right policies and implementation, microfinance can help contribute to poverty alleviation, empowerment and sustainable development. As an endorser of the Client Protection Principles, we are committed to helping raise awareness among MFIs about responsible lending. Since 2008, Triple Jump has incorporated a more in-depth social performance questionnaire into all due diligence visits. The questionnaire is based on the Client Protection Principles and on the Core Social Performance indicators developed by the Social Performance Task Force.

19 Triple Jump Annual Review 2009


â&#x20AC;&#x153;Although the main financial performance indicators have weakened across the board and the sector appeared not immune to the global crisis, Triple Jump has managed to maintain a very good portfolio quality for the ASN-Novib Fund during 2009.â&#x20AC;? Ewoud Goudswaard General Manager ASN Bank, a Dutch bank committed to promoting a sustainable society


Due Diligence One of the characteristics that distinguishes Triple Jump from many of its peers is our thorough due diligence process. At Triple Jump, we put great emphasis on carrying out an on-site client assessment ourselves. As such, our due diligence process is an essential part of the Triple Jump approach. It not only allows us to analyse investment risk, but also helps us to build a strong relationship with our partners and to learn from them. Our assessment focuses on the legal, organizational, commercial and financial aspects of the organization, its social performance, and a thorough analysis of market and country risks.

Risk Management Risk management is a key area for Triple Jump. We assess risk by carrying out a thorough pre-investment analysis and manage risk in the portfolio through active diversification of assets, disciplined monitoring, and a problem-solving attitude. – Triple Jump uses risk assessment tools to analyse the financial and operational aspects of investments, adjusting for market- and investment-specific factors. We use a risk scoring system, relying on actual sector benchmarks, in order to better evaluate and calibrate the level of risk associated with our investments; – All investments are evaluated by external investment committees, providing an unbiased external review of Triple Jump investment proposals; – The webtool enables monthly monitoring of the portfolio, with early warning systems in case of changes in performance; – To better account for the increased market volatility, we have strengthened the sensitivity analysis, liquidity gap analysis and FX risk analysis sections of our pre-investment assessment; – Larger investment exposures are identified and prioritised. In additional, investments that experience sudden upward changes in their risk profile are temporarily red-flagged and receive more attention.

The investment process

Identifying investment opportunities Due diligence & negotiations Investment committee Signing & disbursement Relationship management Monitoring & reporting Advisory Services

21 Triple Jump Annual Review 2009


Results 2009 By the end of 2009, we had reached over 390,000 entrepreneurs through our clients, including 78% women borrowers. This is a significant increase from December 2008, when we reached 298,000 borrowers, of whom 75% were women. Overall, our MFI partners reached more than 9.5 million borrowers throughout the world. At the end of 2009, the total investments under management stood at over EUR 146 million, slightly below the amount initially planned. This was mainly due to non-renewals and early repayments in combination with an over-liquid market, which made it challenging to grow the portfolio in a responsible manner.

Four MFIs initially financed by the Oxfam Novib Fund graduated to one of the other funds under the Triple Jump umbrella that target more mature MFIs. In spite of a difficult year for many MFIs, portfolio quality has remained high for the commercial funds and satisfactory for the developmental Oxfam Novib Fund. By the end of 2009, one client from the ASN-Novib Fund and four clients from the developmental Oxfam Novib Fund were in arrears, resulting in a PAR30 of 0.8% for all investments under Triple Jump management.

Triple Jump investments 2007

2008

2009

Committed

EUR 126.3 M

EUR 158.2 M

EUR 222,1 M

Invested

EUR 101.4 M

EUR 135.1 M

EUR 146.3 M

Number of Clients Average Exposure per Client

108

111

132

EUR 0.94 M

EUR 0.91 M

EUR 1.1 M

Performance of the funds in 2009 Fund type Fund Currency Net Asset Value Annual Return to Investors

Developmental Funds

Commercial Funds

USD

EUR

EUR

EUR 8.1 M

EUR 31.0 M

EUR 151.6 M

2.3%

2.7%*

4.5%

* excluding unrealized currency effects

Investor update In 2009 microfinance continued to be an attractive asset class for investors, however financial returns were more varied between microfinance investment vehicles than ever before. For the first time, investors were able to really distinguish between the performances of different investment managers. Given the market turmoil, we are proud that the investment strategies we have maintained in recent years have enabled us to continue to show good returns on the funds entrusted to us. Throughout the year we have been communicating with investors about the microfinance market and our investment approach. One of the fruits of these efforts has been the commitment from FMO, the Dutch development bank, to

become a substantial investor in the NOTS Fund. Triple Jump has been awarded the mandate of investment manager for the NOTS Fund that will focus on emerging MFIs, an underserved market segment with tremendous potential. In anticipation of the challenges we foresee in the coming years, we have focused on enhancing the quality of our services. We have strengthened our commercial team with regional specialists, most notably on the equity side. At the same time, we have improved our risk management and operational procedures. In this regard, investors can feel confident about our core processes; for the second year running our operations have been found to be SAS-70 II compliant by our auditors.

22 Triple Jump Annual Review 2009


Portfolio distribution Geographic distribution of all combined loans from all investments managed by Triple Jump, December 2009 Global 3%

Distribution by currency of all combined loans from all investments managed by Triple Jump, December 2009

Africa 10%

Central America, Mexico and the Caribbean 11%

Local currency 17%

Middle East and North Africa 1%

Eastern Europe 16% USD 62% South America 28%

EUR 21% Caucasus 8%

Central Asia 15%

Asia 8%

Breakdown of local currency funding in EUR, December 2009

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

Mexican Peso

Peruvian Nuevo Sol

West African CFA Franc

Tanzanian Shilling

23 Triple Jump Annual Review 2009

Honduran Lempira

Uganda Shilling

Cambodian Riel

Kyrgyzstanian Som

Brazilian Real

Philippine Peso

Paraguay Guarani

Colombian Peso

Ethiopian Birr

Nigerian Naira

Azerbaijan New Manat

Vietnamese Dong

Bolivian Boliviano

Indonesian Rupiah

Armenian Dram

Moroccan Dirham

Moldovan Leu

Haitian Gourde

Egyptian Pound

Rwandan Franc

Tajikistani Somoni

Ghanaian New Cedi

Kenyan Shilling

Albanian Lek

Guatemalan Quetzal

0


5

Equity


Equity Mutual Trust Equity is one of the instruments we at Triple Jump can offer to assist our partners in their development. Triple Jump has been offering equity since 2006 through the ASN-Novib Fund, and since 2009 through the NOTS Fund. When considering potential investments, what we look for first and foremost are a shared vision, shared values and an appropriate return. Becoming a shareholder implies a special relationship of mutual trust. At Triple Jump we aim to have this type of privileged relationship with all of our clients. This develops over the years, and often begins with a loan or subordinated debt. Nonetheless, this does not preclude us from entering as a shareholder from the start, if this is perceived as mutually desirable. Adding Value Once we take on the responsibility of shareholder in an MFI, we seek to add value by participating in the institution’s board, either with experienced Triple Jump staff or an expert from our extensive network. Our staff and network of experts have a mix of skills to help contribute to the governance of the MFI. As a member of the board, we take our role seriously, and participate actively in the governance of the institution. Given our focus on 2nd and 3rd tier microfinance institutions, we may call on experts to assist our partners with specific issues, for example transformation or the introduction of savings products. We promote longer-term, value investing. As investments are made through open-ended funds, we do not face a strict deadline for exit. This allows us to be patient, and to work with our partners on their medium and long-term strategy. The Equity Team In the course of 2009 Triple Jump generated a promising pipeline of potential future investments in Asia and Latin America, leading to the hiring of an experienced equity officer for the Lima office. Triple Jump’s equity team has vast regional experience to support the investment officers in identifying and executing new deals.

<<

Arnaldo Santiago Alvarado Villena is a beekeeper in Southern Peru. He borrowed money from microfinance institution Fondesurco. “Thanks to Fondesurco I could start my own business and increase my income. That is why I recommend Fondesurco to other people because they always help us.” Fondesurco is a client of Triple Jump through the Oxfam Novib and NOTS Funds. (Photo: Fondesurco) 25 Triple Jump Annual Review 2009


Regional Overview In 2008 Triple Jump introduced a quarterly portfolio-risk review to supplement the existing monthly and quarterly analysis of clients’ financial results. This review focuses on the following risk areas for MFIs: refinancing risk, foreign exchange exposure, inflation and the performance of consumer and SME loans in the MFI’s portfolio. Our objective is to identify negative trends at an early stage, so that we can work with our partners to find solutions before problems escalate. Although each country and client is different, we have seen certain trends emerging by region: Sub-Saharan Africa: In 2009 most African currencies were relatively stable, and inflation slowed in most markets compared to 2008. In the West-African monetary union (UEMOA), the new microfinance regulation has been implemented slowly at the national level, leading to uncertainty about the legal status of MFIs, and delays in renewing permits. Local banks have tightened their lending conditions to MFIs, in some cases leading to re-financing difficulties. In EasternAfrica, the increased availability of funding from abroad has in some cases led to excessive growth, exposing organisational weaknesses. Nonetheless, new microfinance regulation in a number of countries in the region opens interesting opportunities for MFIs, allowing them to diversify their sources of funding and expand their product offering to clients. Middle East and North Africa: In Morocco, the crisis reached its peak in 2008, when one MFI collapsed and others suffered significant losses. MFIs have become more cautious, sharing borrower lists and reducing their portfolios as they aim to reduce the extent of parallel lending. Losses continued in 2009, but were less significant. In Egypt, MFIs are still waiting for the new microfinance law to be approved. Relative stability in Lebanon and the West-Bank has finally allowed MFIs to grow and achieve excellent portfolio quality. Central and South America: The countries most affected by the international economic crisis were Mexico and Central America. The impact of the crisis has had a strong negative effect on portfolio growth and quality, and political instability in some of these countries has led to additional instability for MFIs. During 2010 we expect to see a partial recovery in Mexico and most of Central America, with high uncertainty continuing in certain countries, especially Nicaragua. Currencies may devaluate in a few Central American countries, increasing the risk of foreign exchange loss. The microfinance market in South America is expected to remain strong, but a further increase in competition in certain countries increases the risk of over-indebtedness. Liquidity is high as local banks and international funds share a strong appetite for investing in the sector. Refinancing risk for MFIs will therefore be low. Most currencies have recovered from strong devaluations in 2008. As most South American countries have relatively high levels of USD reserves, devaluations in 2010 are expected to be minimal or even negative.

Central Asia and Caucasus: The past year has been challenging for MFIs in this region, especially in Tajikistan, Kazakhstan, Georgia and Armenia. Overall, remittances went down considerably (a major source of income for MFI clients) and currency devaluations persisted throughout the first half of the year, which has decreased clients’ ability to repay dollar-denominated or dollar-indexed loans. Overall, we see a slow recovery in the macro-economic circumstances, leading to an improved performance of MFIs across the board; however the crisis also exposed structural weaknesses in some countries, such as over-indebtedness, weak internal controls and dependence on hard currency funding. For the coming year we forecast that loan portfolios will steadily pick up growth, however this is highly dependent on a positive trend in the Russian economy. South and South East Asia: Asian economies were affected by the economic downturn in 2009, although economies were rebounding from the last quarter of the year onwards. Generally, Asian MFIs in the Triple Jump portfolio followed this trend: loan portfolios more or less came to a standstill during the first three quarters of 2009 and portfolio quality deteriorated. While MFIs had an excellent portfolio quality prior to the crisis, we saw PAR30 more than double during the year. As a result, provisioning costs increased and profitability decreased. However, by the last quarter of 2009 we generally saw that portfolio growth was picking up while quality is also improving. These signs indicate that MFIs have been able to weather the adverse circumstances. Eastern Europe: The issues of client over-indebtedness, parallel loans (clients borrowing from multiple sources and using one loan to repay another) and reduced remittances from abroad have persisted throughout 2009 for our partners in Eastern Europe. Especially in the Balkans these problems have led to a decrease in portfolio quality and a decrease in outstanding loans. Besides a lower demand from MFI clients, this decrease was also caused by MFIs strengthening their loan monitoring and internal control policies. The macroeconomic forecasts for the region are moderately positive. Overall, we foresee a more or less stable level of loan portfolios coupled with a stabilization of portfolio quality.

This group of farmers share a plot of land near the village of Zorgho in Burkina Faso. As a group, the farmers have obtained an agricultural loan from the Zorgho branch of Premiere Agence de Credit – Burkina Faso (PAMF-BF). The loan has allowed them to purchase inputs to grow peanuts. PAMF-BF has been a client of Triple Jump through the Oxfam Novib Fund since 2009. (Photo: Triple Jump) 26 Triple Jump Annual Review 2009

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Social Performance Social Performance Assessment Triple Jump firmly believes that with the right policies and implementation, microfinance can help contribute to poverty alleviation, empowerment and sustainable development. We seek to balance the social and financial return objectives of our investors, integrating our commercial focus with the social dimension of microfinance. All our staff have been trained in the area of social performance by rating agencies who conduct social ratings. Triple Jump is a member of the Social Performance Task Force (SPTF) and an active member of the Investor Stakeholder Group of the SPTF. In cooperation with Oxfam Novib, Triple Jump developed an in-depth social performance assessment in 2008 which is used to assess all Oxfam Novib and ASN-Novib clients. Our social performance tool assesses the MFI’s social intent, the implementation of these social intentions, and the social results achieved. Results are assessed in terms of client satisfaction, client protection, outreach, gender, human resources and social performance information. These results are analysed using a spider graph, shown below. The graph shows the average score received by Oxfam Novib Fund clients in 2009. Client Protection 80%

SPI

Outreach

Client Satisfaction 67%

62%

70%

83%

Gender

65%

HR

The Triple Jump SP Assessment Tool consists of a questionnaire which is filled in by the Investment Officer together with the MFI’s management and staff during the due diligence visit. The outcome of the assessment helps us to identify the strengths and weaknesses of an MFI in terms of Social Performance, and can be used to make recommendations to the MFI’s management, as well as to target potential interventions by Triple Jump Advisory Services and Oxfam Novib. The outcome and eventual recommendations are incorporated in the loan appraisal presented to the investment committee. Data from the questionnaires are compiled and analysed for trends.

The Client Protection Principles In the second half of 2008, CGAP and the Centre for Financial Inclusion at ACCION International launched the Client Protection Principles as part of a collaborative initiative together with a broad coalition of microfinance institutions, networks, funders and practitioners. The Client Protection Principles (CPPs) describe the minimum measures that microfinance institutions should take to protect low-income clients from potentially harmful financial products and to ensure that clients are treated fairly. Triple Jump, ASN Bank, Calvert Foundation, Oxfam Novib, the NOTS Foundation and SNS Bank have all endorsed the CPPs. This means that we have committed ourselves to promoting the principles and to incorporating them into our own procedures. You can read more about the principles and the accompanying SMART campaign at www.smartcampaign.org. A specific client protection questionnaire is now part of the standard loan appraisal process for all funds. We hope to raise awareness among MFIs about the steps they can take to protect their clients and thus help ensure that they benefit from the potential of microfinance. Questionnaires filled-in during 2009 show a stronger level of client protection in regulated MFIs, as well as significant regional differences in terms of client protection awareness and procedures. Microfinance Transparency An important part of client protection is transparent communication about the costs of services offered. We believe that transparency in pricing is essential for clients to be able to compare rates, which in turn is necessary for competition to lead to a decrease in rates. Although regulation is the most important and effective way of reaching transparency, there are very few countries where this is addressed. Where regulation does not adequately address pricing transparency, initiatives like MicroFinance Transparency (MFT) have an important role to play. MFT works with MFIs, Central Banks and investors to bring about pricing transparency in the microfinance industry. Triple Jump has endorsed MFTransparency, promotes the MicroFinance Transparency Effective Interest Rate calculator with its clients, and supported the 2009 Cambodian transparency study with a donation.

Aliya Kerimkhanova works as a hairdresser in Semey in Kazakhstan. Loans from the microfinance institution Bereke gave her the opportunity to purchase equipment for her business. She was also assisted with small loans to pay for the education of her children without having to use her business working capital. Her last loan amount was USD 500. Bereke is supported by Triple Jump through the Calvert Fund. (Photo: Bereke) 28 Triple Jump Annual Review 2009

>>


6

Investment Funds


Investment Funds Triple Jump currently advises five microfinance funds: – – – – –

<<

ASN-Novib Fund Oxfam Novib Fund SNS Institutional Microfinance Fund NOTS Microfinance Fund Calvert Social Investment Foundation

Margret Nalumaga operates a small retail shop on the local market in Fort Portal, Western Uganda. She had her first loan from microfinance institution Hofokam as a member of a women’s group made up of 20 people. At that time, her business was very small and she did not have many items for sale. Margret borrowed just 300.000 Ugandan Shillings (100 EUR) to buy more supplies. Over time, she increased her loan amounts and eventually borrowed as an individual client. Her latest loan was 3 million Shillings (1000 EUR) and with this she built a shop that now offers everything from bread and butter to hardware goods and mobile phone cards. “I am very happy with Hofokam”, she says. “All my business, everything I built up here I just owe to them”. When asked about her future plans, she needed some time to think: “You know, when I have all this settled, maybe I want to become a wholesale trader.” The MFI Hofokam received its first loan from Triple Jump through the Oxfam Novib Fund in 2009. (Photo: Triple Jump) 31 Triple Jump Annual Review 2009


ASN-Novib Fund The ASN-Novib Fund (ANF) was established in 1999 by ASN Bank and Oxfam Novib. By the end of 2009, it had grown to EUR 122.6 million, of which EUR 79.5 million had been invested in 54 MFIs in 24 countries, including 4 equity investments. The Fund achieved a net return to investors of 4.1% in 2009. Including the tax break from the Regeling Sociaal Ethisch Beleggen for investors based in the Netherlands, investors obtained a total return of 6.6%. Triple Jump is the investment manager for this fund. The ANF was the first mutual retail fund for MFIs in the Netherlands, and is organized as an open-ended fund. It enables private individuals to invest in MFIs by purchasing units sold by ASN Bank. Units can be purchased and sold on a daily basis. The goal of the fund is to encourage broader participation at all levels of society in the market economies of developing countries.

The ANF invests in expanding and mature microfinance institutions (primarily regulated MFIs, financial institutions and banks, but also NGOs). It operates in countries in Africa, Asia, Eastern Europe and Latin America which have been designated as Official Development Assistance countries by the OECD (the Organisation for Economic Cooperation and Development). The ANF offers loans (including subordinated debt), guarantees for microfinance portfolio expansion, and equity investments. Although the majority of loans are granted in hard currency, local currency loans are also available. By December 2009, 7.5% of the fund was denominated in local currency (excluding USD). Amounts invested range from EUR 500,000 to EUR 4.5 million and investments are priced at market rates.

The fund provides capital for microfinance institutions which lend to micro-entrepreneurs who do not have access to the formal banking system; banks often view these entrepreneurs as either too risky or insignificant. With no write-offs since its inception, the fund boasts an outstanding track record. Only one loan is in arrears, representing 0.3% of the fundâ&#x20AC;&#x2122;s net asset value.

ASN-Novib Fund outstanding portfolio by region, December 2009 Global 3%

Africa 4%

2007

Eastern Europe 16%

2009

EUR 80.4 M

EUR 87.3 M EUR 122.6 M

Invested*

EUR 55.5 M

EUR 69.9 M

43

50

54

EUR 1.3 M

EUR 1.4 M

EUR 1.5 M

Number of Clients

Central America, Mexico and the Caribbean 12%

2008

Committed

Average Exposure per Client

EUR 79.5 M

* Valued at end-of-year exchange rates

Caucasus 9%

Central Asia 13%

South America 36%

Asia 7%

ASN-Novib Fund outstanding portfolio by currency, December 2009

EUR 20%

Local currency 8%

ASN-Novib Fund outstanding portfolio by instrument, December 2009

Loans 91%

Subordinated debt 5%

Equity 4% USD 72%

32 Triple Jump Annual Review 2009


Oxfam Novib Fund The Oxfam Novib Fund for investment in microfinance (ONF) was established in 1997. By the end of 2009, it had grown to EUR 31 million, with loans to microfinance institutions in 37 countries as well as one regional and two global funds. Triple Jump is the investment manager for this fund. The ONF mainly finances Tier 3 MFIs that have significant potential to grow, including MFIs that have not yet reached sustainability but which are demonstrating a positive trend. By doing this, the fund acts as a catalyst for other investment funds. The ONF is an open-ended fund, to which EUR 8 million was added this year by Oxfam Novib. Most clients service a specific target group (such as rural areas, women borrowers or economically vulnerable populations). The ONF seeks to finance MFIs with a higher risk profile which have the potential to “jump” to other more commercially oriented funds with a lower risk profile once a certain scale has been achieved. In 2009, four MFIs made such a jump to one or more other funds managed by Triple Jump.

To avoid placing the burden of exchange rate risk on the MFI or its clients, the ONF provides the majority of its loans in local currency. By December 2009, 60% of the loans were granted in local currency, 36% in US dollars (mainly in dollarized counters) and 4% in Euros. The proportion of local currency funding was particularly high in Africa, at 82%. The ONF offers loans, subordinated debt, and guarantees for microfinance portfolio expansion. Loan amounts range from EUR 250,000 to EUR 1 million, and interest rates are close to market rates.

Oxfam Novib Fund outstanding portfolio by region, December 2009 Global 6% Africa 25%

2007

2008

2009

Committed

EUR 22.8 M

EUR 24 M

EUR 39.1 M

Invested

EUR 22.8 M

EUR 23.9 M

EUR 31 M

70

72

83

EUR 325 k

EUR 332 k

EUR 373 k

Number of Clients

Central America, Mexico and the Caribbean 21%

Average Exposure per Client

Middle East and North Africa 8%

Eastern Europe 3% Caucasus 5%

South America 22%

Central Asia 2% Asia 8%

Oxfam Novib Fund portfolio outstanding by currency, December 2009 EUR 4%

USD 36% Local currency 60%

33 Triple Jump Annual Review 2009


SNS Institutional Microfinance Funds SNS Bank is a Dutch retail bank catering to both companies and individuals. SNS was formed as the result of mergers between several savings banks in the Netherlands. Through its wholly owned subsidiary ASN Bank, SNS Bank is an indirect shareholder in Triple Jump. The SNS Institutional Microfinance Funds (SIMF I and SIMF II) offer institutional investors the opportunity to invest in the microfinance market, while simultaneously serving the financial needs of the developing worldâ&#x20AC;&#x2122;s economically active population.

Both SNS Funds invest in expanding and mature microfinance institutions (primarily regulated MFIs, financial institutions and commercial banks, but also NGOs). Their areas of operation are Africa, Asia, Eastern Europe and Latin America. The funds can offer loans (including subordinated debt), guarantees for microfinance portfolio expansion, and equity investments. Although the majority of loans are in Euros or United States Dollars, local currency loans are also possible. The amounts invested range from EUR 500,000 to EUR 10 million.

Both SIMF I and SIMF II are organized as Closed Mutual Funds under Dutch law by SNS Asset Management N.V. Triple Jump is a sub-advisor to the funds. The portion of the funds managed by Triple Jump was invested in fourteen MFIs in ten countries.

SNS-IMF portfolio outstanding by region, originated through Triple Jump, December 2009

Eastern Europe 32%

Asia 5%

2008

2009

Committed Capital

EUR 41 M

EUR 41 M

EUR 38 M

Invested Capital

EUR 21 M

EUR 35 M

EUR 27.4 M

Number of Clients

Africa 7% South America 18%

2007

Average Exposure per Client

10

16

14

EUR 2.1 M

EUR 2.1 M

EUR 2 M

Central Asia 38%

34 Triple Jump Annual Review 2009


NOTS Microfinance Fund NOTS Foundation (NOTS) is a Dutch organisation that focuses on international development and entrepreneurship. The goal of NOTS is to increase the number of people in developing countries who are able to lead a self-supporting life. With the help of donors and investors in the Netherlands, NOTS aims to achieve this goal by helping specific groups in developing countries – entrepreneurs and families – to develop incomegenerating activities. The two main activities of NOTS are microfinance and renewable energy. Where possible these two activities are combined.

Investments will be financed by senior bondholders, mostly retail investors. FMO, the Dutch development bank, has committed an amount of EUR 12 million to the fund as subordinated capital, thereby taking up a catalyst role and facilitating private sector investment in the fund. Triple Jump is the investment manager for this fund.

The NOTS Fund is a semi open-ended fund targeting Tier 3 financial institutions. The fund was launched in late 2009 and has already invested in a promising MFI in Peru. The fund aims to provide a significant percentage of loans in local currency, helping to mitigate foreign exchange risk for MFIs. In addition, a portion of the fund will be reserved for early stage equity to help emerging MFIs expand their activities. The fund’s average investment is anticipated at EUR 1 million.

2009

Committed Capital

EUR 14 M

Invested Capital

EUR 0.4 M

Number of Clients

ENTREPRENEURIAL DEVELOPMENT AID

35 Triple Jump Annual Review 2009

1


“We rely to a great extent on Triple Jump’s vast local experience and its in-depth on-site due diligence for the selection of MFIs in our Calvert portfolio.” Shari Berenbach President and CEO, Calvert Foundation


Calvert Social Investment Foundation Calvert Social Investment Foundation is an independent organization launched in 1995 by the Calvert Mutual Fund Company, which specializes in socially responsible investment. The Calvert Foundation provides investors with innovative financial products and services that channel flexible, affordable capital to underserved communities. In 2007, the Calvert Foundation entered into an agreement with MicroPlace Inc., an eBay company that has developed a web-based platform for making investment capital from individual investors available as loans in pre-qualified MFIs. MicroPlace has also designed a website for this purpose: www.microplace.com. Individuals in the United States can invest in MFIs through the website.

Triple Jump is one of the three sub-advisors to the Calvert Foundation. These sub-advisors identify, negotiate and monitor loans to the MFIs featured on the website, which was launched in September 2007. The areas of operation are Africa, Asia, Eastern Europe and Latin America. This fund offers loans for microfinance portfolio expansion. Loans are provided in USD, although local currency operations can be structured through a back-to-back/guarantee structure or a traditional hedge instrument. Loan amounts to MFIs range from USD 250,000 to USD 2 M.

Calvert Social Investment Foundation portfolio outstanding by region originated through Triple Jump, December 2009

2007

2008

2009

Committed Capital

USD 3.1 M

USD 9.1 M

USD 11.4

Invested Capital

USD 3.1 M

USD 9.1 M

USD 11.4

Number of Clients Average Investment

7

11

14

USD 0.4 M

USD 0.8 M

USD 0.7 M

Eastern Europe 16% Africa 24% Central Asia 8%

Asia 21% Caucasus 31%

37 Triple Jump Annual Review 2009


7

Triple Jump Advisory Services


Triple Jump Advisory Services Introduction Triple Jump Advisory Services is a leading global capacitybuilding foundation that has served 30 microfinance institution partners that collectively serve more than 2 million clients, representing mainly the poorest of the poor. Triple Jump Advisory Services was established in August 2006 with funding support from Oxfam Novib, the DOEN Foundation, the NOTS Foundation and Triple Jump B.V. Although it operates under the Triple Jump umbrella, Triple Jump Advisory Services is a separate foundation with its own Supervisory Board. The Advisory Services foundation has its own mandate and MFI partner selection process, and focuses on emerging Tier 3 and 4 MFIs. Triple Jump Advisory Servicesâ&#x20AC;&#x2122; mission is to increase poor peopleâ&#x20AC;&#x2122;s access to high-quality financial services. We have a proven track record of helping MFIs by providing capacity-building services and cost-sharing grants for strengthening governance, technology (mobile banking, management information systems) product development and social performance management. We develop customer-centric approaches and technology innovations, such as leveraging mobile banking channels.

Vision Triple Jump Advisory Services believes that specialist expertise can help MFIs to grow more quickly and become more effective. We offer client-oriented, tailor-made, long-term technical assistance to MFIs, designed to improve their sustainability over time. Our advisory services are based on a thorough preliminary analysis of the institutionâ&#x20AC;&#x2122;s financial and operational performance and needs for technical assistance and are arranged in close cooperation with our MFI partners. To ensure that our MFI partners have a sense of ownership of this assistance, these partners contribute to the costs according to a sliding scale, depending on their financial and operational situation.

Goal Triple Jump Advisory Services helps promising microfinance institutions by providing tailored consulting services to improve their operations. Our goal is to guide microfinance institutions to the next phase of development, with a particular focus on removing the bottlenecks which can impede sustainable growth and access to long-term sources of funds.

<<

With this approach, Advisory Services seeks to have a real economic and social impact in emerging markets by harnessing entrepreneurial spirit. Michael was running a small mobile phone shop in Thika, Kenya, when he accessed his first loan from the microfinance institution Kenya ECLOF. After completing his first loan Michael borrowed more and divested into selling computers and accessories. Thanks to the growth of his business, Michael is proud to have bought a family parcel of land and a Cab for-hire. Additionally, he has created jobs and donated generously to the education of less privileged children in the community. Kenya ECLOF is a partner of Triple Jump Advisory Services. (Photo: Kenya ECLOF)

Focus Triple Jump Advisory Services clients are mainly emerging microfinance institutions that have demonstrated their commitment to making financial services available to poor and under-served people. Typically, these institutions are at the point of (or are already) becoming operationally self-sufficient with an aim to becoming financially self-sufficient in the near to medium-term and are in the process of expanding their product ranges and further professionalizing their systems and staff.

39 Triple Jump Annual Review 2009


Client Perspectives

“Triple Jump Advisory Services has saved us years of our precious time” Katia Corroy Castro General Manager Alternativa Solidaria Chiapas (Al Sol), Mexico, began offering microfinance services and social development projects in 1999 in Chiapas, Mexico. It mainly serves women of scarce resources living in rural areas using a village banking methodology. Triple Jump Advisory Services started working with Al Sol end of 2008. Triple Jump has provided loan funding to Al Sol since 2006. “The impact of the Advisory Services has been very significant. The development and implementation of the new individual loan product not only yielded a new product that allows us to retain our most successful clients; it also fostered a culture change that has allowed Al Sol to professionalize its financial services even further. Currently Triple Jump Advisory Services is supporting Al Sol with its transition to ‘sofom’ (a non-regulated financial institution) by supporting the strategy development and overall governance structure. I am pleased with the support as these topics are fully in line with Al Sol’s business needs. The work of the Triple Jump Advisory Services IT consultant has created huge efficiencies in our operations. Triple Jump Advisory Services combines hands-on support with training and knowledge transfer, to create direct tangible results. My staff has learned more from the on-the-job Triple Jump Advisory Services training than it would in 1000 courses. Triple Jump Advisory Services has saved us years of our precious time: it has allowed us to make decisions much faster and with more confidence than if we would have done it only by ourselves.”

40 Triple Jump Annual Review 2009


Triple Jump Advisory Services assists these institutions in the subsequent jump to becoming commercially and socially viable organizations and supports them until they are firmly established in the next level of institutional development. The critical criterion for partner selection is the presence of sufficient potential to become a leader among peers. Obviously, this implies that our partner MFIs should demonstrate a clear capacity and willingness to improve their systems, governance and products.

Approach The Triple Jump Advisory Services approach is unique compared to other foundations and donors as we provide hands-on management of the entire project. Advisors provide close supervision of the project ensuring that results are tailored to the needs of the institution and delivered at high quality. Our Advisors are senior experts in the service areas provided and hence offer key advice to senior management for each project. The advisors are engaged, managing the consultant and his or her work, and provide guidance along the way, making sure that MFI management is active in the process without having to be involved in the day-to-day management of the consultant’s work. Since most MFIs have several areas that need to be strengthened, we adopt a step-by-step approach and try to determine, with the MFI, which area(s) to concentrate on first and build on them over time. Once completed, all projects undergo an internal evaluation including gathering MFI partner feedback. Triple Jump Advisory Services specializes in the following critical areas, which are frequently identified as bottlenecks preventing microfinance institutions from reaching the next stage of development: – Technology (Management Information Systems (MIS) & Mobile Banking); – Governance (Strengthening leadership and management capacity of senior and mid-level managers) and Internal Controls/Audit; – Product and Services Development; – Social Performance Integration (primarily related to MIS automation). Once an MFI is selected for assistance, our advisors conduct an on-site diagnosis of the needs of that MFI. Depending on the needs identified and agreed on with the partner, Triple Jump Advisory Services will choose from our network of expert consultants to assist on each project. We focus on using local consultants whenever possible and to-date have used local consultants for over 70 percent of our projects. These experts have a proven track record in international finance, technology or microfinance and are results-oriented. Advisors provide close supervision of the project, ensuring that results are tailored to the needs of the institution and the set goals are being achieved.

Our Mobile Banking Projects One of the services we offer to MFIs is to design branchless banking channels to help clients access microfinance services by using mobile technology and retail agents. Hence, branchless banking has the potential to expand access to financial services to people living in rural areas and reduce costs. Since 2008,

41 Triple Jump Annual Review 2009


Triple Jump Advisory Services in Senegal

with our partner Caurie Microfinance Caurie is a promising MFI reaching over 20,000 clients â&#x20AC;&#x201C; all women â&#x20AC;&#x201C; that had undergone rapid growth, but whose earlystage management information system had not kept pace. Caurie also needed to strengthen its internal audit function as it continues to grow. Triple Jump Advisory Services assisted Caurie by providing a business and technical expert to carry out a business process mapping to (Photo: Caurie) determine the processes that could be automated and how to gain in operational efficiency at each staff level and at headquarters. We then performed an analysis of the current MIS to determine how these requirements could be integrated and customised into the current system. Based on our recommendations, Caurie decided to purchase a new MIS and, in 2009, Triple Jump Advisory Services provided technical assistance to manage the entire selection process. Once Caurie recruited a new internal auditor in the second quarter of 2009, Triple Jump Advisory Services paired him with an audit expert to review current internal audit processes and make recommendations to improve risk management within the institution, as well as provide guidance on the institutionâ&#x20AC;&#x2122;s upcoming transformation into a cooperative.

42 Triple Jump Annual Review 2009


Triple Jump Advisory Services has implemented mobile banking services for several partners in East Africa and is now launching the first mobile banking service by a Rwandan MFI. In 2010 we will also be pursuing various mobile banking projects in West Africa, Latin America and the Caucasus. For mobile banking we take a careful and methodical approach with our MFI partners, beginning with business planning, market and client assessment, advice on regulatory compliance, developing the business partnership with the mobile network operator and mobile banking product design all the way through technical and operations integration, staff training and launch.

2009 Services Provided Since inception in late 2006, Triple Jump Advisory Services has supported 30 MFI partners globally. In 2009, we worked with 25 different MFI partners throughout Sub-Saharan Africa, the Caucasus and Latin America, of which 12 were new partnerships. We managed a total of 42 projects in 2009, an average of 1.7 projects per partner. Additional projects for many of our existing partners are already planned for the next two years. Of the 25 MFIs we worked with in 2009, 30 percent were Tier 4 institutions and 70 percent were Tier 3.

TJAS MFI partners per region in 2009

Latin America and the Caribbean 36%

Africa 46%

Caucasus 18%

Additionally, Triple Jump Advisory Services offers various practical training courses on topics such as internal control and MIS reporting, the latter a significant and costly obstacle for many MFIs. In 2009 we designed and delivered a technical course called ‘Getting more from your MIS by using Crystal Reports’, specifically for MIS administrators of MFIs, in Accra, Nairobi and Guatemala City. In all, 41 participants representing 34 MFIs came from 11 different countries to attend the trainings. Globally the participants gave an overall score of 4.55 out of 5 for the course and all indicated that they would recommend the course to others. For most, the courses also offered a rare opportunity for MIS staff from various MFIs to meet and discuss the technical issues they face and other areas related to IT.

TJAS Projects per Service Area 2009

Governance 33%

MIS 43%

Products & Services 14% Mobile Banking 10%

43 Triple Jump Annual Review 2009


Triple Jump Advisory Services in Azerbaijan

with our partner FinDev Focused on increasing growth, FinDev asked Triple Jump Advisory Services for assistance in developing a strategy to attract additional funding. Despite strong management and the positive results the institution had achieved, funders were interested in seeing further improvements. Triple Jump Advisory Services analysed the organizational structure and operations and determined the need to strengthen (Photo: FinDev) the overall governance structure and solve MIS limitations. The institution also needed to update and strengthen internal controls. The internal auditor worked hard but required additional guidance from management and the board of directors. Triple Jump Advisory Services assisted in building a proper governance structure and helped the management and board to develop a growth strategy. We helped FinDev to define the role of the board and its individual members, select additional board members and describe tasks to complete (for instance writing the charter and developing subcommittees). We then delivered a training workshop for the internal auditor providing a practical course on planning, common internal control weaknesses and reporting. Lastly, Triple Jump Advisory Services worked with the management team to assist with the needs analysis and selection of a new MIS. We analyzed the current and future business needs and translated them into an IT-strategy with concrete recommendations on which MIS software packages were suitable for the institution. FinDev has now made its selection based on those recommendations and is in the implementation process.

44 Triple Jump Annual Review 2009


Triple Jump Advisory Services in Honduras

with our partner Credisol

(Photo: Credisol)

Credisol is a rapidly growing MFI dedicated to the urban and rural poor in the North East of Honduras. To achieve their goal of transforming into a regulated NGO, they required assistance to build a stronger and more efficient organisation. A needs analysis performed by a Triple Jump Advisory Services advisor showed that Credisol had managed its growth well and had a solid loan portfolio but the institution faced several challenges related to professionalizing the organization, strengthening its products and improving its management systems.

First, we worked on the development of their MIS to ensure reporting could meet Central Bank requirements under its new institutional status and trained the IT department on how to manage and adapt the system long-term. Throughout 2009, we focused on application development, analysis and design, networking and information security. Next, we completed product analysis by conducting a field market survey and revising current product terms and offerings to meet client needs. We continued to provide support with the pilot launch of the revised products, updated current internal manuals and provided loan officer training on the delivery of products in the field. In 2010, we will support Credisol by focusing on strengthening its internal control and audit function while coaching the Board and management on strategic risk management.

45 Triple Jump Annual Review 2009


8

Our organization


Our organization Triple Jump The Triple Jump head office and majority of our staff are located in Amsterdam, the Netherlands. The investment team, including our equity specialists, is made up of 15 investment officers with ample field experience and in-depth financial knowledge. This team is organised along regional lines, with the Africa and Asia/ Eastern Europe regional departments based in Amsterdam, whereas the Latin America team is based in our regional office in Lima, Peru. Investment officers manage 12-15 client relationships in their specific regions. A solid fund administration team, including HR, PR and legal support, is located at our head office. Triple Jumpâ&#x20AC;&#x2122;s operations are SAS-70 II compliant. Our Advisory Services employs three senior advisors and one Director, with two of the senior advisors based in satellite offices located in Senegal and Georgia.

Legal Structure Triple Jump B.V. is a company limited by shares (besloten vennootschap). The shares are divided among four shareholders: ASN Bank, Oxfam Novib, NOTS Foundation and the management of Triple Jump. The Board of Directors has three members and meets with management on a quarterly basis. Triple Jump Advisory Services operates under the Triple Jump umbrella and is a separate foundation sponsored by Oxfam Novib, Stichting DOEN, Triple Jump B.V., ASN Bank Foundation and SNS Reaal. As an acknowledgement of the public benefit of Triple Jump Advisory Servicesâ&#x20AC;&#x2122; work, the foundation has been given an ANBI status under Dutch law, meaning that all donations to Triple Jump Advisory Services are fully tax deductible. The Supervisory Board has representatives from Oxfam Novib, NOTS Foundation and ASN Bank.

<<

This group of women are clients of the Development Exchange Center (DEC) Microfinance Programme in Bauchi, Nigeria. The women obtained a group loan from DEC to purchase peanuts in bulk, which they pound to extract the oil. As the women are Muslim, it is not socially accepted for them to work outside the compound which they live in, so they sell the products of their work to traders who will re-sell them at the market. The oil is used for cooking, and the dry peanut flour is added to sauces. DEC serves over 100,000 women in Northern Nigeria, and has been a client of Triple Jump through the Oxfam Novib Fund since 2007. (Photo: Triple Jump) 47 Triple Jump Annual Review 2009


Client Perspectives

“Triple Jump loans came at the right time” Mwangi Githaiga Managing Director Kenya Women Finance Trust Deposit Taking Microfinance (KWFT DTM) serves close to 350,000 low-income clients, all of whom are women. The MFI has 202 outlets across Kenya and a loan portfolio of nearly $140 million in group and individual loans. In April 2010, KWFT received a license from the Central Bank of Kenya. Triple Jump started working with KWFT in 2007 and has provided three loans totaling EUR 5.5 million. “We believe in empowering Kenyan families through women. We think that the best way to fight poverty is to reach out deeply into rural areas. We recently became the second microfinance institution in Kenya to receive a deposit-taking license. We have strengthened KWFT DTM with experts from the banking industry, but our organizational culture remains rooted in the field, based on close interaction with clients. The Triple Jump loans came at a time when KWFT needed external funding to scale up its operations and increase outreach to rural areas. It also sent a positive signal to other international investors and helped us expand our funding base. We have ambitious growth plans for KWFT DTM, including the opening of 20 deposit-taking branches by the end of 2010. We will continue to develop new products, especially in the areas of health, sanitation and agriculture, and we are very happy that Triple Jump is helping us realize our ambitions.”


Organisational Chart

Triple Jump Board of Directors

M. van Doesburgh

PR

S. Evers

Regional Manager

Asia

Equity

Africa

Eastern Europe

Regional Manager

Controller

Legal

Central America

Admin

Compliance

South America

Triple Jump Advisory Services Supervisory Board

M. van Doesburgh *

Senior Advisor West Africa

S. Evers *

C. Caruso

Senior Advisor East Africa

Senior Advisor LAC

* Non Executive

49 Triple Jump Annual Review 2009

Senior Advisor CA/Caucasus


Impressions from our Staff Name Jeanette Bouman Title Administrator/HR Officer Base Amsterdam, the Netherlands Work HR officer for Triple Jump and Triple Jump Advisory Services. As an Administrator: organizing the investment committee meetings, managing the administration of the Calvert Foundation Fund, managing the administration for Triple Jump Advisory Services, organizing all social events at Triple Jump. When I walked in to the Triple Jump office for the first time in 2007, I instantly had a good feeling about the company. I was very excited to work with a group of people with the same mission: helping to reduce poverty throughout the world by providing financing. Although we each have our own tasks or focus regions, you can feel the team spirit and the social attitude that all TJ staff have in common. Having clients in so many different countries means that we communicate with different people all over the world. To me, the best aspect of this rapidly growing international company is definitely my colleagues, as we have almost as many nationalities as staff! For example, our most recent hires come from Mexico, Kazakhstan, the Philippines and Kenya. All these cultures together make the job so interesting, with new stories, new faces and different traditions. Each year we organize a potluck Easter Brunch where everyone contributes a homecooked dish. It is a very special event where we can share traditions from our respective countries.

Name Eelco Mol Title Regional Manager Latin America Base Amsterdam, the Netherlands Work Overseeing the investment team for Latin America. I strongly believe that microfinance can play a role in alleviating poverty and this job gives me the opportunity to reach as many poor entrepreneurs as possible. In 2007 Triple Jump made an important decision. With the expanding portfolio in Latin America, an increasing number of clients and a competitive environment, we saw the importance of being closer and more visible to clients in this part of the world. The region’s similar culture and language, the long travel distance and the time difference with Amsterdam makes Latin America a perfect continent to have our own Triple Jump office. We started with a pilot period of one year, and my Peruvian colleague Javier Leon started as the first regional investment officer from Lima, Peru. Within six months, I already saw that our assumptions were right; Triple Jump became more visible, and with a local presence we were able to make more frequent visits to clients and new potential investees than we were ever able to

do from Amsterdam. After these positive results we decided to base the whole Latin America team in Lima. Today, three years after the decision to open the regional office, we have a local team of five excellent professionals, directly overseeing the investments from Mexico to Bolivia. I am certain that our local presence will continue to be a strong advantage in a good and fluent relation with the clients as well as for finding new investment opportunities.

Name Tiphaine Crenn Title Senior Advisor, West Africa Base Dakar, Senegal Work Identifying partner MFIs and managing technical assistance and advisory services in West Africa. Microfinance institutions in West Africa play a vital role in providing affordable formal financial services to people who would otherwise have no access. Through our grants and services, Triple Jump Advisory Services helps MFIs put in place the systems to support their continued growth and to offer a wider range of financial services to their clients. This is what drives my work at Triple Jump Advisory Services. The West Africa senior advisor position for Triple Jump Advisory Services is based in the region and therefore has brought considerable advantages in terms of identifying new MFIs as potential partners, managing projects for our current MFI partners and staying informed about the changes occurring in the region on a regular basis. I can better coordinate our support to the microfinance sector by being based here through regular contact and meetings with our partner MFIs, other donors and technical partners and identify and work with technical experts based in the region. Microfinance institutions do not operate within a vacuum and it’s important for us to understand (and to live in) the larger economic context the institutions work in and the issues their clients are facing on a daily basis. We now have a regional senior advisor based in the Caucasus, and from 2010 in EastAfrica as well.

Name Luca Paonessa Title Senior Investment Officer Eastern Europe and Central Asia Base Amsterdam, the Netherlands Work Develop deal pipeline, negotiate terms, perform due diligence of target investees and manage portfolio of investments in MFIs in Eastern Europe and Central Asia. I started to work in microfinance ten days after my graduation from the university, in 2001. After more than 8 years in the sector,

50 Triple Jump Annual Review 2009


I am still very happy with my original choice. I joined Triple Jump in 2008 because I liked the way in which this young company was able to combine strong financial expertise and attention to social values. Probably the thing that impressed me the most during my first two years as investment officer was the openness of the company to input and suggestions on strategic issues. I found this opportunity particularly stimulating, as Triple Jump works in 51 of the most difficult business environments of the planet. Another aspect that I find very stimulating is the interaction with my colleagues. Our investment team displays an astonishing variety of cultural and professional backgrounds, and I feel that I am learning a lot from my colleagues. In addition to my commercial tasks as Investment Officer, I am currently helping Triple Jumpâ&#x20AC;&#x2122;s management to improve the risk management tools and formalize a risk management department. This intellectually challenging task is a good complement to my finance studies as a CFA candidate.

Name Orsolya Farkas Title Investment Officer East Africa Base Amsterdam, the Netherlands Work Develop deal pipeline, negotiate terms, perform due diligence of target investees and manage portfolio of investments in MFIs in East Africa.

investees and manage portfolio of investments in MFIs in Eastern Europe (Balkans and ex-Soviet countries). What I like about the company is that it is a socially-conscious investment manager. In practice, this means that we operate on a for-profit basis, but the bottom line means achieving a development impact in our work. Our profession lies at the crossroads of development and finance. I am motivated by the fact that our investments have a positive impact on the livelihoods of thousands of poor entrepreneurs. The fact that it is a young and dynamic organization makes the work more interesting. I enjoy exchanging ideas and experiences with my colleagues who come from different countries and bring diverse perspectives to the work. The media tends to view Eastern Europe as a homogenous block, but the more you work here the more you realize that the countries are quite distinct in terms of their level of political and economic development. Looking at the impact of the 2008-2009 economic crisis, some countries were lightly impacted, while others were hit quite hard. Each country has chosen its own unique path toward democracy and free markets and this is also reflected in their degree of support for microfinance. Most governments have embraced it as a means to alleviate poverty, strengthen rural finance, support small business development and attract foreign investment. Unfortunately, a few countries have not adopted supportive legal frameworks, thereby limiting its development impact.

I have been fortunate enough to have visited group and individual clients of microfinance institutions in many countries, including post-conflict areas like Rwanda and Southern Sudan. I am impressed by the commitment of field staff in these MFIs, who often work in very rural areas a long way from the closest branch. Successful MFIs spend a lot of time training clients before they even make the first loan. Clients mainly use microloans as working capital for their small-scale trading businesses, and the most successful have been able to significantly increase turnover or move into new business areas requiring more assets. African MFIs can have a strong social impact on the communities they work with, but often lag behind in management information systems, procedures and staff capacity. Despite these challenges, it is encouraging for us that we have been able to slowly increase the number of East African MFIs receiving funding from the commercial funds managed by Triple Jump.

Name Anthony Randazzo, CFA Title Senior Investment Officer Eastern Europe Base Skopje, Macedonia Work Develop deal pipeline, negotiate terms, perform due diligence of target

51 Triple Jump Annual Review 2009


Colophon Triple Jump Annual Review 2009 Text Triple Jump Concept, design and production Tangerine Design, Rotterdam Cartography BosmaGrafiek.NL Printing Veenman Drukkers This Annual Report is printed on FSC paper from mixed sources.


Microfinance Microfinance is the provision of comprehensive financial services to microentrepreneurs. The vast majority of the population in emerging economies works in the informal sectors of urban and rural areas. The income of these entrepreneurs frequently depends on the success of a small business to which they devote their often impressive skills, creativity and energy. Like everyone else, these micro-entrepreneurs, traders, artisans and farmers need access to financial services in order to develop their businesses, invest in home improvements, and use savings and loans to help meet seasonal expenses. However, banks traditionally view working with these poor people as financially unviable. Through the 1980s and 1990s, microcredit programmes throughout the world improved upon the original methodologies and challenged conventional wisdom about financing the poor. First, they showed that poor people, especially women, had excellent repayment rates â&#x20AC;&#x201C; rates that were better than the repayment rates of banks in most developing countries. Secondly, the poor were willing and able to pay interest rates that allowed microfinance institutions (MFIs) to cover their costs. These two features â&#x20AC;&#x201C; high repayment and cost-recovery interest rates â&#x20AC;&#x201C; allowed some MFIs to achieve long-term sustainability and reach large numbers of clients. Microfinance today reaches out to over 150 million people at the bottom of the pyramid around the world. Triple Jump works together with 132 MFIs in 51 countries.

53 Triple Jump Annual Review 2009


Triple Jump Team

Ab Engelsman Chairman

Bart Hartman Board Member

Esha van der Hulst Board Member

Mark van Doesburgh Managing Director

Steven Evers Managing Director

Ulco Seinstra Controller

Ed Spek Financial Administrator

Peter Driessen Financial Administrator

Juan Nieto Solis Financial Administrator

Jeanette Bouman Administrator / HR

Josefina Aguilera Administrator / PR

Gabriela Bustamante Legal Officer

Erik Geurts Senior Investment Officer / Equity

Luis Guerra Senior Investment Officer / Equity

Michaël van den Berg Senior Investment Officer / Regional Manager ECA / Asia Team

Luca Paonessa Senior Investment Officer ECA / Asia Team

Anthony Randazzo Senior Investment Officer ECA / Asia Team

Jessie Greene Senior Investment Officer Africa / MENA Team

Orsolya Farkas Investment Officer Africa / MENA Team

Clemens Gerteiser Investment Officer Africa / MENA Team

Eelco Mol Regional Manager Latin America

Todd Mason Investment Officer Latin America Team

Javier Leon Investment Officer Latin America Team

Gustavo Santivañez Investment Officer Latin America Team

Yasmin Shoaib Investment Officer Latin America Team

Carol Caruso Managing Director TJAS

Marnix Mulder Senior Advisor Latin America

Board of Directors Head Office Macedonia Office Peru Office Triple Jump Advisory Services (TJAS) Tiphaine Crenn Senior Advisor West-Africa

Gerlof de Korte Senior Advisor Caucasus

54 Triple Jump Annual Review 2009


55 Triple Jump Annual Review 2009


Triple Jump Nachtwachtlaan 20 1058 EA Amsterdam The Netherlands T +31 (0) 20 512 06 20 F +31 (0) 20 512 06 29 info@triplejump.eu www.triplejump.eu


Annual Review 2009  

Triple Jump manages and advises several microfinance investmentfunds, each with a specific target group and different risk and returnobjecti...

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