MOUNT KENYA UNIVERSITY

SCHOOL OF COMPUTING AND INFORMATICS

DEPARTMENT OF INFORMATION TECHNOLOGY for (BIT)

 PROJECT TITLE: MWANZO BARAKA MANAGEMENT

INFORMATION SYSTEM. (SHG)

BY: WAMBUA MOSES MUTESA

Reg. No: BIT/2018/85478

INTRODUCTION
It has become a necessity to computerize manual systems to replace them with computerized
systems. This system/project is with the aim of applying the computer skills in order to meet
information needs, improve productivity and also with the ability to provide basic skills to new
system and new software of Mwanzo Baraka Management Information system. This
documentation is used in Mwanzo Baraka and details on how to come up with a computerized
management system. The chapter deal on specific topics, the reason that made the analyst to
come up with the solutions for this problem. The system has the capability to cater for;
membership registration, loan allocation, insurance, production of immediate receipts after
payment and production of member’s financial statements.

Background

Mwanzo Baraka Organization is a self-help group which started the year 2001 with the aim to
improve the economic status of its members through pooling of financial resources. This model
essentially formalizes and supports existing informal savings funds that have operated in villages for
hundreds of years. SHGs accumulate pools of money through their own savings. Eventually they may
also access loans from banks and other commercial institutions. This money is redistributed within the
group as loans, to be repaid with interest at regularly scheduled group meetings. Most SHG transactions
are conducted during these meetings. This includes monthly subscriptions by each member, savings
deposits and withdrawals, loan disbursements and repayments, and transactions related to other
financial products or group functions. Membership is of two types; individual and group where
individual membership is upon a registration fee of Ksh.1000 and capturing of member personal
details .Group membership is upon a registration fee of Ksh.2000 and group details and those of
its individual members are captured. An individual member contributes a monthly shares of not
less than Ksh.1000 and those registered under group contributes a monthly shares not less than
Ksh.1000 where Ksh.200 is the group share contribution by the member.

All monthly contributions are treated as shares and attract annual dividends. Members can
borrow loans based on their total shares where individual membership is loaned up to three times
their shares attracting an interest rate of 1.2% per month on principal amount borrowed payable
within a period not exceeding three years. Members registered under group can be loaned up to
four times there total share contribution attracting an interest rate of 1% per month on principal
amount borrowed and repayment period not exceeding four years. A group can also get a loan
amounting to three times the group total share contribution which attracts interest rate of 0.8%
payable within five years.

Any defaulted payments are penalized at a rate of 10% per month. Every end of year, the
organization determines the total interest charged on all loans and total penalties of defaulted
amount. Where 60% of this amount is paid as dividends to shareholders each getting amount
proportional to their share contribution and the balance is retained to run the organization. The
reasons which have led to computerization is to improve customers service in; membership,
allocation of loans repayment of loans and production of member statements.
 

Overview of existing system

Bookkeeping is a difficult task for SHGs. Most SHG members are minimally educated (if at all), and
may be illiterate or semi-literate. Regardless, every SHG should be aware of the status of its
outstanding loans to members, the status of its loans from external institutions, and the member
payments due at the next meeting. This information is required for financial planning, pursuing
delinquent payments, and deciding whether to issue further loans to a member. Knowing the credit
history of each member helps in deciding upon future loan disbursements. Accurate and timely
bookkeeping ensures that accounting procedures are followed and are in compliance with the rules
of the SHG. The reporting of financial information is also a vital task and is crucial for accurately
representing the SHG to outside agencies. Financial reports indicate the profitability and financial
position of the group and can be used by banks and other commercial financial institutions to judge
the credit-worthiness of a SHG. There are many other potential users of this information.

The operation of the existing system is manual hence its operation is done manually i.e. membership
records are stored manually in files and it’s very difficult to trace a members file. The allocation of
loans is taking an extremely long time for the loans to be disbursed and therefore a need for a
computerized system which will be able to solve all this with accuracies and completeness. Time and
again also the organization experiences cases whereby someone has paid either loan, registration or
any other payment but in the book of records the information is missing. This has been a great
challenge which may lead to misunderstanding within since there is not prove on who is speaking the
truth.

Overview of the proposed system

To maximize the benefits, group-level bookkeeping must be linked with a Management Information
System (MIS) that helps each stakeholder in making effective and efficient decisions. The goal of a
Management Information System is to provide accurate and timely information for making
decisions. The quality of an MIS for managing SHGs depends on the quality of the following
components:

 SHG Bookkeeping: Standard records maintained at the SHG level include the members’
passbooks, receipts, vouchers, ledgers, etc. These records provide the raw data that feeds
into the MIS. Their accuracy and timely maintenance determine the overall quality and
usefulness of the MIS.
 Financial Statements: Standard financial statements such as the Receipts and Payments
Statement, Income and Expenditure Statement and the Balance Sheet inform the SHG and
its observers about the SHG’s financial position. Timely preparation of these reports ensures
that all stakeholders are vigilant about the group’s position and any irregularities.
 Other Reports: Well-designed reports can help all stakeholders in the decision making
process. Reports should be designed to provide the most pertinent information for a
particular process or task. They should be prepared on a regular basis to ensure that the
most up-to-date information is available when making decisions.
 The proposed system will be programmed using several languages i.e. PHP, HTML, and DBMS for
the system to store data and the information will be captured in tables and forms. The output
generated by the proposed system will be through forms, reports, and receipts. The system will as
well print out the outputs for future reference.

Problem statement

As a researcher I noted that the owner and other workers in the business are facing
challenges when feeding in data relating to customers details and retrieving of
reports. They face the challenge of retrieving these details since they are stored on
written materials which at some time might get lost.

Objectives
General objectives

1. To provide a system that will establish the smooth flow of information from the
manager to the other departments within the Mwanzo Baraka Organization.

2. To provide a system that will enhance fast access of information and retrieval of
data.

Specific objectives

1.      Create a system that will be able to capture all details customers in
Mwanzo Baraka Organization.

2.      Develop a system that will be able to access, maintain, and update date very
fast to prevent huge loss of time.

3.      Develop a system that will minimize fraud practices of company files and
information.

4.      Develop a system that will produce will provide a low cost of operation and
maintenance hence return on bigger investment to the organization.

5.      Develop a system that will be an error free zone during transaction processing
based on accuracy of system software and hardware.

6.      Develop a system that will provide data security whereby;

·         Data will be password protected by entering user name (Valid Email

address) and password to Login

·         Login attempts will be thrice failure to which a system generated Email

will be sent to the user to verify whether he/she is the one attempting to login.
 ·         Password will be comprised of first character uppercase and a minimal of
six characters including a special character.

Limitation of the proposed system

As a researcher, it took me time to study the organization system and come up with a
new system that will solve the problem the organization is facing.

It also cost the researcher a lot of money since the researcher had to travel from
residential area of study to where the business organization is located.

Advantages of proposed system

·         Avoid local storage of data

·         Reduce cost of storage, maintenance, and personnel

·         Reduce chance of losing data by hardware failure

·         No cheating to the owner

·         Better record management

·         Proper security of data

·         Proper output of data hence all records can be easily accounted for in
printed form.

PROJECT SCOPE
The SHG information system is a capable group member or skilled personnel who maybe or not be
member of the SHG and maintains the books of accounts. In the absence of such a member the cluster
officer or an educated outsider is called upon to maintain the books in exchange for a reasonable fee or
as decided by the group. The system developer is responsible for training the SHG bookkeeper (either an
outsider or member). The training manual is issued to group executives and SHG bookkeepers at the
time of training to be used for later reference. The books of the SHGs are being reviewed monthly at a
general meeting which involves every member of the SHG for easy data check using membership
numbers issued at the time of registration during the initial period and will eventually be audited by a
certified Chartered Accountant at the end of the year.

The main records included in the system are:

1. MIS Flap book: a complete group transaction record kept in one ledger

2. Member Passbooks: for savings, deposits, and loans

3. Financial Statements: indicating the financial position of the group

4. Group-level Reports: detailed operational, financial and performance reports prepared on a per-
group, per-cluster and per-federation basis.

All regular SHG transactions are recorded in the monthly Flap-book. The Flap-book is designed to be an
all-inclusive, easy-to-use ledger for recording and processing of financial and non- financial information
for an individual SHG.

Features of the bookkeeping system are the following:

 It is designed keeping in mind the needs of semi-literate women/men.

 It is designed to replace complex and cumbersome bookkeeping with a simple and easy-to-use
record. It encourages the user to comply with accepted reporting standards of financial
institutions and apex agencies.
 It captures and presents key data in formats that actively encourage analysis and adaptive
management.
 It is designed to do away with non-value-adding paper work and to demystify bookkeeping and
reporting functions.
 It helps effective management by foreseeing pitfalls and threats, allowing for timely remedial
action and early resolution.
 A bookmark format has been designed with color codes for referencing key records and
documents.
 All major categories of financial products including subscription, savings, and loan
disbursements and repayments (both internal and external) are recorded in simple flap-based
formats facilitating data entry and reference.
 The flap system simplifies aggregation and analysis of data.

The proposed system is to be used in all the departments in the organization i.e. registration,
accountant and finance and the office of the overall manager. The results are used for decision-
making and control of the program.

PROJECT JUSTIFICATION
Generally, my project is all about microfinance innervation for poor families in the community
making saving to make their future bright. People have been interested in microfinance and they
have been in some help-groups within the society i.e. Mwanzo Baraka self-help group. There
also other activities as well like bank donors willing to partner with them to give them cheap
loans as a group within the organization or individually but you must be signed under the
Mwanzo Baraka self-help group.

PROJECT RISK AND METIGATION.

In every project development the developer must be able to understand the few risks that might
occur during and after the system development. In my case here, the system may lead to the loss
of information during changeover and lack of skilled personnel to operate the system. Far of
change it’s also something that may affect the group members since they haven’t interacted with
such before and not all people are always ready for change.

RISK MITIGATION.
This are the strategies used to reduce risk in the system. There are strategies that will be used to
purposely to eliminate, reduce, or control the impact known risks intrinsic with a specified
understanding prior to any risk. My project I will enact more than one to make sure there is full
control of any risk that may arise to obtain optimal results i.e. Risk avoidance, Risk transfer, Risk
acceptance and Risk limitation with that I will be good to succeed in the project.

PROJECT BUDGET.

Budgeting it’s an important aspect in a project development whereby it’s a breakdown of items
that need to be purchased for the success of the system. The items are divided in different
categories i.e. hardware, software, human and other costs that will be incurred.

PROJECT BUDGETING OF THE PROPOSED SYSTEM

ITEMS DESCRPTION QTY COST(KSH)

Computers High speed computers to be purchased 4 60,000

and installed in every department.

Printer Two printers one for the manager and Small 15,000
the other to be installed in a central
point each department to access it. Large 20,000

System The developed software to be installed 1 45,000

in every computer according to
department specification.

Office stationary This include notebooks, pens, mark 3,000

and equipment pens, rubbers, office glue etc.

Office rent Medium sized office measuring 1 30,000

approximately 30m by 25m.
 Network It includes routers, connecting cables, 25,000
equipment boosters etc.

Power expenses Use of electricity 10,000

Total 0

PROJECT SCHEDULE.

This is a time evaluation which helps determine whether the time allocated is properly, 7 months seems
adequate for the build-up of this system as I have prepared the time allocation below;

Time period Stage of development

1 -3 MONTH
st rd
Problem recognition and definition, Information gathering

4 -5 MONTH
TH TH
Requirements specification, System design

6 -7 MONTH
TH TH
System construction, System implementation
CHAPTER TWO
LITERATURE REVIEW

Literature review is important in research as Bob Collymore said that, the greatest thing about
the computer is that no matter how much you staff into, it does not get bigger or heavier. This
quote support the fact that the system is capable of holding large amount of data thus reducing
paper work.

The research carried out by Koshy(2005) state that it can enhance ones understanding of the
issues associated with the topic and it can also help one to sharpen the focus of his/her study as
such effort will help one gain ,ore insight into the topics as well as guide him/her in the pursuit of
fruitful activities.

James martin an administrator at Michigan campus said that “computer has become a way of life
for today’s high society”. Many aspects of modern life that we have come to accept as common
world would not be possible if there were no computers. Today’s computer are used extensively
in many areas of business, industry, and science education. His word proves that the
computerized system is superior to the traditional manual filling system in our modern world.
The manager of Imani children’s home is generally more rewarding in terms of personal
satisfaction than momentary benefit. The manager manages all administrative duties, funding
marketing and management of the children’s home. The manager is responsible for maintaining
the children’s home to source funding. Through this the Imani children’s home will be able to
achieve accuracy, transparency for easy input and output of data, faster retrieval of data and data
security will be a major advantage over the manual traditional system.

On physical needs Nyongesa (2007) sate that these are the basic physiological necessities such as
food, shelter, and clothing. When basic physiological needs are satisfied, a new level need
security and safety together with a sense so belonging together become an important motivating
factor.

CCD’s current bookkeeping system is the result of an extensive redesign coordinated by ekgaon
technologies pvt. ltd. (ekgaon technologies). The project commenced in 2002 with a detailed contextual
study of the existing documentation practices at the SHG, Cluster, and Federation levels. Based on this
study, the formats were redesigned to remove redundancies, streamline information flows, and fill
information gaps. The redesign process started in fall 2003 with the support of the SEEP Practitioner
Learning Program, “Improving Efficiency – Maximizing Human and Physical Resources.” Before a full-
scale implementation, the new system was piloted for three months with 50 SHGs selected from four
different CCD-promoted Mahakalasms (meaning large jugs, i.e. a receptacle for community savings).

The field officers were first provided with an intensive week-long training to learn the new bookkeeping
system. During the pilot, every two weeks the project manager from ekgaon technologies conducted a
thorough review of the SHG records, explaining any errors or oversights to the staff. Also, based on staff
and group feedback, required changes to the bookkeeping formats were made before printing them for
the full-scale implementation. The structure and design of the records were optimized for cost-effective
printing. The final cost of the redesigned group records totaled 108 Rs. (or approximately US$2.40) per
group. Full-scale implementation commenced in June 2005. During the full-scale implementation, field
staff (who had all been trained in the use of the system) trained SHG-level bookkeepers to maintain
their own records using an MIS training manual also developed by ekgaon technologies. The training
manual included pictures and detailed descriptions of the documentation process and explained the
relevance of each of the new formats.

Towards these goals, CCD has promoted four self-managed SHG federations, locally known as
Mahakalasms (meaning large jugs, i.e. a receptacle for community savings). Many similar SHGs and SHG
federations require constant guidance and help from their promoting NGOs. In contrast, each of the
Mahakalasms strives to adhere to the ideals of independence and community-ownership. In fact, CCD’S
goal is to eventually leave its role as promoter and allow the Mahakalasms to become completely
independent community service institutions. The success of this model has led many NGOs in the region
to visit CCD and the Mahakalasm field areas. CBO federations based on the Mahakalasm model have
thus far been replicated in nine states of India through the Community Enterprise Forum International
(CEFI) network.

Focusing on affordable and appropriate solutions, ekgaon technologies designs and develops novel
technologies and management and information systems to meet the needs of rural developing
communities and other change agents. Ekgaon technologies is a strong believer in the ideals of
community and collaboration. Ekgaon technologies uses and develops free and open source software
technologies conforming to open standards whenever possible. For more info please see
www.ekgaon.com.
CHAPTER THREE
METHODLOGY
 Conclusion
Accurate bookkeeping is essential for the strength and long-term stability of SHGs, providing the data to
resolve disputes and maintain accountability to all group members. Timely reporting can also
demonstrate the strength of an SHG to outside observers and other stakeholders. Ensuring the quality of
SHGs is more important than maximizing the quantity of SHGs supported. The critical aspects of an SHG
that need to be documented by are the following:

 Loan / asset quality: Loans are the single most important asset that generates income for the
SHG.
 Efficiency: Demonstrates how the financial and human resources were deployed to the
maximum advantage.
 Sustainability: Determines the ultimate viability of the group along with its intended social and
economic impact.

A high-quality MIS provides tremendous value to the SHG both in achieving and documenting these
properties. This paper-based Management Information System aims to help the SHG in maintaining its
records in a compact, efficient, and systematic manner that complies with general accounting practices.

The proposed system is of significance to management of the Sacco. The system has fulfilled all the
objectives set out in the requirements specifications despite the challenges passed.

The achievements outlines that computers are much faster than manual operations initially done by the
staff and hence faster speed of processing ensured efficient work flow.