Strategies to Build a Sustainable Micro Finance Institution
Chief Executive Officer Access Financial Services Limited
Good morning. It gives me great pleasure to address you today at the Caribbean Microfinance Forum in
Bahamas. My presentation today will tell the story of how Access Financial Services has evolved over the
years and changes that were made to our business model facilitate the company’s growth and
development. I will explore elements of the strategy that we used to build a sustainable MFI and more
specifically the business model that we used to take Access to where it is today.
Statistics reveal that approximately 50% of businesses fail within the first 4 years of operation with much
of the blame being attributed to poor business model selection or poor execution. When Access began
in 2000 there were approximately 15 other MFIs that began operating in the micro finance sector in
Jamaica around the same time. These entities had the same access to resources, capital and training.
Today only two of those entities exist.
Background & Introduction of Access
Jamaica like many Caribbean countries has the majority of its 2.7 million population operating outside
the formal economy. In Jamaica it is estimated that as much as 60% of the island’s Gross Domestic
Product is generated outside of the economic mainstream with much of the informal business activity
being undertaken by micro and small enterprises. According to the 2010 Economic and Social Survey of
Jamaica, sole traders employ approximately 411,000 workers and account for approximately 37.6% of
the total labour force.
Access Financial Services started in September 2000 out of a realization that there was a void which
existed in the provision of financial services to Jamaica’s micro and small business sector. Traditional
financial institutions neglected the sector as they felt that providing micro and small businesses with
financing was too expensive because of the small loan size that lending to the sector requires. At the
time Banks were on a drive to reduce traffic in their branches and the provision of loans to the micro
sector would prove counter-productive as it related to that objective.
Prior to starting the business I ran the idea by some family and friends. My godfather, who is an ex-
ambassador to Washington, did not believe that the idea could work and that the business would
eventually fail. When I presented my idea to my cousin, who is a manager at the auditing and consulting
firm Price Waterhouse Coopers, he responded by asking “Marcus who the hell wants to borrow
$50,000”. Despite doubt from people I respected and who had more experience, I took the risk and
pursued the idea.
The company started with 2 employees at its current head office in Kingston, Jamaica. Today our lending
division manages a gross loan portfolio of approximately US$7m and operates from 13 branches
employing 120 persons.
The company began by offering micro business loans primarily to women. Over the years Access has
diversified its product offering to include small business loans, personal loans, automobile loans, hire
purchase, bill payment, cambio and remittance services. The company’s loan products are marketed
under the names Microbiz, Megabiz, Payroll Express, Access Autoloan and Access HP.
Planning the Business
Access began operating with J$10,000 in equity and a line of credit from Development Options Limited.
Prior to receiving funding from Development Options Limited we were required to prepare and submit a
detailed business plan which contained relevant information such as:
1. The proposed organizational structure
2. Board and management expertise
3. The level of financing required including
4. The debt/equity mix
5. Financial projections
6. The target market and
7. The marketing strategy that would be employed to build the portfolio
Even though the company had a humble beginning I had a vision of making it into a significant player in
the financial sector and someday, listing on the Jamaica stock exchange following in the footsteps of my
father who had listed his company, Island Broadcasting Services on the JSE in 1994.
The Early Years
There were certain strategic decisions that were made which I believe were critical to ensuring that the
company remained viable during its early years.
Our initial budget called for break even in the third month of operation with a portfolio size of US$34k.
Total monthly expenses at the time were budgeted at approximately US$1,000 which included my salary
which was capped at US$1,340 per annum. The key was to keep expenses in check and adjust them in
accordance with the company’s ability to pay. The focus was on quality and not quantity. Growth was
deliberate and incremental, new products and branches were added slowly. I wanted the company to
become profitable and cash flow positive in the shortest possible time.
The company at this stage really resembled the typical micro business. With a staff complement of three
I was the head cook and bottle washer responsible for writing loans, collecting on those loans, updating
accounting records, payroll officer, IT specialist and HR Manager. At the time I worked an average of 10
to 15 hours per day 6 to 7 days per week.
While we used basic software such as spreadsheets to generate reports, we also ensured that the
company had up to date information to manage its loan portfolio as arrears and other management
reports and financial records were generated in a timely manner. The first set of audited financial
statements as at March 31, 2002 showed total revenue of US$75,587.54 and a net profit of US$23,513
for the 17 month period since the company began operations.
From the beginning great emphasis was placed on customer service and we have invested in ongoing
customer service training for our team members in an effort to improve the level of service that we
provide to our customers.
A key metric in measuring the success of a MFI is the client retention rate. By focusing on customer
service we have been able to maintain an acceptable retention rate. Recently we celebrated one of our
clients Lorna Blackwood, who has been with Access since the company’s inception and is currently on
her 26th loan.
Setting the Foundation
During 2004 – 2006 we began to invest heavily in information technology, including the development of
specialised software. The improved IT system allowed us to price individual loans based on risk and
aided in loan underwriting and decision making. It also allowed for improvements in the company’s
internal controls and the efficiency with which management reports were generated. Once this was
underway we began the aggressive expansion of the company’s branch network and increased our
product offering to include personal loans and auto loans.
During the period the company’s systems and procedures were documented. Manuals were created
which allowed for the seamless replication of our procedures as we expanded our branch network.
During the following two years we invested heavily to expand the company’s branch network opening
10 of our 13 branches during the period.
As a direct result of the branch expansion and expansion of its product line Access recorded significant
growth in its loan portfolio with loans and advances growing from US$83,000 in 2002 to US$1.4m as at
March 31, 2006. Total interest income recorded growth of 922% moving from US$73k in 2002 to
US$746k for the 2006 fiscal year.
In 2006 the company made the strategic decision to diversify its revenue stream by establishing a
money service division which offers remittance, cambio and bill payment services. The money service
division now accounts for approximately 10% of total revenue.
New Corporate Structure
As a result of the company’s growth and contribution to the micro and small enterprise sector in
Jamaica, Access began to receive a significant amount of media coverage, recognition and positive PR.
During the 2004 to 2006 period we received offers from two large financial service companies who were
interested in purchasing a stake in the company. I assessed the skill set that was being brought by both
suitors. In looking for a partner I wanted an entity that shared my vision, brought complementary
management expertise and was willing to provide the financing necessary to fund the company’s
In September 2006, 49% of the company was sold to Mayberry Investments Limited. Mayberry a leading
brokerage house that was listed on the Jamaica Stock Exchange met the criteria that I was looking for.
Most importantly they shared my vision of the future of the business which included its listing on the
Jamaica Stock Exchange and were also willing to provide a line of credit to fund its future growth.
The Growth Years
After Mayberry’s investment in 2006 the company was able to grow its portfolio from US$1.4m as at
December 31, 2006 to US$5.5m as at December 31, 2010. Total interest income increased significantly
moving from US$746k in 2006 to US$4.4m in 2010. Net profit also increased moving from US$108k in
2006 to US$1.7m in 2010.
With Mayberry’s investment Access became an associate of a listed company which necessitated an
immediate compliance with best practise corporate governance protocols.
The company’s growth necessitated the expansion of our team and our organization chart has evolved
over the years. In the early years some of the positions that we now deem critical for the company’s
performance were nonexistent. Our early organization chart was devoid of senior managers. Since 2006
we have spent time deliberately building our corporate structure filling vacancies that existed for
positions such as Operations Manager, HR Manager, Internal Auditor and Chief Accountant.
In Jim Collins book “Good to Great” he states “First Who Then What” making the point that good talent
should be brought on board even when there is no immediate vacancy. This is a philosophy to which I
subscribe that has contributed significantly to the company’s development.
Listing on the JSE Junior Market
In April 2009 the Jamaica Stock Exchange launched the JSE Junior Market which provided a 100% tax
remission for the first five years after listing as its main incentive. The listing would allow the company
to pay down expensive debt and the tax remission was also attractive given that we were profitable,
growing and paying a significant amounts in taxes. The discipline of being an associate of a listed
company ensured that when the opportunity to list presented itself we were ready to comply with the
rigors of being regulated by Jamaica’s Financial Securities Commission.
In October 2009 Access Financial Services became the first company to list on the Junior Market of the
Jamaica Stock Exchange raising J$100m through the sale of 20% of the company’s common stock.
The listing of Access on the JSE Junior Market was successful. The IPO opened on October 14, 2009 and
closed two days later on October 16, four days before the scheduled closing date. The subscription price
was J$18.40. After a 10:1 stock split in April 2010 the company now trades at J$4.75, an increase of
Some of the factors that have made the listing successful include:
(1) A story of solid growth and performance
(2) We are able to demonstrate that we had a qualified team with the necessary expertise
(3) The company was managed within a framework of strong corporate governance and
(4) The company had solid growth prospects
The Investor’s Choice, a leading business publication in Jamaica conducts an annual rating of listed
companies assessing them on real growth in the calendar year, efficient use of capital and labour, and
the provision of solid returns to shareholders. In 2009 Access was the runner up and in 2010 we placed
third, a significant achievement for a newly listed entity given that we were being compared with all
forty plus companies listed on the JSE. In 2006 the company won the Jamaica Employers Federation
Young Entrepreneurs Association Award for outstanding achievement in enterprise and business
Over the years the journey has not been all smooth sailing. We faced our share of challenges including
internal fraud, external fraud, and missteps which has tested our resolve and has provided me with
many sleepless nights and gray hairs. Two incidents immediately come to mind. The first and most
significant occurred when a trader in our Money Service division bought counterfeit drafts, totalling
US$143,000, in breach of company procedures. Another involved internal fraud and the creation of
fictitious loans by credit officers which resulted in losses in excess of US$80,000.
We have been able to weather the storms and have over time focused on improving our internal
systems and controls to reduce the risk of fraud.
When faced with challenges in the early stages it was extremely daunting but over time as a
management team we have learnt to take setbacks in stride.
Evolution of the Company’s Business Model
The company has evolved over the years. Our legal structure has moved from a private limited liability
company to a public one. The level of regulation, accountability and our disclosure requirements have
increased accordingly. Our product offerings and income streams have been diversified. The expansion
of our branch network has resulted in an increased emphasis on internal controls and internal audit. Our
most important evolution however has been in the use of technology to make our processes more
efficient and increase the level of our internal controls. Technology has also assisted us in efficiently
dissecting our loan portfolio, assessing risks inherent in different segments of the portfolio, and pricing
those segments according to their risk weighting.
Since the company’s formation in 2000 the landscape has changed. Initially the microfinance industry
was shunned, but more recently it has been embraced by traditional financial institutions, some of
whom have opted to become shareholders of Access, while some have opted to form subsidiaries which
provide products and services to the micro finance sector.
Recently, through Caribcap, with the assistance of Pierre Markowski, we worked on improving the
attractiveness of our micro business loan products and also spent time improving the efficiency within
which these products are delivered to our customers.
The listing of the company on the JSE Junior Market was a significant milestone and the realization of
one of our main objectives. Our immediate goal is to continue the expansion and diversification of the
company’s income streams and to make use of emerging technologies such as mobile money to improve
our efficiencies. We will relentlessly pursue our goal of being the lender of choice for Jamaica’s
microfinance industry through brand building and the offering of excellent service to our customers.
With the continued evolution of our business model and sound management we aim to graduate to
Jamaica’s main stock market within a couple of years.
(1) Don’t be afraid to take risks
(3) Having a clear documented vision of where you want the business to go
(4) Focus on quality not quantity in building your loan portfolio
(5) Closely manage financial and other resources especially cash and receivables
(6) Invest in talent
(7) Keep accounting and other records accurate and up to date
(8) Document internal procedures and company policies
(9) Focus on providing quality customer service
(10)Diversify income streams
(11)Don’t be daunted by setbacks
(12)Work relentlessly at improving internal controls