NICRO Annual Report 2003-2004

JJ OOSTHUYSEN MANAGING DIRECTOR: NEF

NICRO Enterprise Finance has created a methodology and an institution around the financial needs of the low-income entrepreneur. Having entered a high growth phase in its early development stage, NEF increased loan disbursements as expected and established itself firmly in Gauteng, Mpumalanga, Free State, the Eastern and Western Cape this past financial year.

The value of a loan in micro-finance is defined by the willingness on the part of clients to effect repayments. This has proved challenging and will remain so until all factors contributing towards low repayments in South Africa have been successfully addressed.

Enhancing client loyalty is a micro-finance institution’s most important business strategy. Every element impacting on the successful management of micro-finance operations - from product pricing to staff incentives; marketing to eligibility requirements; client screening to the range of services on offer - can, and should, be formulated to promote loyalty. For this reason NEF subscribes to a mission and vision that fosters a sense of purpose, ownership, and accountability; sound governance; operating within a local context; a robust business plan geared towards expansion and sustainability; and ensuring a competent and stable workforce.

NEF Broad Objectives

• To provide small loans to marginalised communities with a view to offering them access to economic opportunities;
• To enable NEF funding partners to reach their target audiences and become major players in the micro-finance sector, thereby ensuring that these partners achieve their mandates;
• To mobilise human capital in lower income sectors to contribute meaningful towards economic development;
• To develop and promote sustainable methodologies for lending to micro enterprises;
• To strengthen the capacity of micro-enterprises, enabling their transformation into viable small business concerns;
• To increase outreach through targeted market penetration and equitable geographical spread across South Africa’s provinces
• To implement and maintain best practice governance, operations, overall performance, planning, supervision and control by leadership and management;
• To facilitate development of a shared institutional vision by all staff;
• To enhance staff productivity.

Loan Data & Demographics: April 2003 - March 2004

Governance

The Board of Directors, which met regularly every second month, established four committees to assist with governance issues: (i) Remuneration, (ii) Governance & King 2; (iii) Audit, Internal Audit & Risk Management, and (iv) Executive Committees. NEF’s management team, which is responsible for day-to-day operations and comprises all Provincial Loans Managers, the Managing Director and key head office staff, also met every second month to address operational issues and to make recommendations to the Board.

Principles of NEF Lending

Small loans are provided to create self-employment and income generating opportunities to low-income entrepreneurs, and are made available in a continuous sequence. A borrower becomes eligible for a new loan once his/her previous loan has been repaid, but may receive no more than one loan at any given time. All loans are paid back in manageable instalments.

Risk Management

Risk management for NEF entails not only focussing on financial risk, but also on the reputation of the company and its future survival. Management is accountable to the Board of Directors for designing, implementing and monitoring the process and its integration into the activities of the company. Loan loss risk constitutes the greatest part of risk management for NEF and management has therefore implemented numerous strategies to diminish this risk, major elements of which include pre-loan assessments, sureties required for loans, post disbursement monitoring, product design and effective management information systems.

Financials

NEF’s audited financials are contained in the organisation’s full annual report.

In Conclusion

The past year has been a challenging one, with significant lessons having been learned around the behaviour of the market that NEF serves. In the coming year the organisation will focus primarily on consolidating operations, fine-tuning its business model and, should funding partners share its vision, gearing up operations for volumes to reach more economically active poor entrepreneurs.

GERHARD JANSEN VAN VUUREN PROVINCIAL DIRECTOR

NICRO Eastern Cape faced many challenges during the year with enthusiasm and dedication, and worked tirelessly to ensure that soundorganisational developmental principles were implemented. Major progress was achieved in terms of improving internal communications and addressing the development of the organisation, particularly at a human resources level.

The employment of experienced staff was a top priority that succeeded in ensuring an improved quality of service in rural areas. Financial management systems were enhanced with the assistance of the auditors, ensuring greater accountability whilst working with public funds. Negotiations with the Department of Social Development were conducted to lobby for increased subsidies that would afford us the chance of expanding the number of subsidised posts.

Service delivery expanded, largely thanks to the establishment of fruitful partnerships with role-players and we are especially grateful to Business Against Crime for entrusting NICRO Eastern Cape with training contracts.

We would like to express our sincere gratitude to all our committed supporters, benefactors, staff and volunteers, as well as our clients, for embarking on the journey towards achieving our goals.

Community Victim Support Services

Strong emphasis was placed on the Perpetrator Programme as the method of intervention to address domestic violence. A total of nine groups were facilitated from the Port Elizabeth Office and negotiations with the East London Court were initiated to prepare for the implementation of the programme in East London. NICRO Eastern Cape also conducted the first Family Journey, a weekend programme designed to encourage families to identify, rebuild and enhance the positive aspects of familial relationships that have been adversely affected by domestic violence. The programme facilitated the learning of skills to enrich relationships between family members through focus groups with young children, teenagers, women and men.

At our Rape Support Centre at the Dora Nginza Hospital, the distribution of antiretroviral medication to rape survivors has commenced and we have initiated a support group for the many victims who test HIV positive. Volunteers now have the added responsibility of conducting pre- and post-test as well as follow-up counselling to those in receipt of medication for up to one year after it has been administered. The Centre renders services to an average of 75 rape survivors each month, approximately half of whom are under the age of 14 years. Negotiations to establish a similar centre at the Frere Hospital in East London have commenced.

Following a research study on volunteer compassion fatigue conducted during 2003, we implemented an emotional wellness programme for our volunteers to assist them to cope with the trauma they experience from serving victims of crime. We plan to assess volunteers’ fatigue levels on a quarterly basis to measure the impact of the wellness programme.

The Victim Support team also conducted impact evaluations at our care centres based at police stations to evaluate whether we are addressing the real needs of the victims we serve. The results of the study were used to amend our volunteer training programme and to expand the victim support services.

Diversion

This financial year proved a testing one for the Diversion Programme as a result of funding challenges, despite having sufficient funds for the running of the Journey Programme.

Given that The Journey is an expensive intervention, service points were instructed to identify local facilities at which to implement the outdoor adventure component of the programme in an effort to minimise costs. The local hiking club in Port Elizabeth was subsequently utilised for the facilitation of all high-risk activities such as hiking, abseiling and rafting. This has become a mutually beneficial partnership as it also affords the club with an avenue through which to share their knowledge and expertise with disadvantaged communities.

In East London and Umtata we were able to utilise a new outdoor facility at a very low cost, at which the outdoor adventure programme was jointly facilitated with probation officers from the Department of Social Development. We are grateful to the Department for their support and the provision of transport for the participants as well as to conduct followup services and home visits in Umtata. We have an excellent working relationship with the Department of Social Development at a grass roots level and are intent on nurturing a partnership at provincial level in order to look at ways of securing finance for the Diversion Programme.

NICRO Eastern Cape introduced the SAYStOP Programme, another of the Diversion options with the Diversion Programme Manager assuming responsibility for the mentoring and training of probation officers. SAYStOP has now been extended to the entire province and with the support of the SAYStOP Steering Committee of the Western Cape, we trained 25 probation officers this past year. Four provincial staff members have been trained in its facilitation. Probation officers will run the programme under the supervision of NICRO’s Diversion Programme Manager. The process of handing SAYStOP over to the Department of Social Development has commenced with the submission of a funding proposal to the Department.

Offender Reintegration

NICRO Eastern Cape’s Offender Reintegration services have been making remarkable inroads by touching the lives of beneficiaries and assisting them to overcome the challenges they face and successfully rejoin society, their communities and families. The Tough Enough Programme (TEP), a component of NICRO’s Offender Reintegration Programme, has evolved and improved over the years, and celebrates many success stories about former offenders who, four years down the line, are leading productive lives free of crime.

The Offender Reintegration team has slowly but surely convinced communities to start taking care of and support former offenders upon their release, and the first group of mentors has already been trained in East London and Uitenhage. We are particularly excited about the development of the community support component of the Tough Enough Programme and the significance it will have in the lives of TEP participants.

The annual Prison Art Competition made such an impression on the major Eastern Cape prisons that we were inundated with enquiries about this provincial competition. After all the entries had been received, the Offender Reintegration team hosted a very successful Creative Arts Awards event at the Boardwalk Conference Centre in Port Elizabeth at which the provincial winners were announced and awarded their prizes.

All in all, the rendering of offender reintegration services has been a very rewarding experience for the Offender Reintegration team. As service deliverers we truly believe that the programme makes an enormous difference to the lives of our clients, and that there is much potential for it to expand and grow.

In the new financial year the Offender Reintegration team will be taking up the challenge of demonstrating to the business world that former offenders who have participated in the Tough Enough Programme should not be feared or ignored, but that they have paid their dues and are both eager to and capable of making a positive, constructive contribution to society.