BACKGROUND TO THE ORGANISATION

Community Microfinance Limited

Community Microfinance Limited (CML) is a Ugandan private company limited by guarantee, and not having a share capital that was incorporated in October 2009.  The idea of starting the Company was initiated by Moses Nsereko Kayongo, who was later joined by three other directors. The establishment of the company was sparked off by the realisation that, despite the current range of financial institutions operating in Uganda, the outreach of microfinance in the country remains low. Accordingly, CML acquired a money lenders license which, by law grants it the powers to carry on the business of lending anywhere in Uganda.

1.2       Company Location and Facilities

Community Microfinance Limited currently operates from rented premises in Nansana Town Council, Wakiso District, which is a strategically-located Commercial township on Kampala-Hoima Road. The company plans to acquire its own premises in the long run, and equip it with the basic facilities for running a microfinance institution.

Vision

The vision of CML is “To be the preferred world-class microfinance institution.”

Mission 

The mission of CML is “To provide efficient, affordable, innovative and sustainable, customer-focused financial services to the underserved communities in Uganda.”

Goals

 Over the planning period, CML will pursue the following broad goals:

1)    Deliver quality financial services, allowing the company to increase client outreach of 4,320 active loans, and gross loan portfolio outstanding of Shs 2 billion in 2013.

2)    Build a strong Board and management team, and efficient systems that will enable the company to achieve a steadily-reducing operating cost ratio.

3)    Establish stakeholder confidence by achieving operating self-sufficiency of 250% by 2013.

Under each of the above broad goals, CML will pursue specific objectives as given in the Operational Plan.

Core Values

CML– upholds the following core values:

·         Facilitator of Excellence.

·         Impartiality and Non-Discrimination.

·         Responsibility.

·         Accountability.

·         Professional Leadership.

Market and Clients

CML works with disadvantaged and vulnerable people who are engaged in income-generating activities that help improve their standard of living. The company currently has 115 loans outstanding, and a gross loan portfolio of Shs 53 million.  This is a small figure given the country’s large un-banked market.

 

Based on the loan products offered and the loan-delivery method, the organisation has significant potential to increase its outreach over the planning period. Besides, CML possesses a comparative advantage over competitors, because of the close association which the current manager has with the businesses operated by the served and targeted clients.

Governance and Management

 

CML currently has a Board of Directors comprising seven members, who are competent and qualified to lead a microfinance company. 

In management, CML has a highly-competent and experienced team, who conduct the day-to-day business of the company. The company significantly benefits from the long experience of the Manager, who served in various capacities with Advance Uganda Microfinance, having been a Loans Officer, Credit Officer, Debt-Collection Officer, Branch Manager and Operations Manager. Other staff who have sufficient qualifications include: the Accountant; Customer Care Officer; Cashiers; and Loans Officer.

Financial Products and Services offered by CML

 

CML is principally a retail microfinance institution, in that it extends loans to the final user. In exceptional cases, it grants wholesale loans to intermediary organisations, including Cooperative Savings and Credit Organisations (SACCOs) especially where its retail lending is not cost-effective. Currently, CML offers a generic microfinance loan product that offers flexibility to clients regarding loan use. The loan attracts interest of 3% per month, charged on the reducing loan balance. CML does not intend to change its interest rate policy over the planning period.

As at 11th Aprill 2011, CML had net loan portfolio outstanding of Uganda Shs 24 million, with portfolio at risk of 0%, and reserve ratio of 0%. In order to encourage timely loan repayments, CML offers monetary and non-monetary incentives to both clients and staff. The company will regularly review the incentives system to keep it relevant, and help to win client loyalty while minimizing credit risk. The two are key ingredients in CML’s sustainability equation.

Funding

 

CML is funded mainly by the four directors through equity investments. As at 11th Aprill 2011, equity funding totalled Shs 50 million. In addition, the organisation ploughs back earned income to finance its operations. Given the projected levels of activity, this range and level of funding is inadequate.