Invited review: Are adaptations present to support dairy cattle productivity in warm climates

The Norwegian DevelopmentNetwork

GUIDELINES FOR APPRAISAL AND MONITORING OF

MICROFINANCE PROJECTS

May 2002

by

- Formats for Micro-finance projects -

Jens Claussen, Nordic Consulting Group,Norway

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- Guidelines for appraisal and monitoring of microfinance projects -

LIST OF ABBREVIATIONS

CGAP Consultative Group to Assist the Poorest

GDP Gross Domestic ProductMBB Micro Banking BulletinMF Micro FinanceMFA Royal ministry of Foreign

Affairs, NorwayMFI Microfinance InstitutionNDN Norwegian Development NetworkNGO None Governmental OrganisationNORAD Norwegian Agency for Development

CooperationUSD United States Dollar

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TABLE OF CONTENTS

1. INTRODUCTION..........................................1

2. formats for project document/progress reports.........2

ANNEX I - SAMPLE PROJECT DOCUMENT/APPLICATION FORMAT

ANNEX II - PROJECT DATA FORMATS

ANNEX III - PROJECT SAMPLE

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1. INTRODUCTIONIn 1999 the Royal Norwegian Ministry of Foreign Affairs(MFA), the Norwegian Agency for Development Cooperation(NORAD) and the NGO partners in the Norwegian DevelopmentNetwork (NDN) commissioned a study of their portfolio ofmicrofinance (MF) projects. The study was implemented intwo phases; the first phase focussed on their approachesto microfinance, the second phase on actual performance ofmicrofinance projects supported. The study revealed thatthere is a scope to improve procedures used by NGOs, NORADand MFA in their monitoring of MF projects. The Norwegian NGOs promoting microfinance have for a longtime felt the need for more structured formats for projectdesign/applications and progress reporting enablingappraisal and monitoring of microfinance projects. Theformats should take into account the specific indicatorsused for assessment of such projects like outreach,operational efficiency and financial sustainability.In response to the above, this document presentsprocedures and formats for appraisal and monitoring of MFprojects. It is intended as a tool first and foremost forthe members of the NDN and their partners in the South toimprove their appraisal of microfinance project proposalsand monitoring of their implementation. In the following some formats are presented that can beused for collecting and analysing information to serve theabove purpose. They have been developed on the basis ofthe following criteria:

The formats should be simple with an informationrequirement strictly on a "need to know" basis.

The information required should be easily availableby MF projects to limit the transaction cost for themin meeting donor appraisal and monitoringrequirements.

The performance indicators should be simple and easyto interpret but at the same time provide a

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comprehensive overview of overall performance of theMF project.

The formats in this document are based on more detailed and complete guidelines and tools, in particular: "Format for Appraisal of Microfinance Institutions: A Handbook" byCGAP (www.cgap.org/html/p_technical_guides04.html) and "Micro and small enterprise finance: Guiding principles for selecting and supporting intermediaries" by the Donor Committee on Small Enterprise Development (www.ilo.org/public/english/employment/ent/papers/financgd.htm).

Guidelines that also include tools for impact and client satisfaction assessments may be obtained from various other sources specialising in the field of microfinance like USAID's impact assessment and micro enterprise best practices projects (www.mip.org)and MicroSave Africa (www.microsave-africa.com).

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2. FORMATS FOR PROJECT DOCUMENT/PROGRESS REPORTS

Project document/application formats should be used asguidance to ensure that baseline information is collectedfor subsequent monitoring of performance by use ofperformance indicators. Most multilateral and bilateraldonors use some form of logical framework in projectdesign and have developed their own internal guidelinesand formats to structure the project document/application.A sample of such a format is enclosed in annex I1. It mayserve as a checklist for the formats used by respectiveNGO.All projects may be subject to the same formats forproject documents/progress reports. For MF projects,however, there are some important additional features toconsider ensuring that baseline information is collectedto allow adequate monitoring. As a point of departure wesuggest to use some few key indicators for appraisal andmonitoring of MF projects grouped into three differentcategories: Outreach indicators

1. Average number of active clients serviced during theyear (calculated as a yearly average of the weekly ormonthly average number of clients or as an averagebetween beginning of year and end year).

2. Average loan in percent of GDP per capita as anindicator of which income bracket of the populationis being serviced (calculated as the average totalloan balance divided by average number of loansdivided by GDP per capita, the yearly averagecalculated in the same manner as average number ofclients).

3. Percent number of clients saving during the year(average number of active clients saving divided by

1 Logical Framework is commonly used by most multilateral organisationsand institutions (like the UN organisations and EU) as well as bilateralaid agencies (like all the Nordic agencies, DFID, GTZ, SNV, SDC, etc.).

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average number of clients, the average calculated inthe same manner as average number of clients).

4. Percent women clients. Yearly average number ofactive women clients divided by the yearly averagetotal number of active clients.

Institutional indicators

1. Number of loans per staff (average number of loansdivided by number of person-years of staff). Itserves as an indicator of "physical" productivity ofthe project.

2. Administrative cost per loan (the administrative costtaken from the project/MFI accounts including allpersonnel costs and other administrative costs butexcludes financial costs like interest and feeexpenses and loan loss provisions). It serves as afinancial productivity indicator.

3. Administrative cost in percent of total loanportfolio (the same administrative costs as abovedivided by the average total loan balance). It servesas an indicator of the cost of the service relativeto the financial volume of the service provided.

Financial performance/portfolio risk

1. Operational self-sufficiency (total operationalincome divided by total operational costs). It showsto what extent the total operational income issufficient to cover total operational costs, butexcludes return on equity or investments. If theratio is 100 percent the total operation can besustained without external funding however will notmake any surplus.

2. Portfolio yield (interest and fee income in the yeardivided by the yearly average loan balance adjustedfor inflation). It serves as an indicator of thefinancial performance of the loan portfolio and/orreflects the interest rate policy of the project. Ahigh relative yield will typically picture a highreal interest rate and/or low default rate.

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3. Percent loan amount in default of more than 30 days(total loans with at least one payment overdue after30 days divided by total loan balance). Preferably,there should also be an aging arrear report,covering, for example, 60 and 90 days and one year.It signifies the risk for future loss in income andfinancial assets.

The above indicators give key information to overallperformance and performance in each area (efficiency,effectiveness and sustainability). The data required toproduce the above indicators are provided in the projectdata sheets presented in annex II and can be considered asformats to be attached to the project document and/orprogress reports. In Annex III we present data from asample project to illustrate how to calculate andinterpret the indicators.The outreach indicators may be taken as an approximationto impact. Real impact assessment would, however, needadditional information from a more in-depth study athousehold/client level preferably with a baseline study ofa sample of potential clients prior to projectimplementation followed by annual/bi-annual surveys of thesame "panel" of clients. It may include simple clientsatisfaction surveys based on interviews of a sample (orpanel) of clients guided by a standard questionnaire toensure consistency in data collection.2

There are no "global standards" for most of the indicatorsto compare whether the MF project is well performing ornot. However, the Micro Banking Standards Projectpublishes a Micro Banking Bulletin (MBB) at regularintervals3. The MBB presents key indicators of a sampleselection of large-scale specialised MF institutionsconsidered to be among the best performers in thebusiness. When comparing MF project indicators with theMBB panel it is important to take into account that

2 For guidance on impact assessment methodologies, client satisfactionstudies and drop-out studies, see www.microsave-africa.com andwww.mip.org.

3 The MBB's homepage is www.microbanking-mbb.org.

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economy of scale and geographical location are importantfactors in determining the above indicators. Some of the indicators may give some guidance regardlessof country specific circumstances like;

Average loan in percent of GDP per capita. Thisindicator will show whether the MF project isproviding small, medium or large-scale loans comparedto the average “income level” of the society. As anindicator of poverty focus one would expect thataverage loan in percent of GDP per capita is below 50percent. For the sustainable MBB projects averageloan size is well below GDP per capita.

Percent loan amount in default of more than 30 days.Based on many empirical studies it is commonlyclaimed that a default rate above 5 percent will notmake the MF project sustainable in the long run.

For all the indicators, however, the important issue is toassess changes over time, that the MF projects increasestheir client base (growth in average number of activeclients) but at the same time maintains their povertyfocus (average loan in percent of GDP per capita), thatthe institutional indicators show that physical andfinancial productivity is maintained or improved, and thatthe financial performance indicators develop favourably tomake the MF project a more sustainable operation. There are important relationships between the outreach,efficiency and financial performance indicators, and theymust be compared to each other to get a comprehensive viewof an MFI's performance. For instance, a high portfolioyield might be a result of inefficiency, highadministrative costs and consequently higher interestrates than necessary. Furthermore, reaching financialsustainability is not an ultimate goal for all MFIs. Theremight be sound reasons for subsidising MFIs for severalyears. However, it is important to know whether an MFIoperates in a cost-effective way. Inefficient MFIs poseexcessive burdens on their clients. Even MFIs that obtaingood performance indicators might not serve the clients ina satisfactory manner. Therefore, MFIs should conduct

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client satisfaction studies with the aim of improvingtheir services and reduce the clients' transaction costs. For monitoring purposes the same indicators should bepresented in the project applications and progress reportsto allow comparison of projected versus actual indicators.

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ANNEX I - SAMPLE PROJECT DOCUMENT/-APPLICATION FORMAT

1. BACKGROUND AND JUSTIFICATIONA description of the project background rationale, and thepolitical and institutional environments. In MF projectstypically describing MF as a tool in poverty alleviation,the socio-economic situation of the target group, theircurrent access to and need for financial services, thecurrent market for MF in the country or area concernedincluding association of MFIs and donor coordinationinitiatives, and the regulatory framework for MFactivities.2. PROJECT LOGICAL FRAMEWORKDevelopment Objective (Goal)

Define an achievable goal and external risks that may haveimpact on opportunity to achieve it. For MF projects thegoal is typically poverty reduction, increased income andwealth for households, empowerment of target groups, etc.Immediate Objective (Purpose)

Define an achievable objective, quantifiable to the extentpossible, (impact) indicators to assess if the objectivehas been achieved and external risks that may have impacton opportunity to achieve it. For MF projects typicallynumber of clients serviced by MF services and theirincrease in income, household wealth and/or otherindicators measuring impact of access to MF services. Project Outputs/Results

Define all outputs to be produced, indicators to verifythat they have been produced and external risks that mayhave an impact on the possibility to produce them. For MFprojects typically description of type of financial andnon-financial services, number of clients serviced by typeof service, other outputs associated with the project.Project Activities

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For MF projects these are typically training of financialofficers and branch managers, and identification andsensitisation of clients, developing and installing amanagement information system, setting up the organisationincluding developing the branch network. It should includea description of external risk that may affect theimplementation of the activities. It should also include adescription of the implementation arrangement with aschedule of reporting, reviews and evaluations.In addition, the project document should include a matrixshowing each output with associated activity within aschedule also indicating cost per activity (Annexed to theproject document). This matrix will subsequently form thebasis for progress reporting.Project Inputs

The MF project inputs typically includemanagement/promoters and organisation, personnel, rentand/or construction of branches/offices, managementinformation system and other non-material and materialinputs with a description of external risks associatedwith the possibility to acquire them and maintaining them.3. PROJECT BUDGET AND FINANCING PLANIn annex II a proposed simple format for the MFI projectbudget is presented. It is based on the recommendedstandard format for appraisal of MF institutions developedby CGAP but represents a more simplified version. Itcaptures the specific financial information of MFoperations that can also serve as input to the calculationof outreach, institutional and financial indicators (ref.chapter 2 above).

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ANNEX II - PROJECT DATA FORMATSINCOME AND EXPENDITURE (in USD)OPERATING INCOME Year 1 ……. Year N A. Interest and fee income from loansB. Other operating income (not includinggrants and donations)C. Total operating IncomeOPERATING EXPENSE Year 1 ……. Year N D. Interest and fee expenseE. Loan loss provision expenseF. Administrative expense — PersonnelG. Other administrative expenseH. Total operating expenseI. Net operating profit (loss)NON-OPERATIONAL INCOME/Expenditure Year 1 ……. Year N J. Cash donations for financial servicesK. Other non-operational income L. Non-operational expenditureM. Total consolidated profit (loss)

BALANCE SHEET (in USD)ASSETS Year 1 ……. Year N N. Short-term assetsO. Total loan portfolioP. (Loan loss reserve)Q. Long-term investmentsR. Net fixed assetsS. Total assetsLIABILITIES Year 1 ……. Year N T. Savings accounts; clients savings U. Other liabilitiesV. Total liabilities W. Total equity X. Total liabilities and equity

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Basic dataCOUNTRY DATA Year 1 ……. Year N

AA. InflationAB. Official GDP per capita in USDPROJECT DATA Year 1 ……. Year N

AC. Average total number of staff -yearsAD. Number of active clients end of yearAE. Number of active women clientsAF. Average total loan balance in the yearAG. Number of loans end of the yearAH. Average number of loans in the year

AI. Average loan size in the year

AJ. Total amount of loans end of year withpayments delayed with more than 30 days

AK. Number of active clients that are savingend of the year.

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PERFORMANCE INDICATORS

OUTREACH Year 1 ……. Year N

AL. Average number of active clients in theyearAM. Average outstanding loan in percent ofGDP per capitaAN. Percent active clients saving during theyearAO. Percent women clients INSTITUTIONAL INDICATORS Year 1 ……. Year N

AP. Number of loans per staffAQ. Administrative cost per loanAR. Administrative cost in percent of loanportfolioFINANCIAL PERFORMANCE/PORTFOLIO RISK Year 1 ……. Year N

AS. Operational self-sufficiency AT. Portfolio yieldAU. Percent loans in default of more than 30days

EXPLANATIONS To allow cross-country comparisons it would be beneficialif all data are provided in USD however they may beprovided in local currency - in the latter case theNorwegian NGOs will have to make the currency conversionsto make comparison with projects across countries. Inintegrated programs in which the microfinance operation isonly one component, the income and expenditures shouldonly reflect those associated with the MF component butincluding its share of general administrative costs of thetotal program.INCOME AND EXPENDITUREA. Interest and fee income from loans - All income onloans made to clients (use cash basis, or separate accruedinterest from actual receipts. When loans become non-performing, new accruals of unpaid interest should ceaseand old accruals of unpaid interest should be reversed).

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B. Other income - Fees for savings passbooks, insurancepremiums, etc. Interest from bank accounts or investmentsin market instruments used primarily for liquiditymanagement. It should not include donations and othercontributions from donors and financial institutions.C. Total Operating Income - The sum of A and B.D. Interest and fee expense - Interest and fee expensesfor all loans, deposits, or other liabilities funding thefinancial service operation.E. Loan loss provision expense - Cost ofcreating/maintaining the loan loss provision. If currentperiod write-offs exceed reserves, take this expense here.F. Administrative expense personnel - All staff andconsultant costs, including payroll taxes and fringebenefits (preferably on an accrual basis, especially inthe case of major future benefits like severance payobligations).G. Other Administrative Expense - Like rent,transportation, supplies, utilities, fees, depreciation,other associated with the financial services. H. Total operating expense = D + E + F + G.I. Net operating income = C – H.J. Cash donations for financial services - Grants andother contributions from donors to the operation of thefinancial services. K. Other non-operational income - Income from investmentswhich play no role in the delivery of financial services,income from non-financial services, sale of land,consultancies, etc.L. Non-operational expense - Any expenses not related tothe MFI’s financial services business, such as anevaluation or impact study mandated by a donor.M. Total consolidated profit (loss) - Net operating profit(loss) plus non-operational income, minus non-operationalexpenses = I + J + K – L.BALANCE SHEET

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N. Short-term assets - Cash on hand, checking accounts orother instruments paying little or no interest. Reservesin central bank (relevant only for licensed financialintermediaries). Interest-bearing deposits and investmentsin financial instruments, where the principal purpose isliquidity management. Accounts receivable, accruedinterest on loan portfolio.O. Total loan portfolio - Total outstanding balances ofloans to clients, including loans past due but not writtenoff.P. (Loan loss reserve) - A negative asset account: set-aside for estimated future losses on problem loans thathave not yet been written off. Q. Long-term investments - Stock in any other enterprises,or other long-term, illiquid assets that earn returns.R. Net fixed assets - Land, building, equipment, net ofaccumulated depreciationS. Total Assets = N + O + P + Q + R.T. Savings accounts - Compulsory savings required as partof the credit methodology. Liquid deposits from thegeneral public. U. Other short and long term liabilities -Time depositslike certificates of deposit from the general public.Loans at market rates from banks or other financialinstitutions. Rediscount or other special lines of creditfrom the central bank. Concessional loans from donors,etc. Accounts payable, accrued interest to be paid onloans and deposits. Mortgages on property. etc.V. Total liabilities = T+U.W. Total equity - Paid-in equity from shareholders likeequity contribution of owners of stock. Donated equityreceived through cash donations from sources that do notreceive stock. Cash donations for financial services.Accumulated consolidated profit (loss) previous years (Maccumulated from previous years). Consolidated profit(loss) current year (M). Other capital accounts like

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special reserves or other capital accounts, plus anyretained earnings from non-financial operation.X. Total liabilities and equity - Must be the same astotal assets i.e. X = S.COUNTRY DATAAA. Inflation - the official consumer price index for theyear published by the country's national bureau ofstatistics, central bank or other Government agency. AB. Official GDP per capita in USD - as published by thecountry's national bureau of statistics, central bank orother Government agency. PROJECT DATAAC. Average total number of staff-years - The yearlyaverage number of staff-years employed in financialservices calculated as a yearly average of the weekly ormonthly average number of staff years or as an averagebetween beginning of year and end year. For programs witha wider scope than microfinance this should give anestimate of the person time exclusively used for thefinancial services component including amount of inputfrom general program administration etc.AD. Number of active clients end of the year - The numberof active clients at the end of the year that are beingserviced by the MF project.AE. Number of active women clients end of year - Thenumber of active women clients at the end of the year thatare being serviced by the MF project.AF. Average total loan balance during the year - Yearlyaverage loan balance calculated as a yearly average of theweekly or monthly average of the loan balance or as anaverage between beginning of year and end year. Data onoutstanding loan balance are provided in the balance sheet– average can be calculated as the average between end ofcurrent year balance and end of previous year balance.AG. Number of loans end of the year – Number of loansoutstanding at the end of the year.

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AH. Average number of loans in the year – Calculated asthe average of AG in the same manner as average loanbalance (ref. AF above).AI. Average loan size in the year = AF/AH..AJ. Total loan balance end of year with payments delayedwith more than 30 days - The amount in USD of the loansthat have delays in payments of principal and/or interestof more than 30 days.AK. The number of active clients that are also saving atthe end of the year.PERFORMANCE INDICATORSOutreach indicators

AL. Average number of active clients in the year - Averagenumber of clients serviced during the year calculated inthe same manner as AF above. Can use average between ADcurrent year and AD previous year.AM. Average loan in percent of GDP per capita = AI/AB. AN. Percent active clients saving during the year –Average number of active clients saving (average AKcurrent and AK previous year) divided AL. AO. Percent active women clients - Average number ofactive women clients (average of AE current and AEprevious year) divided by AL.Institutional Indicators

AP. Number of loans per staff = AH/AC. AQ. Administrative cost per loan = (F+G)/AH.AR. Administrative cost in percent of total loan portfolio= (F+G)/O.Financial performance/portfolio risk

AS. Operational self-sufficiency (total operational incomedivided by total operational costs) = C/H. AT. Portfolio yield (interest and fee income divided byaverage loan balance adjusted for inflation) = (A/AF)-AA.

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AU. Percent loan amount in default of more than 30 days =AJ/O.

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ANNEX III - PROJECT SAMPLEIn the following we present the data sheet for a small-scale microfinance project (some 1200 loans) from itsthird year of operation. The data is from a microfinanceproject in Nicaragua primarily servicing individualclients through a cooperative. As can be seen from thedata below it is still expanding and still receives grantfunding to support its financial services. The case mayserve as an illustration of how to interpret theperformance indicators as they have been calculated on thebasis of the data presented (see comments below).INCOME AND EXPENDITURE (in USD)OPERATING INCOME Year 1 Year 2 Year 3

A. Interest and fee income from loans 137

165 156

183 248

427

B. Other income 14

788 29

747 32

438

C. Total operating Income 151

953 185

930 280

865 OPERATING EXPENSE Year 1 Year 2 Year 3

D. Interest and fee expense 92

531 61

261 22

914

E. Loan loss provision expense -

-

-

F. Administrative expense — Personnel 68

903 170

732 163

706

G. Other administrative expense 19

889 217

303 154

435

H. Total operating expense 181

323 449

296 341

055

I. Net operating profit (loss) -29

370 -263

366 -60

190 NON-OPERATIONAL INCOME/Expenditure Year 1 Year 2 Year 3

J. Cash donations for financial services 240

695 184

685 69

560 K. Other non-operational income

L. Non-operational expenditure 12

321 13

452 15

680 M. Total consolidated profit (loss) 199 -92 -

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004 133 6 310

BALANCE SHEET (in USD)ASSETS Year 1 Year 2 Year 3 N. Short-term assets 22

267 28

025 122

180 O. Total loan portfolio 342

523 441

019 506

500 P. (Loan loss reserve) Q. Long-term investments R. Net fixed assets 51

519 114

431 150

525 S. Total assets 416

309 583

475 779

205 LIABILITIES Year 1 Year 2 Year 3 T. Savings accounts 12

558

9 856

5 564 U. Other liabilities 109

124 100

110 94

881 V. Total liabilities 121

682 109

966 100

445 W. Total equity 294

627 473

509 678

760 X. Total liabilities and equity 416

309 583

475 779

205

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BASIC DATA

COUNTRY DATA Year 1 Year 2 Year 3

AA. Inflation 11 % 9 % 13 %AB. Official GDP per capita in USD

410

440

520 PROJECT DATA Year 1 Year 2 Year 3

AC. Average total number of staff-years 15

36

38

AD. Number of active clients end of year 698 752 768AE. Number of active women clients end ofyear

398 331 268

AF. Average total loan balance in the year 298762

391771

473760

AG. Number of loans end of year 856

1 220

1 253

AH. Average number of loans in the year 798 1038 1237AI. Average loan size in the year 374 377 383AJ. Total amount of loans end of year withpayments delayed with more than 30 days

7 536

18 523

48 624

AK. Number of active clients that are savingend of year 455 498 532

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PERFORMANCE INDICATORS

OUTREACH Year 1 Year 2 Year 3

AL. Average number of active clients in theyear

635 725 760

AM. Average outstanding loan in percent ofGDP per capita 91% 86% 76 %AN. Percent active clients saving

65%

66%

69% AO. Percent women clients 57% 44% 37%INSTITUTIONAL INDICATORS Year 1 Year 2 Year 3

AP. Number of loans per staff 53

29

33

AQ. Administrative cost per loan 111

374

257

AR. Administrative cost in percent of loanportfolio 26 % 88 % 63 %

FINANCIAL PERFORMANCE/PORTFOLIO RISK Year 1 Year 2 Year 3

AS. Operational self-sufficiency 84 % 41 % 82 %AT. Portfolio yield 35 % 31 % 39 %AU. Percent loans in default of more than 30days 2 % 4% 10%

COMMENTS TO THE DATA PRESENTEDOutreach indicators

The project has increased its outreach to clients in thethree years as can bee derived from Average number of clients inthe year (AL), but is still small-scale compared to the MicroBanking Bulletin average microfinance institution. Itappears to have increased its level of services byproviding an increasing number of loans to the sameclients rather than increasing number of clients serviced.It has gradually provided smaller loans thus likelyreaching out to lower income groups, which is confirmed bythe decline in Average loan in percent of GDP per capita (AM). The percent of active clients saving (AN) has gradually increasedwhich may serve to illustrate that the outreach of other

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forms of financial services are also increasing. Theamount of savings (as can be noted from the balance sheet)has gradually been declining, thus this important sourceof finance is not being exploited. In this case it is avoluntary savings scheme, not forced savings as insuranceagainst loan loss and there are no provision for such"insurance" as can be noted from the accountinginformation were there are no loan loss provisions or reserve (E andP). The percent of women clients (AO) has gradually declined throughthe years while the number of loans has increasedsignificantly. This observation will need additionalinformation to be explained, especially if it is due to achange in the approach to how the financial products aretargeted and/or approach in mobilisation of clients. Institutional indicators

The number of staff years (AC) has increased significantly morerelative to number of loans (AH) thus the physicalproductivity, although increased the third year, is stilllow (AP) and the administrative cost per loan (AQ) remains high (inyear 2 as high as the average outstanding loan). The administrative cost in percent of the total loan portfolio (AR) is alsohigh. Thus the project has a need to expand its number ofloans in order to achieve better economy of scale (costefficiency) i.e. improve physical productivity but most ofall financial productivity. Financial performance/portfolio risk indicators

The operational self-sufficiency (AS) declined substantially in thesecond year primarily due to a significant increase inother administrative expenditures (G) which were reduced in thethird year combined with increased income from financialoperations (A) thus improving project financial performance(reduced net operating loss). With a further increase in volume of financialservices/number of loans, it may reach operational self-sufficiency (100%) and turn overall consolidated loss (M) intosurplus even with further reduction in grants/donations(J).

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The portfolio yield (AT) is at a high level signifying a highreal interest rate compensating for low financialproductivity and an increasing default rate (AU). A furtherdeterioration in the volume of loans in default mayhowever put the portfolio at risk, reduce income frominterest on loans (A) and thus reduce the prospects ofachieving operational self-sufficiency.

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Invited review: Are adaptations present to support dairy cattle productivity in warm climates

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