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SAFWCO has prepared the IFRS/ CGAP formats and started making financial reporting on these formats. This has improved transparency and disclosures. As a result of this, negotiations with commercial banks on debt financing are making faster headway. Combined with PPAF offer of providing collateral for debt financing and SAFCO registration under Companies Act, commercial banks are now willing to lend 100% of the collateral amount plus undertake 15% exposure themselves. Together with the State Bank allowing MFIs to obtain debt financing from foreign investors and to cover foreign exchange risk, this opens up the way for SAFCO to negotiate foreign investments.
Under Governance, the specific committees are still to be formed and preparations are underway to first form Advisory Board to guide the governance improvement process, however a separate finance department has started working since 2007 and separate financial, management and social audit for the CED sector was carried out in 2008 and 2009. In reviewing the CED sector business plan, Safwco agreed to deepen the impacts and improve outreach within the region commanded by the present branch network.
Safwco centralized its disbursement and repayment so as to better manage liquidity and earn bank profits on them. In centralizing disbursement, the head office has centralized Compliance, MIS and Accounts. The branch is now geared to target and carry out appraisal and send them to the head office, where the appraisal form is first checked for compliance, then the MIS entries are made and then the checks are made and sent to the branch. At the same time, the check amounts are transferred from the central account to the branch’s current account. Similarly, repayments deposited into branch’s current account are daily remitted to the central account to earn daily returns on them. Safwco’s own fund is now being deposited into a long term deposit account with a credit line agreement to help Safwco earn, while managing liquidity crunch whenever it occurs. The centralized arrangements have improved time and quality checks on appraisal, disbursement and recovery information management and timely disbursements and recoveries.
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