TLM Staff Member Shanty Kock With Client

8/14/2019 TLM Staff Member Shanty Kock With Client

1/9

OPPORTUNITY INTERNATIONAL AUSTRALIA

TLM Growth Progress ReportJulyDecember 2009

TLM staff member Shanty Kock with client Zerarias Rassi


2/9

OPPORTUNITY INTERNATIONAL AUSTRALIA

TLM Growth Progress ReportMessage from the CEO

When a woman receives a small loan, it is not simplya financial transaction. Its much more than that. Foreach client, the loan will represent somethingdifferent: for a young woman, it may be anopportunity to gain independence. For a mother, itmay be a chance to enrol her child in school. For agrandmother, it may be a way to plan for herretirement.

For our clients, many of whom have enduredincredible hardship in their lives, a small loan is a voteof confidence in their ability to forge their ownfuture. When a person has established a successfulsmall business and can do the things we take forgranted afford nutritious food, pay for an electricityconnection, send their children to school we seethat microfinance does not just improve cash flow. Itcan also change peoples lives.

Following a rigorous process of internal capacitybuilding and product redesign, our partner in West

Timor, Tanaoba Lais Manekat (TLM), is now in apromising position for future growth. Your supporthelped TLM open two branches and reach out tothousands of new clients in 2009.

Opportunity International Australias work is onlymade possible through the generosity of our loyalsupporters. At December 2009, our partners in India,Indonesia and the Philippines were serving over twomillion clients. In 2010, we want to let more peopleknow about the life-changing impact ofmicrofinance in the lives of the poor. Your continuedsupport and advocacy will help us to create more

awareness, harness more support and reach out tomore people in desperate need of a hand up.

Thank you for your support of the inspiring men andwomen who are our clients.

Kind regards

Robert DunnChief Executive Officer

Klofas Seran runs a welding business in the village of Oebufu. Heinvested his loan in buying more materials, which has increasedhis income. He has also found that TLMs new group loan giveshim the flexibility he needs. I run a welding business, and the smallloan repayments have been manageable for my income levels,says Klofas.

Report summary

Active clients have increased, with TLM nowserving over 16,000 people

The new Group and Individual Loan productscontinue to be popular with TLM clients and staff

Portfolio at risk has decreased to 4.34%, reflectingrecent changes in internal processes

New training curriculums have been launched forgroup clients, covering financial management andentrepreneurship

A HR development plan is currently being

implemented.

This report is an update on the TLM Growthprogram from July to December 2009.


3/9

West Timor is not a typical place for microfinance toflourish: rural villages operate on largely cashlesseconomies and livelihoods are often dependant on agood harvest. However, TLMs client-focusedapproach to providing clients with effective service isnow seeing more people benefit from small loans.

From June to December 2009, TLMs active borrowersincreased by a third, from 12,270 to 16,321.

Thanks to your support, TLMs Group and IndividualLoans have been redesigned and implementedacross all 19 branches. The changes have improvedstaff efficiency, customer satisfaction and areattracting more people to apply for loans.

2 OPPORTUNITY INTERNATIONAL AUSTRALIA -TLM Growth Progress Report

TLM Growth update

Hestys story

In a simple wooden house surrounded by lushforest, TLM client Hesty lives with her husband andfive children, aged between six and 14: Riko, Roki,Sania, Intan, and Putra. The household also includesHestys mother-in-law.

Determined to help her husband, a fish vendor,support their young family, Hesty sold vegetablesdoor to door. Carrying two buckets of producethrough the surrounding villages was physicallychallenging. In the rainy season, it was even moredifficult. Sometimes Hesty was forced to returnhome or sell her produce at cheaper prices.

Some of her customers couldnt pay her on time, soHesty struggled to meet her operating costs.Despite her hard work, she could only generate Rp.30,000-40,000 (A$3.55-4.75) a day. At one point, hereldest child Riko was suspended from school for aweek, until Hesty and her husband found themoney to continue to pay school fees.

Hesty met a TLM loan officer and took theopportunity to improve her business. With her firstloan, she started a business selling fried banana,tofu and soybean cakes. She purchased a stove and

ingredients, and soon found that her produce wasselling out each day. Now on her third loan cycle ofRp. 2,000,000 (A$238), Hestys business continues toexpand and she now earns Rp. 80,000-90,000(A$9.50-10.70) a day. She also continues to sellvegetables, while her husband and mother-in-lawsell fish.

The business is now so busy that Hesty employssomeone from her village to help her cook and sellthe food. In the future, Hesty plans to sell meatballsand noodles, which will further increase herincome. She is using her extra income to pay for her

childrens education and save for emergencies.

In just three loan cycles, Hestys life has alreadychangedshe now has the confidence to lookforward to the future.

Keyindicators

Jun2009

Dec 2009

Activeborrowers

12,270 16,321

Branches 19 19

Loansoutstanding (A$)

3.00m 3.39m

Loansoutstanding (Rp)

25,207m 28,471m

Average loan size

(A$) 306 264Average loan size(Rp)

2.57m 2.22m

Operationalsustainability

114% 100%

Portfolio at risk >30 days

11.62% 4.34%

Active clients include all TLM Group and Individual clients.Exchange rate used is A$1: Rp. 8,400In 2009, TLM focused on serving Group rather thanIndividual clients, resulting in a decreasing average loan sizeacross all products.

Hesty and her husband preparing fried tofu.

Hesty preparing fresh vegetables to sell.


4/9


TLM Growth update

Portfolio at riskFrom June to December 2009, TLMs portfolio at riskreduced from 11.62% to 4.34%. This was animprovement upon the projected goal of 6% PAR >30 days for December 2009.

This great improvement is due to theimplementation of a series of controls, including amore comprehensive loan application and asystematic process to deal with late repayments.

Target for branches operating sustainablyCurrently, 89.5% of TLMs branches are operating

sustainably. The two new branches at Insana andSabu are 82% and 52% operationally sustainable,respectively.

Branches achieve operational sustainability whenthey cover their lending costs with loan repaymentincome. The 17 established branches contributemore than proportionately to TLMs overallsustainability of 100%.

Operational sustainabilityNew government regulations in Indonesia includethe taxation of any Foundation which exceeds 100%operational sustainability. To counter this, TLM isreinvesting additional funds in community projects.

TLMs Rural Bank was established in 2008 to enableTLM to meet changing regulations such as these, bymoving clients into the Rural Bank and allowing theFoundation to focus on community development.However, banking regulations restrict the speed withwhich the Rural Bank can open new branches, andtherefore the speed at which TLM can transfer theclients.

TLM is currently exploring options to meet theseregulations without impacting on client growth.

HR development plan

Due to the lack of skilled employment opportunitiesin West Timor, TLM receives hundreds of applicationsfor every advertised position. Staff members usuallystay with TLM for many years, becoming a valuedpart of the organisation.

TLM is currently investigating how to encourage staffto reach and exceed performance goals, throughtraining and incentive schemes. This will improveoverall efficiency and staff morale.

A HR development plan is currently beingimplemented. Along with staff training, aperformance management system has beeninitiated, in order to gain an accurate picture ofcurrent performance. Sanctions and incentives havebeen implemented for branch staff, with a similarsystem for Head Office staff in development. To assistin the implementation of the HR Development Plan,

TLM is currently recruiting an Australian volunteer,who will help lead the process from April 2010onwards.

The most positive aspect of having a loan

with TLM from my point of view is theopportunity to set aside some money eachday from increased sales through mykiosk.

Ebenhaesar Robo, TLM clientEbenhaesar Robo in his well-stocked kiosk. The benefits [of theloan] have translated through to my whole family, which I amvery thankful for, says Ebenhaesar.


5/9


In May 2009, TLM opened a branch on remote Sabuisland, situated approximately 175km from Kupang,the regions capital.

The Sabu branch was established in order to reachpoor communities who largely rely on subsistenceagriculture to survive. The islands remoteness anddry climate means that seasonal hunger iswidespread. There is great potential for economicgrowth, through small enterprises, on the island.

Sabu island has a very low population density.Electricity is only available at night to approximately60% of the population. Only 40% of the populationhas access to running water. There is one hospital onthe island and several small health clinics.

TLM faced many challenges in establishing the Sabubranch. As the local population are not welleducated, TLM ran a recruitment drive throughoutWest Timor to find suitable staff. Adverse weatherdelayed shipping to Sabu island for a period,affecting the office set up and staff placement.

There are two ways to travel from Kupang to Sabuisland: aeroplane and ferry. The aeroplane isprohibitively expensive, so TLM staff travel on theferry, which only does the 26-hour round trip twice aweek and costs Rp. 85,000 (A$10). The Sabu branchsnine employees back to the mainland to see theirfamilies four times a year. This considerable personalsacrifice is testament to the dedication of TLM staff.

Reaching remote communities

The Sabu branch team.

The ferry from Kupang docks at Seba Harbour on Sabuisland.

In the day to day operation of the branch, TLM staffface various difficulties. Firstly, many people on Sabuisland only speak a local language, so staff musthave a translator. Low population density and poorinfrastructure also means that reaching clients canbe time consuming.

TLM staff are also working hard to gain trust in thelocal communities. There are many money lendersoperating on the island and it will take time to build

TLMs reputation as a fair and equitable

microfinance institution.

The new Sabu branch is the latest TLM initiative tobring microfinance and support services to remoteWest Timorese communities.

Sabu island, circled, is approximately 175km from Kupang,

where TLMs head office is located. Source: Multimap


6/9

New Group LoanIn 2009, TLM launched its new Group Loan across all19 branches, offering loans with flexible sizes andrepayment schedules.

Clients still meet weekly in groups to make loanrepayments. However, groups can be as small or aslarge as is necessary and clients are no longerrequired to co-guarantee each others loans. Thisflexible approach, with loan officers dealing witheach client on an individual basis, means thatvillagers feel more confident in applying for a loan.

Client trainingTLMs Training and Transformation Unit is dedicatedto equipping clients with the skills and confidencethey need to run their businesses successfully.

The unit conducted a focus group with 46 clients inorder to identify how clients want training to bedelivered and what should be covered. The results ofthe focus group suggested that clients want moretraining on financial and business management, andskill-specific training related to their businesses.

Previously, basic business training was provided inshort sessions during weekly group meetings.However, this training soon became repetitive formore experienced clients. TLMs new approach is toprovide more sophisticated business training once amonth to groups of about 60 clients who gather in alocal church hall.

Eight branches have hosted the training to date,which covers financial management,entrepreneurship and market identification. Theremaining 11 branches will host the training in 2010.

The Unit is planning to provide Individual clients withtraining tailored to their businesses on a quarterly

basis.


TLM Growth update

Staff trainingTLM staff need ongoing training to ensure they canfulfill their roles effectively and efficiently. TLM aimsto build the capacity and leadership qualities of staff,equipping the loan officers today with the skills theyneed to become the branch managers of tomorrow.

Funded by Opportunity Australia, expertmicrofinance consultants MicroSave recentlyundertook a Rapid Institutional Assessment of TLM.Regular and frequent staff training was identified asan important requirement for skill improvement.

From July to December 2009, training for staff hasincluded basic accounting, communication skills,microcredit analysis, new taxation regulations andHR management. Relevant staff have also beentrained on the new Management InformationSystem and group and individual lending manuals.Branch staff underwent an examination on the newmanuals. Training was facilitated by TLM seniormanagers, external training providers and qualifiedlocal people.

Individual LoanThe new Individual Loan has now been fullyimplemented. Clients are pleased with the quickerloan disbursement process, while the staff find thenew manual easier to use, as it systematicallyoutlines processes which helps loan officers tominimise credit risk.

TLM currently serve 4,321 Individual Loan clients.Approximately 13% of these clients employ peopleto help them run their business. The average numberof employees is two. This equates to approximately1,123 extra families benefiting from a stable source ofincome. By employing local people, TLM clients aresharing the advantages of microfinance with theircommunities.

Planning aheadTLM is planning the following improvements in 2010: Portfolio quality: setting performance targets for

each loan officer, implementing effective controland monitoring of new loan manuals, adding twoloan officers at each branch

Loan products: implementation of new loan withdaily repayments

Capacity building: delivering training for staff andclients.

MicroSaves Rapid Institutional Assessment tool isdesigned to evaluate an organisation and its potential. Onthe basis of this assessment, areas where the MFI is likely torequire training and technical assistance can be identified.


7/9

Staff profile: Daniel PandieDaniel Pandies experience at TLM has given himinsight into each aspect of its operations. Daniel hasworked as a loan officer, a branch coordinator and inthe credit department. In 2009, Daniel joined thenewly-formed Training and Transformation unit.

In his current role, Daniel is responsible for clientbusiness training, TLMs organisational culture andcommunity development projects. He enjoys havingthe opportunity to meet clients and deliver effectivetraining.

The greatest challenge for Daniel in delivering resultsis to make the training suitable for clients who havelittle or no education. Some of TLMs clients areilliterate, so Daniel and his colleagues try and exploreinnovative education methods, such as groupexercises and videos.

Daniel believes the training is very effective in helpingclients to better manage their business and householdexpenses. Daniel is looking forward to expanding

TLMs training programs in 2010 and beyond.


Investing in people

Postcard from the fieldHello friends. Instalment number two fromKupang during my year in the field with TLM.From memory last time I checked in, I was makingmore language bloopers than George Bush on agood day, my sweat glands were in overdrive andI was planning to help TLM with improving theiraudit function as well as review and improve theirprocess manuals.

It is now (February) the middle of the rainy season.And when it rains in Kupang, it pours. For days onend. Good for the farmers. Not so good for a city

boy who loves the sun. At least the sweat glandsget a reprieve. By the time you read this, the wetseason should be behind me.

On the work front Ive been busy here but havebeen working to a fluid workplan. Flexibility isthe key here. Most recently I have been workingwith the management team to develop TLMsthree year business plan. It has been both anexciting and difficult process. Exciting becauselooking ahead allows the team here to dream big,and imagine what kind of impact we might have ifthe number of families we impact in the region

increased to 25,000 then 35,000 then dreambig, 50,000 over the coming years. The potential ishuge.

Yet it has been a difficult process too. Difficultbecause, as with any organisation, particularly not-for-profits, there are limitations. Limitations due tofunding. Limitations due to an uncertainregulatory environment. Limitations due to a lackof skilled labour in parts of this poor province. Butno one said this was meant to be easy. And I amparticularly heartened that Opportunity Australiais committed to keeping supporters informed of

both the successes and the struggles. And whenall is said and done, TLM is making a hugedifference in this region of Indonesia.

The team here at TLM are terrific also. Friendly.Warm. Helpful. Full of laughs and smiles. Makesthis experience all the more enjoyable. Bring onthe next six months.

Mark PeacockAustralian Youth Ambassador

Australian Youth Ambassador Mark Peacock (second from left)

celebrating Australia Day with TLM staff in the Kupang office.

Daniel at home with his wife and three children, Wem, Karlindaand Richard.


8/9

DisclaimerThis report provides information about Opportunity InternationalAustralias program activity. Information is provided to us by ourimplementing partners and we believe it is a true and accuratereflection of program activity at the time of writing. Programs maychange in scope or be discontinued where our core operationsare no longer fulfilling the intended outcomes. In this case,Opportunity International Australia may redirect funding to a

suitable alternative program.

I can save money and plan for thefuture. This gives me and my familygreater security and certainty. This ismy first loan and this loan has been

extremely helpfulDorce Nenobais, TLM Community Group client

GlossaryPortfolio at risk (PAR) is a stringent measure of amicrofinance institutions loan portfolio quality. It

calculates the total value of outstanding loanbalances for loans with at least one payment beingoverdue by more than 30 days. PAR is used tohighlight potential future repayment problems.

Operational sustainability is the ability of anorganisation to cover the costs of its lendingprogram with the revenue earned from itslending program.

Financial sustainability is the ability of anorganisation to cover the costs of its lendingprogram with the revenue earned from its

lending program including the cost of itscapital, in particular inflation.

Mariana weaving traditional cloth in her home.


Alfonsius story

Alfonsius storyOutside his simple concrete house, Alfonsius Taifa ishammering old tyres into chairs, buckets and pots.Alfonsius innovative business supports his wife andfive childrenIdo, Ega, Medi, Icha and Atika, agedbetween two and 11. His family relies on him togenerate enough income to meet their daily needs.

After high school, Alfonsius worked for a printing

company for seven years, which went bankrupt in1999. Fortunately, he received severance pay whichhe used to set up his tyre recycling business.

Initially, Alfonsius worked very hard to market hisproducts door-to-door and gain new customers.Despite receiving many orders, Alfonsius hadinsufficient capital to meet demand. Then he becameill and could only afford the hospital fees with thehelp of a neighbour.

In 2009, Alfonsius heard about TLM. He received aloan of Rp. 750,000 (A$89) which he used to buy raw

materials and equipment. He buys the tyres fromrepair shops at Rp. 2,500-5,000 (A$0.30-0.60) each.Alfonsius has been able to expand his business and,with his wifes help, meet the demand for theincreasing number of orders.

Prior to joining TLM, Alfonsius earned approximatelyRp. 50,000-75,000 (A$6-9) a day. Now, his daily incomehas tripled to Rp. 150,000-200,000 ($A18-24). Alfonsiuscan now support his family and save for his childrenseducation. His greatest dream is to purchase a house,as he is currently renting.

Alfonsius hopes to further expand the business andemploy people to sell his products. Through hiscreativity and hard work, Alfonsius has used TLMssupport to create a brighter future for his family.

Alfonsius with one of his chairs made out of discarded tyres.

Alfonius with three of his young children.


9/9

1. Invest in the future of microfinanceBecome an Opportunity Investor and walkalongside Opportunity Australia as we implementand improve services to the working poor in India,Indonesia and the Philippines.

Invest in InnovationSupport OpportunityAustralias Social Performance Management program.$25,000 delivers expert consultants and practicaltools to provide more people with betteropportunities.

2. Sponsor clients in their journey outof poverty.You can sponsor 25-50 microfinance clients for$10,000. These clients will start or expand their ownsmall businesses and in doing so, bring hope to theircommunities. You can choose to support clients inIndia, Indonesia or the Philippines with life-changing loans.

3. Support the people who make

microfinance workWalking with TLM - Our partner TLM is building itscapacity to provide flexible, innovative financialservices and training to poor people in West Timor.

Double your impactPhilippines RenewalProgram -Three microfinance institutions and long-term partners of Opportunity Australia, ASKI, TSKI and

TSPI, are transforming into dynamic organisationsequipped to achieve greater social impact now andin the future. AusAID will match each dollar youdonate, doubling your impact.

How do you want to

change lives?

Thank you for your generous support.

Opportunity Australia needs your help to expandour community of supporters and continuechanging lives in India, Indonesia and thePhilippines. We would like to connect with morepeople like you.

Sharing your report with family, friends andcolleagues is an easy way to increase the impact ofyour commitment. You can inspire others to join uson the journey as we give a hand up to those livingin poverty.

To discuss how you might share your journey withothers, contact your local Donor Relations Manageror contact us on [email protected] 812 164.

More exciting opportunities tosupport clients and their families arecoming soon.

Share the journey

Microfinance can help parents give their children a chance ata brighter future.

Your support can provide the poor with enough capital to kick

start their businesses and work their way out of poverty.

Be the change you want to seein the world.

Mahatma Gandhi

ID3SP1833ED0310

Documents

TLM Staff Member Shanty Kock With Client