Women’s Microfinance NetworkWomen’s Microfinance Network

Non-banking Deposit and Credit Non-banking Deposit and Credit OrganizationOrganization

RUSSIARUSSIA1

Women’s Microfinance Network:Women’s Microfinance Network:

•Founded in 1998 with the support from Founded in 1998 with the support from Women’s World BankingWomen’s World Banking

•MissionMission: – – build middle class, develop build middle class, develop local economy, encourage initiative and local economy, encourage initiative and entrepreneurship by opening access to entrepreneurship by opening access to financial resources for small business ownersfinancial resources for small business owners

EstablishedEstablishedBy womenBy women andand for for womenwomen

2

WMN was established as an WMN was established as an association of several non-for-association of several non-for-profit entities forming a two-profit entities forming a two-tier structure:tier structure:

• 1st level – locally managed funds 1st level – locally managed funds (partner organizations) located in (partner organizations) located in several regions of Central Russia;several regions of Central Russia;

• 2nd level - apex institution based in 2nd level - apex institution based in Moscow (NGO WMN)Moscow (NGO WMN)

3

•Fundraising (WMN lenders included Citibank, Deutsche Bank, IFC, Oikocredit, BlueOrchard, etc.)

•On-lending the funds borrowed from international lenders to the partner organizations

Providing partner organizations with technical assistance (workshops, experience exchanges, consultations)

•Monitoring and auditing operations of the partner organizations;

•Reporting to foreign lenders on the performance of the association 1st

LEVEL:

Offering micro loansOffering micro loans

2nd LEVEL:

NGO WMN (Moscow)NGO WMN (Moscow)NGO WMN (Moscow)NGO WMN (Moscow)

NGO FundNGO Fund

YaroslavlYaroslavl

regionregion

NGO FundNGO Fund

YaroslavlYaroslavl

regionregion

NGO FundNGO Fund

KostromaKostroma

regionregion

NGO FundNGO Fund

KostromaKostroma

regionregion

NGO FundNGO Fund

TulaTula

regionregion

NGO FundNGO Fund

TulaTula

regionregion

NGO FundNGO Fund

KalugaKaluga

regionregion

NGO FundNGO Fund

KalugaKaluga

regionregion

NGO FundNGO Fund

Tver regionTver regionNGO FundNGO Fund

Tver regionTver region

4

AsAs an association of separate non-an association of separate non-commercial legal entities WMN commercial legal entities WMN existed until 2005.existed until 2005.

Over the 7 years of successful Over the 7 years of successful growth and development the network growth and development the network disbursed disbursed

46 890 loans, plus 4,672 loans since 46 890 loans, plus 4,672 loans since thenthen

in the amount of RUB 1.726 bln.in the amount of RUB 1.726 bln.(over USD 60 mln., USD 1 = RUB 30)(over USD 60 mln., USD 1 = RUB 30)Plus 0.67 bln RUB since then.Plus 0.67 bln RUB since then.

5

3 396

5 759

8 8469 860

10 066

7 882

1 078

0

2 000

4 000

6 000

8 000

10 000

12 000

1999 2000 2001 2002 2003 2004 2005

Number of loans disbursed by WMN as Number of loans disbursed by WMN as an association of NGO fundsan association of NGO funds

in 1998 – 2005in 1998 – 2005

6

Amount of loans disbursed by WMNAmount of loans disbursed by WMN in 1998 – 2005 (thousand RUB)in 1998 – 2005 (thousand RUB)

65 485

171 338

316 305

421 913

474 230

250 352

15 8600

50 000100 000150 000200 000250 000300 000350 000400 000450 000500 000

1999 2000 2001 2002 2003 2004 2005 7

Loan portfolio of WMNLoan portfolio of WMN in 1998 – 2005 (thousand RUB)in 1998 – 2005 (thousand RUB)

20 454

57 692

128 234

183 556

230 744

85 026

4 1200

50 000

100 000

150 000

200 000

250 000

1999 2000 2001 2002 2003 2004 2005 8

In 2005 founders of WMN decided to In 2005 founders of WMN decided to consolidate the association of NGO consolidate the association of NGO MFIs into a single commercial MFIs into a single commercial entity as it opens new opportunities entity as it opens new opportunities for growth and development. for growth and development.

The goal of the transformation was The goal of the transformation was to create a precedent of to create a precedent of establishing a regulated Russian establishing a regulated Russian MFI. MFI.

9

Advantages offered by a regulated Advantages offered by a regulated entity status include:entity status include: •clear legal basis for operations;clear legal basis for operations;

•access to an expanded range of financing sources access to an expanded range of financing sources and increased leverage;and increased leverage; •governance structure with stronger accountability governance structure with stronger accountability mechanisms;mechanisms; •strengthening of internal controls and strengthening of internal controls and monitoring;monitoring;

•increased standardization of credit operations. increased standardization of credit operations.

10

In Summer 2005 NGO WMN paid up 100% of In Summer 2005 NGO WMN paid up 100% of startup capital (RUB 20 mln./ USD 645,161) of startup capital (RUB 20 mln./ USD 645,161) of a newly registered credit company – Non a newly registered credit company – Non banking deposit and credit organization banking deposit and credit organization “Women’s Microfinance Network”, closed joint “Women’s Microfinance Network”, closed joint stock company (ZAO NDCO WMN).stock company (ZAO NDCO WMN).

In September 2005 ZAO NDCO WMN obtained its limited In September 2005 ZAO NDCO WMN obtained its limited banking license authorizing it to banking license authorizing it to •capture time deposits from legal entities,

•invest the funds on the institution’s own behalf and at its own cost,

•issue bank guarantees and

•purchase and sell foreign currency in cashless form.

11

ZAO NDCO WMN started microfinance operations in ZAO NDCO WMN started microfinance operations in January 2006 in Moscow. January 2006 in Moscow.

Credit products offered:Credit products offered: Business and consumer loans RUB 5,000 – 350,000 (USD Business and consumer loans RUB 5,000 – 350,000 (USD 160 – 11,300) for 2 – 36 months, interest rates 32% - 160 – 11,300) for 2 – 36 months, interest rates 32% - 46%46%

As of 31 December 2006 As of 31 December 2006 ZAO NDCO WMN loan portfolio stood at RUB 68 mln. with ZAO NDCO WMN loan portfolio stood at RUB 68 mln. with 78 clients78 clients

RUB 59.8 mln. or 88 % of the loan portfolio were loans RUB 59.8 mln. or 88 % of the loan portfolio were loans to 10 Russian MFIs. to 10 Russian MFIs.

As in 2006 partner organizations hadn’t been transformed As in 2006 partner organizations hadn’t been transformed to ZAO NDCO WMN yet, the Board of Directors took to ZAO NDCO WMN yet, the Board of Directors took decision to offer loans to different Russian MFIs (NGOs - decision to offer loans to different Russian MFIs (NGOs - credit cooperatives) in order to make the available funds credit cooperatives) in order to make the available funds “work”.“work”.

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Consolidation of the partner organizations Consolidation of the partner organizations assets into ZAO NDCO WMN started in assets into ZAO NDCO WMN started in April April 20072007 and was completed in and was completed in December 2007December 2007..

Since 31 December 2007 ZAO NDCO WMN comprises Since 31 December 2007 ZAO NDCO WMN comprises Head office in MoscowHead office in Moscow and and

11 branches11 branches in in 5 regions5 regions of Central Russia: of Central Russia:

• 4 bigger branches in the regional centers 4 bigger branches in the regional centers of Kaluga, Tula, Kostroma and Tver of Kaluga, Tula, Kostroma and Tver

• 7 smaller branches in the towns of the same 7 smaller branches in the towns of the same regionsregions

13

WMN geography: 11 branches WMN geography: 11 branches

14

338,355

303,555281,914

243,398

324,546

304,722

307,852

68,110

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

30-Dec-06

30-Dec-07

30-Mar-08

30-Jun-08

30-Sep-08

30-Dec-08

30-Mar-09

31-May-09

Loan portfolio of ZAO NDCO WMNLoan portfolio of ZAO NDCO WMN in 2006 - 2009 (thousand RUB)in 2006 - 2009 (thousand RUB)

15

3,415 3,3223,1533,256 3,334 3,2903,205

70

0

500

1000

1500

2000

2500

3000

3500

4000

30-Dec-06

30-Dec-07

30-Mar-08

30-Jun-08

30-Sep-08

30-Dec-08

30-Mar-09

31-May-09

Number of clients of ZAO NDCO WMNNumber of clients of ZAO NDCO WMN in 2006 - 2009in 2006 - 2009

16

315,474

188,609

162,393

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2006 2007 2008

Loans disbursed by ZAO NDCO WMN :Loans disbursed by ZAO NDCO WMN :

Amount (RUB 000)Amount (RUB 000)

3,123

1,439

110

0

500

1000

1500

2000

2500

3000

3500

2006 2007 2008

NumberNumber

17

4.23%

10.51%

4.70%4.21%

4.89%

7.90%

2.72%3.03%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

30-Dec-06

30-Dec-07

30-Mar-08

30-Jun-08

30-Sep-08

30-Dec-08

30-Mar-09

31-May-09

PAR 30 of ZAO NDCO WMNPAR 30 of ZAO NDCO WMN in 2006 - 2009in 2006 - 2009

18

Clients of ZAO NDCO WMN - Clients of ZAO NDCO WMN - economically active people, mostly women, economically active people, mostly women, with low income and traditionally excluded with low income and traditionally excluded from accessing streamlined banking services.from accessing streamlined banking services.

Для производства:For farm owners:

Для производства:

««WMN was a helping hand WMN was a helping hand in difficult times. I’d like to in difficult times. I’d like to thank it very much. The thank it very much. The micro-loans allowed me to micro-loans allowed me to double the livestock of my double the livestock of my hog-raising farmhog-raising farm»»

TatianaTatiana KukhtoKukhto

WMN micro-loans open new horizonsWMN micro-loans open new horizons