INTERNSHIP REPORT CONDUCTED AT KWEFAAKO DEVELOPMENT INITIATIVE CO-OPERATIVE SAVINGS AND INVESTMENT GROUP

LIMITED, KAMPALA DISTRICT

LIST OF ACRONYMS

KDI Kwefaako Development Initiative

SACCOs Savings and Credit Cooperative Organisations

BDS   Business Development Services

SUPCO Supervisory Committee

SMEs  Small and Medium Scale Enterprises

LC1 Local council one

AGM Annual General Meeting

ID Identity card

UCA Uganda Co-operative Alliance

ABSTRACT

This internship exercise was carried out at Kwefaako Development Initiative (KDI) Limited, Katwe, P.O.Box 34069, Katwe Plot 877, Level 2, Buyaya building along Katwe Road opposite Jamila house.

The institution offers various loan products such as agricultural loans,  ,vulnerable group loans, School fees , Business loans, Emergency Taka loan ,savings and Shares to its target clients which include; the Savings and Credit Cooperative Societies (SACCOs), producers and Marketing Cooperatives,  Cooperative Unions, Small and Medium Enterprises (SMEs) . The institution also provides Business Development Services (BDS) for example Education Services to its clients, with the objectives of enhancing clients’ skills and their capabilities to manage their businesses profitably and sustainably and to impart skills and knowledge on good governance, their financial management and business management and as well onsite technical support to the clients.

This internship exercise was intended to provide the intern with relevant and the required practical skills and experience in the microfinance field such as loan appraisal and disbursement, loan monitoring and recovery, loan management and loan tracking skills, loan underwriting and approval, client mobilisation and sensitization, customer care and communication skills among others.

Basing on the view of microfinance as being more of a practical than theoretical course, I must confess that I managed to apply the theoretical knowledge to the practice in the field and within the institution as required by the institution. During the course of internship, I was able to use a number approaches, methods and techniques to gather relevant information from the field and from within the institution and these included; observation of the activities performed by other staff of the institution, interview method, hands on practice, literature review of the institution, interaction with the staff and clients, data entry and record keeping among others.

However, I also faced a number of challenges for example on technical aspects among which included inadequate funds, language barrier with some clients and I therefore advice that actions should be taken by the persons responsible for the sustainability and profitability of the institution.

CHAPTER ONE

THE INSTITUTIONAL PROFILE

1.0 Introduction

The institution is known as Kwefaako Development Initiative Sacco abbreviated as KDI.

1.1 The origin of the institution.

Kwefaako Development Initiative Sacco (KDI) was founded in 2010 by a group of 6 people who were former students of Mengo Senior School with a purpose of keeping together

It has been in existence for 6 years, KDI was opened on 8^th of April 2016 and offers savings and credit facilities for members and entire community .It was purposely set up to give timely solution for people in and around Kampala and its members who need to improve on their financial status

The SACCO is member owned and it currently constitutes a membership of 310 members.

1.2 Location of the institution

Kwefaako Development Initiative is a member owned institution with the Head Office located on Plot 877 Level 2, Buyaya building along katwe road P.O.BOX.34069, Kampala-Uganda. However, their planning to open up other branches in kibuye market and kyengera in Kampala and Wakiso.

1.3.1 Mission

“To improve the social and economic wellbeing of members and the community through savings and credit Investment training and social activities”.

1.3.2 Vision

“To be one of the most reliable saving and investment groups in Uganda”

1.4.0 Goal

“To contribute towards the development and transformation of the urban population”.

1.5.0 The core values Responsibility

All the staff of KDI must be responsible with all their duties, the staff must provide timely services and must be able to keep members savings.

Integrity, transparency and accountability

All the staff of KDI are duty bound to be truthful and honest in their dealings with various stakeholders. Staff should demonstrate respect for public office and responsibility for their decisions and actions.

Team work

KDI realises the need for synergy and collaboration.

Innovation

To ensure high quality performance of staff at all levels and coming up with new staff ideas for example product diversification among others.

1.6.0 Type of the institution.

KDI is a Member owned institution which was registered in 2016 as a SACCO therefore it has been in existence for 6 years and governed by its members and these include  the chairman ,vice chairman, supervisory committee among others

1.7.0 The products and services offered by the institution.

KDI offers various loan products and services and these the various types of loan products offered by the KDI include the following with their requirements and loan terms;

1.7.1 Emergency Loans

REQUIREMENTS

• Should be a member of the society
• His/her accounts should have been operated for at least 2 months
• Photocopy of ID
• A business plan and a trading licence where applicable
• At least two guarantors and collateral security
• Recommendation from the employer

TERMS AND CONDITIONS

• Should fill a loan application form
• 10% interest rate per months
• Loan should not exceed 40% of the value of the security and 2% insurance fees.

1.7.2 Personal Loans

REQUIREMENTS

• Should be a member of the society
• His /her account should have operated for at least 2 months
• A photocopy of ID
• A business plan and a copy of trading licence
• At least five guarantors
• Recommendation from LC1
• Collateral security

TERMS AND CONDITIONS

• Should fill a loan application form
• 3% interest rate per month
• Should have saved 50%of the loan amount
• Processing fee is 15000/=
• 2% insurance
• Should not exceed 6 months
  • Group Loans

REQUIREMENTS

• Should be a member of the group
• His /her accounts should have operated for at least two months
• Photocopy of ID
• At least five guarantors and a trading licence where applicable
• Recommendation letter from employer if any
• Recommendation from LC1
• Collateral security
• 20% savings in the amount applied for

TERMS AND CONDITIONS

• Should fill a loan application form
• Interest rate of 5% per month not exceeding 5 months
• 20% savings of the loan applied
• Loan should not exceed40% of the value of the security
  • Taka Loans

REQUIREMENTS

• Must have a running account with the society atleast2 months
• Must have deposited 30% of the required amount to buy the property
• Must have 10% of required amount in shares in the society
• Should have an account with the society
• 2passport size photos
• Photocopy of identification cards
• A running business or salary
• Recommendation letter from employer for salary earners
• The property in purchase act as collateral security

TERMS AND CONDITIONS

• Completed application form
• Interest rate of 2.5% per months
• Should have savings for at least 30% of the loan applied for
• Loan sizes shall depend on the client’s ability to pay.
• Borrower must repay his /her full instalment on the agreed date without fail

1.7.5 Agriculture Loans

REQUIREMENTS

• Should be a member of the society
• His /her accounts should have operated for at least 2months
• Photocopy of ID
• At least 2 guarantors and a trading licence where applicable
• Recommendation letter from the employer if any
• Recommendation from LC1
• Collateral security
• 20% savings on the amount applied for

TERMS AND CONDITIONS

• Should fill a loan application form
• Interest rate of 5% per months not exceeding 5 months
• 20% savings of the amount applied for
• Loan should not exceed 40% of the value of the security

1.7.6 Business Development Services.

KDI provides Business Development Services (BDS) to its clients, with the objectives of enhancing clients’ skills and their capacities to manage their businesses profitably and sustainably and to impart skills and knowledge on good governance, financial management and business management. KDI also provides onsite education support to clients.

1.8.0 Institutional financial position.

The institution has 310members and the others are clients who are being provided with credit at an affordable rate and business development services. KDI has an outstanding portfolio of Ugx 300,650,450with the repayment rate of 48% and 16 running loans as at the end of April 2017.

1.9.0 Organism/organisational structure.

1.10 The organisational culture

The SACCO’s working hours start at 8:30am and ends at 5pm form Monday to Friday. This was designed by the members for the staff to follow on normal occasion on daily basis and the staff members always hold weekly meetings to review the SACCO’s proceedings and sustainability. This is being led by the Manager to ensure the staff  follows the set performance and operational procedures and guidelines.

The management and staff do their work freely with minimum supervision, there is encouragement of free interaction with and among the staff members and there is also segregation of duty among the staff to prevent conflict of interests and other unusual practices that may arise in the SACCO. Some effort is also made to motivate management on daily basis and this is in form of Lunch and end of financial year parties, and this encourages team work among the staff and management

1.11 Employee characterisation

The SACCO is being managed by a team of qualified members which include the chairman, Manager, the Credit Officer, Cashier and the education officer who are all equipped with the required relevant skills in the management, credit and administrative operations of a financial institution. Other staff members include the cleaners all with the relevant skills and experiences.  This has enabled   efficient and effective performance of the institution

1.12 Ownership and governance profile

KDI is a SACCO owned by the members with the vision of providing financial services and non-financial services to all the active poor of Uganda so as to help extend rural finance and eliminate the problem of poverty and unemployment. KDI is being governed by one body i.e. the Uganda cooperative alliance (UCA). . The SACCO has various departments such as the Credit department, the Management department, Finance departments, Marketing department, etc. all with their respective heads who are responsible for the various activities in the SACCO.

1.13 The institutional regulation and supervision

Kwefaako development initiative is licensed as a SACCO by guarantee under Uganda cooperative alliance (UCA). KDI is also regulated by the Ministry of trade and industries. The company is being supervised by the Annual General Meeting (AGM) of the SACCO.

1.14 Administrative and management flow.

KDI is led by the committee who are appointed by the members in the AGM and this committee is answerable/accountable to the AGM. The committee appoints the managers who also become sitting members of the committee after appointment. The manager is in charge of implementing deliberations of the committee and managing the daily operations of the SACCO and aiding decision making through ensuring the employees are playing their roles hence they are responsible for every action relating to the internal management of the respective SACCO of their operation and they carry these deliberations with the help of the SACCO staff.

1.15 Monitoring and evaluation system.

As the committee and the staff form part of the SACCO, The SACCO is being monitored and evaluated by the committee members. However, the manager is responsible for monitoring and evaluating the activities and the assets at the SACCO using performance monitoring tools prepared by them as part of their duties and responsibilities and the staff is being monitored and evaluated by the Manager who appraises the staff on monthly basis to check on their performance.

CHAPTER TWO

METHODS AND TECHNIQUES USED TO COLLECT DATA

2.0 Introduction

During the internship exercise, the intern was able to use the following methods and techniques of data collection to gather information relevant in study and producing the report from the study;

2.1 Observation method.

This was the first method the internee used during the internship exercise and more especially in the first week of the internship exercise due to lack of practical skills or hands on experience of the activities of the institution. This involved much more of watching the activities being performed by the staff of the institution like cash book entry, interactions and discussions with the clients, loan appraisal and disbursements by the credit committee, preparation and review of the clients’ files and databases, balancing of the cashbooks, petty cashbooks and daily activity journals, writing and stamping of receipts, among others. This helped the intern to quickly adapt to the ways how different practical activities are being carried out in the institution and as well the conduct and the ways of the staff of the institution, thus creating a friendly environment for the intern. This method also enabled the intern to determine the staff workload per day by observing the number of clients who visit the SACCO on daily basis and estimating their number and also the quantity of activities carried out by the staff on daily basis.

2.2 Interaction

This method involved word of mouth and face to face means of data collection with the staff, clients and also other stakeholders of the SACCO. It involved the internee interacting and inquiring asking short questions about the institution, its clients and the various activities carried out by the institution. The intern was therefore able to inquire about various things which included the vision and mission statements, aims and the objectives, the institutional culture, the origin and background of the SACCO. The procedures of posting entries or transactions in the different books of accounts and generation of various financial statements was yet another area of interest that intern inquired from the staff and the clients views and feedback to the institution’s products and services.

2.3 Hands on practice

This was the most effective and reliable method or means of learning the major practices of the institution. This involved direct participation by the intern in activities such as loan appraisal, performance appraisal, loan disbursements, creating of clients’ databases, loan approval, balancing the daily and monthly books of accounts, attending to clients (customer care services). The intern also took part in field activities such as loan monitoring and recovery, clients’ visit, mobilisation and sensitisation, loan tracking and monitoring of clients’ loan performance among others thus gathering relevant data and information for the performance of the SACCO.

2.4 Interview method

This involved both oral and written interviews with the staff and the clients of the institution to gather relevant data and information about the institution. The intern was therefore able to prepare short questions which were asked orally and required answers from the interviewees (i.e. both the staff and the clients of the SACCO) in their own thinking about the questions being asked by the interviewer (the intern) and this also involved individual sampling and group interviews for the purpose of comparison of the views of the population interviewed. The intern also used engaged in written interview and here the intern was able to prepare questionnaires with closed-ended and open-ended questions which required short answers such as “YES”, “NO”, “NONE”, etc. and was therefore able to gather relevant data and information about the SACCO, its clients, clients’ needs and challenges in consuming the products of the SACCO, their views and the unmet needs. On the side of the staff, the intern was able to get information on various areas such as loan performance, monitoring and evaluation criteria and results, loan disbursement policies, performance evaluation, financial position and performance of the institution, human resource management policies, etc.

2.5 Recording and record keeping.

Another critical aspect of data collection is proper storage of data and information for reference and future use. Here the intern was also to record and enter the relevant data collected in to the computer in order to be stored or kept safe for the purpose for which it was gathered and also future use such as planning, monitoring and evaluation, new product development, outreach maximisation, marketing of the products, etc. thus promoting the sustainability and profitability of the SACCO. JAs described by the intern, recording and record keeping can be done both manually and digitally on the computer however, it’s more efficient recording and keeping data on the computer.

2.5 Literature review.

This method involves self-review and studying of the past documents or records of the different activities carried out in the institution like the financial reports, past loan application forms, journals for example from Bank of Uganda, and publications of the institution and other financial institutions and the Apex bodies such as AMFIU, UCSCU, ADF, NGOs, IMF, and World Bank among others. Other sources of literature include the internal payment vouchers, Board and Credit Committee Meeting minutes, monthly and annual reports and others. This method helped the intern to gather not only the present information but also the past information about the institution which helped in analysing the performance of the information and determining the trend of its performance over time so as to establish the better ways of improving productivity of the institution.

2.7 Focussed Group Discussion.

This was aimed creating a friendly environment and a concrete relationship between the members and the SACCO and it involved group discussion and interactions between the members and the SACCO in order to gather their views concerning the SACCO, their unmet needs, challenges views, complains, weaknesses and all pressing issues about the SACCO and the products and services provided to them. The intern was therefore able to represent the SACCO in a group discussion with a number of members.

CHAPTER THREE

SKILLS AND EXPERIENCE ACQUIRED

3.0 Introduction

The intern was able to acquire a number of skills and experience during the internship exercise from the activities carried out both within the institution and in the field and these include the following;

3.1 Administrative and management skills.

Here the intern was able to understand the chain of command at the institution and the reporting functions of each of the section or department within the institution. The intern was actively involved in a lot of management and administrative activities which included preparation of asset and stock registry reports, monitoring the stock and asset movement in the institution through making records for transfer of assets, monitoring and supervising staff activities as well as reviewing staff appraisal reports, reviewing the staff attendance records and carrying out spot checks on the staff, arranging for monthly meetings and chairing meetings at the institution with the Board to check on the performance of the institution. The intern was able to attend all loan committee meetings to appraise, recommend and approve loans for disbursement to the applicants. The intern also participated in collecting clients’ feedback on the services and products of the institution through interacting with and interviewing the clients so as to develop appropriate products and better ways of delivering the products and services to the clients in order to satisfy their needs.

3.2 Financial management skills.

The intern took part in the daily entry of transactions in the system and gained a lot of skills and experience in the areas such as cash analysis, petty cash entry, reconciliation, updating of clients’ databases, recording data in payment vouchers, filing of the receipts, and banking of cheques and following up bounced cheques among others, these enabled the intern to gain a lot of skills and experience in the areas of managing finance and also knowledge in using the loan performer system to manage financial transactions and prepare periodic reports for the performance of the institution.

3.3 Loan appraisal skills.

The intern got involved with the credit officer in loan appraisal and this involved activities such as verifying the required legal documents such as operating license, business performance records and making projections on the performance of clients’ business to determine whether the activities are worth funding by the institution, other documents included certificate of registration of the clients’’ businesses, business plans , operational manual and policy guide of the clients and tax clearance forms to determine the level of compliance of the clients. The intern also carried out field visits to verify the security pledged by the clients and as well visit the clients’ businesses to see the performance and verify the records presented by the clients about the business and finally completing of the loan appraisal form and presenting to the loans committee for further amendments and approval by the committee.

3.4 Loan monitoring and tracking skills.

Here the intern took part in monitoring the loans by paying visits to clients to see how the loans are performing and whether the loans have not been diverted into other uses by the clients other than the activity that it was meant for; the intern was able to visit the clients such as miracle centre church, mutungo ,Katwe 2 zone among others, this enabled the intern get adequate skills on monitoring the loans. The intern was also involved in filling the loan tracking form used for tracking the loans and evaluating the performance of the loans and other activities also involved ensuring the clients produce the accountability for loans disbursed to them. All these help the institution in evaluating the performance of their loans and thus reducing the level of loan delinquency and default and as well improving the institutional performance and sustainability.

3.5 Client mobilisation and marketing skills.

These involved moving out to the field by the employees to look for the prospective and potential clients as well as bringing into exposure the products and information about the institution in order to create awareness of the institution to public so as to attract them to consume the products of the institution. The intern therefore took part in these activities and was able to visit the following businesses; retail shops for group clients who normally take small amounts of money, Hope nursery and day care centre, , brick making site, saloons and many other untitled businesses within kampala with the intension of marketing institution’s products and services and as well encouraging them to consume the products of theinstitution ( KDI). This enabled the intern to gain a lot of skills and experience in mobilising and marketing financial services.

3.6 Client screening and selection skills.

Basing on the fact that financial service provision is a very risky business, there is need to always determine who should consume the products and services of a financial institution and who needs more preparation in order to be deemed potential for the financial products and services. This therefore brings in the act of screening and selecting the potential clients to be served by a financial institution and the intern was also involved in this activity and was able to screen and select the potential clients basing on the following criteria; compliance with the requirements by the clients, tax compliance records of the clients, business records, performance and the future projected performance of the business using the previous, current and the projected cash flows of the clients’ businesses, the financial and credit records of the clients, etc. this helps in determining whether the client will be in position to pay back the loan when entrusted by the institution

3.7 Customer care and communication skills

The intern also gained a lot of skills and experience in dealing with the customers which involved welcoming and attending to the customers in the best way that make them feel at home and satisfied and also develop love and pride for the institution such that they are able to come again and again and also encourage their friends to come along with them to witness thus selling the institution and promoting outreach maximisation of the institution. The intern was able to this by seating on the front desk to welcome clients, ensure they register in the visitors book to make them feel considered, interacting with them freely and finally ensure their problems or needs are catered for by the staff of the institution or the intern himself thus building in the intern a lot of skills and experience in dealing with customers as well as how to communicate to them.

3.8 Recording and record keeping skills

This involved a number of activities by the intern which included recording information in various meetings  and loans committee meetings and preparing the minutes for the meetings, keeping records of assets and stock as well as updating the stock and asset registry upon the use of those assets, filing of the records such as clients’ records and document which are filed on clients’ respective files and storing the information into the computer system for proper record management to avoid loss of clients’ and institution’s information. All these activities enabled the intern to gain a lot of skills and experience in record management.

3.9 Team Work Skills

The internship helped me to get many friends in the organisation and outside the organisation, different employees of the organisation became good people to me.

3.10 Computer skills.

The intern was also able to get more experience and skills in using computers and soft ware’s used by the institutions, in this, the intern was involved in entry of several data and information and also performing other activities such as cash analysis, updating client database, entry of transactions, sending and receiving mails within and outside the institution, scanning and printing documents and preparing daily till sheets , performance reports, etc. thus enabling the intern to be well equipped with the computer knowledge and experience.

CHAPTER FOUR

CHALLENGES, CONCLUSION AND RECOMMENDATIONS

4.0 Introduction

This chapter shows some of the challenges the intern faced during the entire internship exercise, the conclusion and some of recommendations that the intern was able to come up with concerning the areas that need to be improved for the betterment and prosper of the institution and these are discussed as below;

4.1 Challenges

There are a number of challenges that the intern encountered during the intern exercise which include the following;

Breakdown of some technical equipment.

There was a problem of system breakdown and this could always happen due to some few mistakes done by an individual, this could lead to delay in the work of the institution as we could be waiting for the technician to install the system back.

The long lead time

The long period for the clients to get the loans from the time of their application is also issue that needs to be addressed in order to increase the rate of disbursement of loans and as well motivate the clients who would need immediate funding in order to cope up with the ever-changing business environment.

Transport challenges

This was a challenge most especially when going to the fields as cars would not access to some places which required us to walk on feet in order to reach our clients and make appraisals and others for recovery issues.

Language barrier

This was also another challenge mostly during the client mobilisation and visits in places where the intern could not speak the local language and the people could not easily speak English for example during a field visit in Nsambya Kitoro where there was need for a translator to communicate with the BatoroWomen Group. However, this was not a very big challenge as most of the target people speak English in the area.

Limited access to some institution’s information by the intern

The intern had limited access to some of the institution’s information especially to the financial documents. Such documents were blocked through the use of passwords and this surfaced as a challenge because the financial management skills were then partially done.

4.2 Conclusion

In conclusion, it has therefore been an opportunity for the intern to have the “hands-on”  approach and experience to the microfinance practices at Kwefaako Development Initiative Katwe where she was able to learn and take part in all the relevant and necessary activities of the institution in line with the Microfinance practices with adequate guidance from the entire staff of the institution which made the exercise very valuable and productive to the intern adding on to the knowledge got in class. This report therefore shows the activities that the intern engaged in, the skills and experience acquired and challenges encountered during the entire internship exercise.

4.3. Recommendations.

As per time the intern spent for the internship exercise at Kwefaako Development Initiative and the knowledge and experiences acquired, she has been able to point out the following recommendations which she believes might be of great value to the institution.

Improvement in the lead time.

The period taken to process the loans by the clients should be improved in order to meet the immediate needs of funding by the clients such that they are able to make productive use of the funds and generate adequate returns from their businesses due to the fact that our economic climate is never stable and some of the activities are seasonal therefore calling for immediate response. This will also lead to increase in the portfolio size and as well the performance of the credit department as well as attracting more clients to access the products and services of the institution.

Employee’s contracts.

Most of the employees have short term contracts of around three months which are renewable basing on the performance which to some extent demotivates them from working since at times they are not sure of their contracts being renewed or not, there should be therefore be addressed by giving them longer term contracts which will enable them to work under minimum tension and be able to produce the required output.

Marketing and outreach maximisation.

The institution needs to take some marketing and promotional activities such scheduling radio talk shows and adverts, taking part in the trade shows, taking part in sports events and crosscutting issues such as community cleanliness i.e. the institution can put some street dustbins, etc.

Employees identification.

The intern also recommends that staff should be provided with the IDs or tags that they wear for easy identification by the community and can be easily be consulted for more information about the institution by the people in the community.

Intern motivation

The intern also recommends that the institution should also provide some intern motivation through providing them with lunch or transport allowances since this will motivate and inspire the interns to work harder.

Appendices

Appendix I: Handover Letter

Appendix II: General Comment