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ABA Toward Self Employment Programme

ABA Toward Self Employment Programme

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ABA-SME strengthened its down market operations with a grant scheme, the Towards Self Employment Programme (TSEP). This programme aims to help unemployed poor people to start or strengthen business through a two-part conditional grant (150 EGP / 30 US$ each) funded by ABA’s Zakat Charity Committee.
ABA-SME strengthened its down market operations with a grant scheme, the Towards Self Employment Programme (TSEP). This programme aims to help unemployed poor people to start or strengthen business through a two-part conditional grant (150 EGP / 30 US$ each) funded by ABA’s Zakat Charity Committee.

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Published by: Poverty Outreach Working Group (POWG) on Sep 09, 2010
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10/31/2011

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6.3.1. Scale and replicability

6.3.1.1. Strategy for scale?

ABA wants to reach 100 thousand clients by 2010, 75% of which are poor clients.
The financial resources needed to achieve this are available. New branches and offices
should be implemented in new areas of the five governorates to increase the outreach.
No plans are made for TSEP to increase the number of beneficiaries or to expand its
activities to other governorates.
Managemenr argues that they don’t want to push TSEP team to achieve “numbers” and
need first to serve the needy of Alexndria before expending somewhere else. They also
give a religious justification to their concentration on Alexandria. Since TSEP funding
comes from Zakat of Alexandria population, it has to be spent first in their area (or
governorate of reference).
Expansion can also create operational challenges. Operational Audit team, based in
Alexandria, could not follow up with TSEP. Whom could ABA-SME entrust? This
supposed decentralization might not create temptation?

6.3.1.2. Replicability of program or service

TSEP seems replicable to ABA management mainly in Egypt. It can be also adapted to
other cultural/geographic/socioeconomic conditions. Essential factors for replication are
the availability of funding from the community and for the community. The belonging
feeling improves monitoring and reduces risk of collusion. The value of the “good”
notion, whether religious or cultural is also helpful for the replicability.

6.3.2. Financial and operational self-sufficiency (if applicable)

The following ratios relate to entire client population for 2006 (excluding TSEP
beneficiaries):
6.3.2.1. Financial expense ratio:
6.3.2.1. Operational expense ratio: 12,5%
6.3.2.1. Cost per client: 35 USD
6.3.2.1. Clients per staff member: 76
6.3.2.1. Average loan balance per borrower: 304 USD (32% of GDP per capita)
6.3.2.1. Average savings balance per saver: not applicable
6.3.2.1. Portfolio at risk: 1,8%

6.3.2.1. Tailoring of product/service

TSEP staff are shown as being volunteers to work on this specific product on top of their
own work in the Operational Audit Department. We can then think of cost reduction and
more efficiency. It appears that the voluntary aspect is not monetary (work over hours
without pay) but that they are willing to dedicate 1 week per month, from their work

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time, to this specific product. Top management think that even though the Audit staff
volunteering on TSEP are not really working on a voluntary basis, they work more than
their peers due to the fact that intensity of work is not the same all the time and that they
have some free time during their working hours.

The cost reduction was introduced lately through the partnership with charity NGOs.
They should be more trained, informed and sensitised to the goals and the operational
aspects of TSEP in order to maximise the benefits of the cooperation.

6.3.3. Cost-effectiveness of non-financial services?

ABA provides many non financial services to its clients: training, show room, illiteracy
classes, library, technical assistance …etc. On an individual basis, it does not cover its
cost, but considering the total payment received from clients to benefit from these
services, ABA is generating 30% profit margin (cross-subsidisation of services).

6.3.4. Strategies to cover/reduce costs?

There are a handful of measures taken to reduce costs and to make products and services
financially sustainable: cross-subsidization, increase in scale, increased efficiency, cost
control, credit scoring, NGO partnerships, group loans methodology are currently used.
Several technological innovations are still under study.

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