EXECUTIVE SUMMARY

Progress Association Tanzania Chapter through_______________

PATA Savings and finance, is a cooperative financial, social-driven institution with

operating branches in Dar es Salaam and Pwani regions that provide financial support to
individual and micro business. Since 2006, PATA has provided loans and savings
services to people in the in this area considered "unbankable" by formal financial
institutions.

By operating a sustainable savings and finance in Tanzania PATA seeks to revolutionize

and to grow in the microfinance industry that is apparently run by profit making
companies. PATA upholds a dual mission of providing affordable capital to individuals
and micro business while adding value to members in the form of project ownership,
bonus and hassle free, flexible financial services.

COMPANY PROFILE

Progress Association Tanzania Chapter PATA is a non profit organization registered on

13 September 2006 in the ministry of Home Affairs under the Society Ordinance. The
NGO was founded with key purpose to help members reduce poverty by

1. Educating members on poverty alleviation strategies and

2. Establishing a credit union or PATA saving and finance institution for making
loans in small amounts to individual and micro businesses or "microfinance."
3. Providing capacity building services for members to sustain their income
generating activities

1
The necessary capital to operate PATA operations was raised through member savings in
the form of compulsory deposit, monthly savings and contributions (shares) from each
member.PATA is now looking for cash injection of T.sh 400 million to support
expansion efforts and leverage at least this amount in debt financing. This working
capital will accelerate growth, exponentially increasing the number of customers and
amount...PATA has 13 branches with 50 staffs in Dar es Salaam and Pwani regions. The
head quarter is located at Kilwa Road Mtoni Kwa Aziz Ally Halal Restaurant building.

Growth History Sept 06- June 07

Period Members Asset value
June 07 3 000
May 07
April 07
March 07
February07
January 07
December 06
November 06
October 06
September 2006

SUSTAINABILITY
PATA Saving and Finance has been successful in its approach of microfinance by
targeting individual market traders and micro business, delivering financial services
nearer to the borrowers by establishing branches to develop to common bond among
members to ensure effective utilization and recovery of loans; collecting the principal in
small regular monthly installments so that the repayment does not put pressure on low-
income households; developing collective funds with compulsory savings from
borrowers for their mutual benefit to cope with financial crisis and saving them from
trouble at times of emergency; and promoting social development of members using
credit as an entry point.

By June 2007, PATA has mobilized through 13 branches over 3000 members and
disbursed ____ million of which ____% has already been recovered. The amount of

2
outstanding loans with borrowers has reached _____ million, and savings in the
members’ collective funds at ___ million.

Inspite of the low rate of interest charged on the loan PATA has been able to cover its
operating expenses, because of the low cost of operation of this intensively supervised
credit program. In December 2006, the cost of administration was___of the amount of
loans disbursed, and ___ of the amount of outstanding loans with the borrowers.

PATA has found that a branch that reaches a business size of___ million of outstanding
loans can recover its cost from the interest earned.

Table 1. Cumulative achievement of PATA up to June, 2007.

_______________________________________________________________
Up to December Up to June
2006 2007
_______________________________________________________________
No. of branches under operation 13
No. of active members
Total loans disbursed
Total loans recovered
Amount of outstanding loans
Accumulated fund
Approved loans waiting to be financed
_______________________________________________________________

PATA Key Indicators for Good Performance

PORTFOLIO QUALITY RATIO
Benchmark
Total outstanding
Portfolio balance of late loans Ratio Decreasing ratio is
favorable. Preferably

3
At risk Amount of loans less than 3%.
outstanding

EFFICIENCY RATIO
Operating cost Operating costs Ratio Decreasing ratio is
ratio Average amount of favorable. Efficient,
loans outstanding mature
institutions tend to
range
between 25% and
15%.

SUSTAINABILITY RATIO:

Operating Financial income + Ratio Increasing ratio is

Self-sufficiency Other favorable. Given
operatingincome proper
Financial costs + funding to reach scale,
Loan loss reserve + most
Operating costs programs will aim to
reach
100% self-sufficiency
within seven years.

DEFINITIONS:

Financial income: Interest, fees and commissions on credit activity received from borrowers and interest
on deposits or investments. This income is included in Operating Income.
Other operating income: Income from PATA operations that is not a direct result of credit activity, such as
the sale of application forms. This income is included in Operating Income.
Financial costs: Cost that the PATA incurs to borrow funds to finance the loan portfolio.
Loan loss reserve: Financial reserve set aside to cover the loans that are expected to default in the normal
course of operations.
Operating costs: The total administrative costs at the branch and Head Office levels combined.

From its inception, PATA has been financed through members Savings compulsory
deposits, contributions and application fee and capable to meet loans application for the
first eight months, but relying solely on this capital has limited PATA’s growth as
evidenced by the fact that PATA has _______ approved loans waiting to be financed.

4
PATA -Organizational structure

Board

Executive
Committee

Branch
committee
Executive Director

Admn. Finance Project Marketing Credit

Manager Manager Manager Manager Manager

Directors
The managers and directors have worked together since the beginning of operations in
September 2006, having over 5 years of combined experience in the microfinance
industry.

Executive Director and CEO co-Founder: Jamal H.Kisongo has three years of
microfinance experience as manager of a SACCOS. Kisongo has also worked as a
secretary of a trader’s association UWASOMBAKI (Umoja wa Wafanya biashara Sokoni
Mbagala Kizuiani) and current Temeke Municipal committee member dealing with child

5
labour and women empowerment. He is a High School graduate and diploma holder of
business administration from Cambridge Tutorial College.

Operations

PATA Saving and Finance loans are made to members in a network of branches in urban
area and rural areas of Dar es Salaam and Pwani regions. The loans range in size from
T.sh 50,000-15,000,000/- and are used for both personal and business purposes. Loans to
market traders account for the larger loans and act as a subsidy for the smaller loans to
individuals, primarily women.

PATA has in-place a management information system that provides easy access to
accurate and up-to-date information. For example, loan officers get information on loans
that need follow-up, branch manager’s can monitor daily progress of the branch, and
senior management can get a full picture of the portfolio performance and quality.
Members (Customers) also get quick information on heir accounts, payments and
balances. The institution also has up to date books of accounts and deposits records.

Detailed information on customers and their activities is captured when filling application
form that can then be used to assess client business impact.

1. Business Advisors

INDUSTRY OVERVIEW

Social changes

The Global Microfinance Market

___, operates in the large, growing, yet underserved market of microfinance lending. The
MicroCredit Virtual Library estimates that there are currently 7,000 microfinance
institutions worldwide, serving approximately 16 million poor people. The total cash
turnover for these institutions is $2.5 billion.

6
Of the estimated 500 million people who operate micro or small businesses around the
world, only 10 million have access to financial support for their businesses (Source:
Micro-credit Summit).

Worldwide demand for credit by this population is almost limitless. Based on an average
loan size worldwide of $550, demand...

Economic changes
There is a vast potential market for retail financial services among low-income clients,
and a growing number of Microfinance institution have successfully entered this market.
These are the findings of recent research undertaken by CGAP, the global resource center
for microfinance supported by a syndicate of 30 multilateral, bilateral, and private
donors. Microfinance is the category of financial services offered to lower-income
people, where the unit size of the transaction is usually small (“micro”). Starting in the
1970s, well-known pioneers, such as Grameen Bank in Bangladesh and ACCIÓN in
Latin America, demonstrated that low income people can be creditworthy.

Today, microfinance covers the full range of financial services—credit, savings,

remittances, insurance, and leasing, among others—which are increasingly provided by a
diverse set of financial service providers.

1. Demographic changes
2. Technological changes
3. Envinomental changes
4. Political changes
5. Industry trends –investigation of the past ,present and future trends
6. Key success factors in the industry
7. Barriers to entry, size of industry

PATA Services

7
PATA products have been packaged in flexible terms for individual or group borrowing,
hassle free administration for loan repayment and monthly installments. For instance for
agriculture repayment schedule is done according to the type of the horticulture product.

PATA Savings and finance offer four types of products

1. Emergency loan
2. Development loan
3. Agriculture loan
4. Education loan

What are your service unique features?

What is the value added features
What are the benefits of features?
How is service positioned against competition?
What are you doing differently?
What has been the history of this product in the marketplace?
Provide photograph

Marketing Strategy

Because PATA is mindful of the fiscal operations and expenses necessary to run a
profitable enterprise, the marketing budget is, by design, small and highly focused on
very basic, interpersonal efforts. Only those activities that provide proven return and
bring in new loans to achieve the intended growth and projection figures are
undertaken.PATA at head office level promote their activities using open meetings
arranged by locality chairpersons, ward offices or village government while at branch
level branch members launch campaigns for recruiting new members.

Grassroots marketing and establishing trust with customers has been the hallmark of the
branch operations to date. These efforts led to a ___ percent growth in PATA loan
portfolio between September 2006 and June 2007. Ensuring positive customer experience

8
has led to word of mouth as the leading source for new client acquisition. In a country
like Tanzania, where relationships and community are the mainstays of business activity,
the "word on the street" is the best marketing channel and a strong indicator of a
company's reputation. It is also inexpensive.

Market Size and Trends

Dar es Salaam is the economic center of Tanzania and has a population of more than
3,000,000 people with over one third of the population living in Temeke. Although
Tanzania economy is still driven by agriculture, micro business in the urban areas
represents an increasing number of jobs.

TARGET MARKET
PATA Savings and Finance target clients who are unbankable by commercial bankers,
who can save at least T.sh 1,500 per month.PATA has strong presence in market trading
points like Tandale, Tandika,Kigamboni, Buguruni and Mbagala in Dar es Salaam and
Rufiji for Pwani.

Competitive analysis
PATA competititors are FINCA, FAURU and Pride which are companies with
substantial equity, SACCOS and Savings and Credit Association (SACCAS) in general.
Against this competitito PATA has positioned itself by having a wide member outreach
in Dar es Salaam and Pwani, serving financial services closer to target markets and
offering 3 times the saving balance loans. All loans are individual loans though groups
are allowed to apply where members agree to use this approach.
 Hours of operation
 Years in Business
 Product/service description
 Product/service differentiation
 Customer profile
 Pricing
 Marketing/advertising

9
  Strengths/weakness –why customers go to them
 Opportunity /threats to your business

PROMOTIONAL STRATEGY
a. Costs
b. Readership
c. Target market profile
d. Distribution coverage
e. Distribution frequency of the promotion
PLACE
Where is it
What are the costs associated with the location
What is the marketing importance of the location?
Residential v. commercial location
Is there future potential for your location?
How will your method of distribution affect
 Sales
 Service promotion
 Timing
 Economics
PRICING STRATEGY
Pricing for a service
• Overhead
• Labour
• Profit margin
Pricing considerations
• Low, medium, high
• Client’s perception of value
• Will lowering your price regularly
Breakeven analysis
Identify the business volume level that is required to cover the overhead expenses

10
B.Even = _Fixed costs
Unit selling price-unit variable costs

Growth strategy

PATA intention is to pursue a market niche in emergency financing for making a

significant portfolio growth while minimizing overhead. PATA will specialize in
emergency financing as a spearhead to establishing operations nationwide in Dar es
Salaam and in other regions in Tanzania. Using the specialization in emergency finance
we expect to drive penetration of the micro-credit market while still maintaining healthy
profit margins.

In this year 2007, we have relocated our head office to prepare for expansion. The new
office space has enough space to accommodate additional staff needed for expansion,
while remaining in a geographically strategic location that is convenient for PATA
borrowers.

Social Impact

Receiving a ___ loan generates significant social impact in the following areas:

• Human Capital Development: Relates to improved economic standing, heightened

self-esteem and sense of empowerment, and creation of a stable financial situation
for borrowers
• Community Development: Resulting from borrowers' improved economic
standing and ability to give back to the community
• Corporate Governance: Refers to the equity incentives that Prisma will offer to its
employees and its ethic of empowering its staff through inclusive decision-
making roles
• Socially Responsible Market Creation: Speaks to the...

11