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Workshop Discussion - Successful Management Strategies to Reduce Cost and Improve Efficiency

Plenary Session – Policies, Regulation, Governance and Systems that Promote Sustainable Financial Institutions for Poor and the Poorest.

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Workshop Discussion - Successful Management Strategies to Reduce Cost and Improve Efficiency

Presentation by Amy De Los Santos, Director, Field Operation and Client Management Services, TSPI Development Corporation, Phillippines

TSPI started in 1981 with a very small group of staff and clients. Today TSPI is one of the leading microfinance institutions in the Philippines, with an outreach total of 83,000 clients as of November 2003, and manpower of 521 professionals both in the headquarters and our branches. Now we have 47 branches in the island of Luzon. TSPI has been financially viable since 2001, with total assets as of November at 428 million pesos; capital equity of 186.7 million; and a loan portfolio of 281,135 million pesos; however, our financial viability didn't happen overnight…

There were 2 major strategies that we employed to address this triangle of Microfinance. First, TSPI had to veer away from depending on financial grants and second would be to build and maintain the capacity of each of our branches. With 47 branches, that's a lot to manage.

I would like to share with you some components of this strategy. The first component would be on maintaining efficient branch operation and production management. The second would be to train staff with competent personnel management and financial management and more internal control. Another would be: program marketing and client management, this is where, we're using basically Grameen's model of a combination of group guarantee and individual responsibility.

In the first component, accurate area management, classifying of areas is very important, we help to locate where the poor are. The Philippines is an island and it's hard for us to pinpoint the areas we will be. Then we also develop predetermined goals and targets at the same time. We install and implement program systems, and standard operations. We're following the Microfinance Council standards of performance in evaluating our own performance- so it's like looking at the mirror and and evaluating ourselves.

The second component would be: good staff--with personnel management. We have a policy of hiring people where the branch is. We also have performance appraisal and incentive programs, so that they will retain clients and at the same time, have good production.

The third component would be controlled financial management. We have predetermined objectives from the beginning of the year, and we also have an audit department where they police operations and make sure that all of our staff are in line.

The fourth component is client management. We have a very strong client organization, starting from the centers, up to the highest levels of leadership. We emphasize center leadership as part of the strategy for efficient management of our program.

We also have a client retention program which encourages our staff to maintain clients. TSPI is about 23 years old, and we have clients who've been with us for the past 12 years. In addition, we have open line communication with our clients, through our organized groups, from the smallest center to the highest leadership. Based on TSPI's 20 years of experience in microfinance there is no doubt that MFI's play an important role in economic development of poor communities.

Access to credit for the people to accumulate wealth and prepare for financial vulnerabilities is very valuable. However, as we have experienced in TSPI, long-term survival and sustainability is critical for an MFI to reach its target clientele and cover as many as we want to and at the same time, cover administrative and other costs. While the social goals of reaching the poorest and poverty alleviation are valid, sustainability -- standing on one's own feet -- is as true for a low-income household receiving microfinance as it is for the microfinance institution itself.

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