March 20, 2009

Namken Recognized for Developing Microfinance in Iraq

On March 30 ACDI/VOCA’s Nadia Namken, chief of party for the Iraq Access to Credit project, received a certificate of recognition from Tijara for helping to develop microfinance in the country. Tijara, which means “trade” in Arabic, is a large USAID project that promotes private sector growth and employment in Iraq. This is the top honor given by Tijara, and only one person is recognized each year.

Then on May 4 Sanabel, the Microfinance Network of Arab Countries, notified ACDI/VOCA that the microfinance institution (MFI) it founded in Iraq* would receive a Transparency Certificate for its 4-diamond MIX Market profile.

Sanabel’s Transparency and Research Manager Ranya Abdel-Baki, commented in his notice to Namken, “[The MFI] is not only the first MFI from Iraq to have a MIX Market profile and to be included in the global benchmarks, but also to receive this certificate! I do realize that this has taken a great deal of courage on your part as well as a high level of commitment to standardization and transparency to make this happen. I really appreciate your cooperation. It’s because of [the Iraqi MFI’s] lead that we are able to attract more Iraqi MFIs to the MIX Market and benchmarks.”

The award will be presented on May 14th at the Sanabel Micro Finance Conference 2009 in Beirut, Lebanon.

“Receiving a transparency award from the MIX Market, the global, web-based, microfinance information platform, raises the level of professional recognition in the microfinance field and helps position the Iraqi MFI for continued sustainable growth,” said ACDI/VOCA’s Technical Managing Director for Financial Services Doug Leavens.

More generally, Namken’s efforts in Iraq under difficult circumstances have contributed in to the growth and professionalism of the broader microfinance and SME finance sector in Iraq, according to Leavens.

“You make us proud! Thanks for all the good work you are doing in Iraq to build the microfinance industry,” said Leavens.

He said, “Nadia’s singlehanded work over several months developing an innovative loan officer monthly performance-based bonus scheme was so well received that new loans outstanding immediately jumped to $1 million per month. She wrote proposals that raised at least $8 million in new loan funds, as well as $1.24 million in operating funds for ACDI/VOCA's technical support costs. She provided constant and timely feedback to Tijara on their proposed policies for MFI reporting, new product development, such as a draft group loan policy, and adaptation of international best practices to the Iraqi environment. She also gave feedback on a draft NGO law.”

With the help of the MFI’s General Manager Abbas Saedy, she got the institution posted on the MIX Market. The MFI’s 4-diamond rating is high. (An institution needs to have international rating to get a 5.) Namken led a successful MFI team to the 2008 Sanabel Middle East regional microfinance conference, and this year is again helping represent the Iraqi microfinance sector at that important forum.

In 2008 the MFI portfolio grew by 68.5 percent from 2007 with portfolio at risk at a fraction of 1 percent. Also, the microfinance institution reached financial sustainability. Its portfolio is currently 25 percent ($15 million out of about $60 million) of the total Iraq microfinance portfolio, so her work in supporting that one institution has had a large impact on microfinance in Iraq. ACDI/VOCA’s efforts to promote growth, sustainability, operational efficiency, loan officer productivity, etc., have helped to create a benchmark for the entire Iraq microfinance sector.

Tijara compares MFIs with each other through their Performance Classification and Monitoring System. The MFI is well ahead of others in many indicators. For example, the second-best MFI in terms of loan officer productivity would have to increase their productivity by more than 50 percent in order to catch up.

Tijara learned about ACDI/VOCA’s methodologies during its assessment of the MFI in early 2008. They made copies of many of our policies and procedures, took pictures of the accounting files and applied some of this to the indigenous MFIs managed by Tijara. In this way, ACDI/VOCA’s experience benefitted others in the industry.

When some MFIs complain that they can not do something, Tijara answers, “You can because this one did it.” While MFIs are often reluctant to share their know-how with the competition, information still spreads around.

Maintaining strong growth and portfolio quality control; introducing an innovative loan officer performance program; introducing Islamic lending, women's loans, start-up loans, agriculture loans, and moving into new markets; plus returning to some old markets help set an example for the entire MF industry.

Leavens added, “ACDI/VOCA's sensitive approach to setting up a grassroots local NGO, building all local staff, promoting from within, recruiting and training up Iraqi's to run to business and assume positions of leadership within an ACDI/VOCA signature approach reflects global best practices and creates a foundation for sustainability.”

ACDI/VOCA contributed to the development of the microfinance industry in Iraq in 2008-2009 in these specific ways:

• resumed operations in areas that were left in 2004 and 2007 due to insecurity, and opened satellite offices to reach remote areas not previously served
• introduced new loan products: short-term SME loans, credit line for small consumer loans (wedding, education, emergencies, etc.) and Islamic loans
• emphasized working with women entrepreneurs (through grants for SME lending to women, building a strong relationship with women’s unions and women empowerment organizations), internally displaced persons and start-up businesses (introduced loans)
• developed and improved policies and procedures (accounting, internal audit, risk management, credit, including policies for new products and employee loans, board bylaws, credit committee regulations, audit committee bylaws, etc.)
• strengthened internal audit function, with the auditor regularly reporting to the board; management follow-up plans; internal audit rating included in the branch manager incentive scheme
• created, trained and mentoring an Iraqi board of directors
• continued mentoring senior management
• received A rating by Tijara (the highest) and received unqualified audit opinion by an international audit firm
• developed a three-year business plan for 2009-2011 and annual operational plans and budgets for each branch
• made further improvements to the MFI’s management information system by working out a number of bugs and redundancies, improving reporting format and creating a central database
• built synergy with small business development centers

Another ACDI/VOCA colleague, Senior Technical Director of Financial Services Elena Nelson said, “With her diligence at training, coaching and working with the local MFI board, Nadia and the project’s technical advisor have done a stellar job at spreading best industry practices.”

Namken herself said, “There is more to do, and too little time—as usual.”

* The MFI’s name is withheld because of security concerns.