Calculating Reimbursement Rates:
 
What is the field standard for calculating repayment rates?
According to The Microfinance Handbook: An Institutional and Financial Perspective by Joanna Ledergwood (pg 206), a World Bank publication, either of these are acceptable:

• On-time repayment rate:
  • Collection on current amounts due less prepayments/Total current amounts due
• Repayment rate including past due amounts :                              
  • Collection on current amounts due plus past due less prepayments/Total current amounts due plus past due payments

There are four repayment rates outlined in the CGAP publication, “Measuring Delinquency”:

• On-time repayment rate
  • Amounts paid on time in cash/amounts falling due for the first time during the period
  • Best used as a day-to-day performance/red-flag indicator because it tracks success in collecting payments when they first become due.
  • Not a good measure of long-term annualized loss or future cash flow because it excludes late payments collected
• Asian collection rate
  • All payments received during cycle/all amounts due during cycle including past-due amounts from other cycles
  • Problematic to combine old arrears and current maturities in terms of understanding what is happening in current portfolio
  • Results in double-counting but makes it possible include payments collected from past cycles
• Current collection rate
  • All cash received during cycle/Cash that fell due during same period
• Cumulative collection rate
  • All payment received/All payments due throughout entire life of MFI 

Executive Summary of Repayment Cycle 3/5:
 
Project Muso Ladamunen (PML) recovered all of the funds it disbursed this cycle, which commenced in March 2010 and ended in January 2011.  PML disbursed 50,000 FCFA loans (~$100) to 219 women in 11 associations for the duration of 36-weeks.  Each PML cycle begins with a month grace period where participants are not obligated to make weekly payments.  Each week, PML collects 1750 FCFA from all participants, which includes loan principle (1388 FCFA), mandatory savings (250 CFA), and 12% annual interest (111 CFA)*.  Comprehensively, PML collects 50,000 FCFA in loan principle, 9,000 FCFA in mandatory savings, and 4,000 FCFA in interest.  Participants earn their savings at the end of the cycle and have the opportunity to recover all of the interest through on-time repayment.  Of the four associations who contributed loan capital this cycle, Chesiri, Yeregneton, and Yelenton recovered all of the funds they disbursed; Sigitemogoson recovered 78% of their disbursed funds.  The PML repayment rate for the 3/5 cycle was 97.34% and the delinquency rate was 2.66%.  This rate is based on the weekly collection of 1750 FCFA, which includes the payment of savings and interest.  14.1% percent of participants utilized part of the savings PML collects in order to make a missed payment at the end of the cycle; therefore, 85.9% made each 1750 FCFA payment in full and gained 9,000 FCFA in savings at the end of the cycle.
 
*At the start of the Microfinance program, PML charged 12% annual interest, which returned to PML’s bank account, to be put towards programmatic costs.  However, in 2008, when participants and religious leaders voiced their concerns over the conflict between paying interest and traditional Islamic law, PML’s team redesigned the repayment system. Together, we created an innovative no-interest model: each participant, through on-time individual and sub group repayment, now has the opportunity to earn back her 4,000 CFCA in interest (9%).  This collaborative effort with the religious community in Yirimadjo means that our microfinance model is accessible to religious Muslim women and families for whom other banking services are unavailable.
 
Final Repayment Information (12 January 2011):

• Total number of participants missing one or more payments: 31
  • Total who owe less than 9,000 FCFA: 18
  • Total who owe more than 9,000 FCFA: 13
• Breakdown by association:
  • Yelenton – 3 total, all <9,000 FCFA
  • Sigitemogoson – 16 total, 11>9,000 FCFA, 5<9,000 FCFA
  • Yiriwaton – 1 total, <9,000 FCFA
  • Sababoumandogo – 7 total, 2>9,000 FCFA, 5<9,000 FCFA
  • Gnetta I – 4 total, all <9,000 FCFA
  • Associations fully repaid: Yeregneton, Chesiri, Sabougnouman, Sebeton, Danayaton, Gnetta II

Statistics for Cycle 3/5

Repayment Rate: Cycle 3/5

• Collection on current amounts due plus past due less prepayments/Total current amounts due plus past due payments
• PML Recovery Rate
  • Total disbursed by PML: 8,750,000 FCFA
  • Total recovered by PML: 8,750,000 FCFA
  • PML Recovery Rate: 100%
  • This rate represents the amount of funds recovered by PML as a percentage of the amount of funds disbursed.  It takes loan principle and PML’s disbursement only into account.

• Principal Recovery Rate
  
  • Total disbursed: 10,950,000 FCFA
  • Total recovered: 10,831,115 FCFA
    
    • 10,950,000 – 118,885 = 10,831,115
    • 118,885 = the amount Sigitemogoson used of their loan capital contributed at the beginning of the cycle to repay loans
  • Principal Recovery Rate: (10,831,115/10950000)*100
  • Principal Recovery Rate: 98.91%
  • This rate represents the amount of funds recovered by PML & the associations as a percentage of the amount of funds disbursed.  It takes total loan principle disbursement into account.
• Repayment Rate
  
  • Goal to collect from borrowers: 13.797.000 FCFA
    
    • (1750 FCFA (weekly collection) * 36 weeks * 219 participants) = 13.797.000 FCFA
  • Total collected: 13.430.000 FCFA
  • Total uncollected: 367.000 FCFA
  • Repayment Rate: (13.430.000/13.797.000)*100
  • Repayment Rate: 97.34%
  • This rate represents the amount of funds collected by PML as a percentage of the amount of funds due.  It takes weekly collection (loan principle, savings, & interest) into account.

• Delinquency Rate
  
  • The amount of late payments divided by the total outstanding principal balance
  • Goal to collect from borrowers: 13.797.000 FCFA
  • Total uncollected: 367.000 FCFA
  • Delinquency Rate: (367.000/13.797.000)*100
  • Delinquency Rate: 2.66%
  • This rate represents the amount of funds uncollected by PML as a percentage of the amount of funds due.  It takes weekly collection (loan principle, savings, & interest) into account.

 
Repayment Rate: Cumulative
 

• 40,660,000 FCFA loaned out (total loans)
• 40,506,115 FCFA recovered (total loans)
• 99.62% Cumulative repayment rate

 
Other Relevant Cycle Statistics:

• Percent of delinquent borrowers = 5.94%
  
  •  (13/219)*100
• Percent of fully repaid borrowers = 94.06%
  
  •  (206/219)*100
• Percent of borrowers who utilized mandatory savings for 1 or more loan payments = 14.15%
  
  • (31/219) * 100
• Savings rate
  
  • 9,000 * 219 = 1.971.000 FCFA represents 100% savings rate
  • Total savings distributed at the end of cycle: 1.742.000
  • Savings rate = (1742000/1971000) *100
  • Savings rate = 88.38%