Project Name: Country: Mozambique Socremo Banco de Microfinanças Management Service Contract Project Locations within the Country: Professional Staff Provided by LFS: Maputo, Matola, Beira, Chimoio, Maxixe No. of Staff: 4 Long-Term Experts + Pool of Short-Term Experts Names of Clients: Start Date Completion Date: Access Microfinance Holding AG (Month/Year) (Month/Year) (AccessHolding), AfriCap Microfinance Fund 07/1997 09/2007 (AfriCap), Kreditanstalt für Wiederaufbau (KfW), LFS Financial Systems GmbH (LFS), State Secretariat for the Economy (SECO) in Switzerland, 3 local shareholders Description of the Project: SOCREMO (Sociedade de Crédito de Moçambique) was founded in 1998 in the form of a non-bank credit institution licensed and regulated by the Mozambican Central Bank. The project had developed from an integrated training and credit programme for start-ups, in particular for ex-Mozambican contract workers in the former GDR. LFS advised Socremo since foundation. The first phase (1999 – 2001) was characterised by the transformation process of the project into a commercial credit company. This transformation was finalised in September 2001. The most important feature of the second phase (2001 – 2002) was accelerated growth and the achievement of financial self-sufficiency, accompanied by the diversification of SOCREMO’s equity structure, its financial products, and its regional presence, with branches in Maputo and Beira. The third phase, the transformation into a bank, started in 2003. In May 2004 SOCREMO received the bank license, and became Socremo Banco de Microfinanças (Socremo). In the course of this transformation LFS acquired an equity share of 9.2% and took over the management of the bank in January 2005. The Management Service Contract ended in September 2007. At this time Socremo was the second largest microfinance institution in Mozambique and the most profitable one. Socremo offered the following products: • Loan products: micro loans, SME loans, consumer loans, housing loans; • Deposit products: current accounts, saving deposits, fixed-term deposits. As of 30 September 2007 Socremo had an outstanding loan portfolio of USD 14.0 million with a PAR 30 of 1.13%. The micro loan portfolio was 9,322 loans in the amount of USD 6.8 million with a PAR 30 of 1.46%. The SME loan portfolio was 318 loans in the amount of USD 5.0 million with a PAR 30 of 0.87%. Deposits were USD 3.7 million. In December 2008 LFS and AccessHolding divested their equity stakes to a private strategic investor. Services Provided by LFS: LFS services (management, advice, training) covered all business areas of Socremo, in particular: • Establishment of a sound governance structure, • Setting up of an efficient internal organisation, including polices and procedures for all departments and job descriptions for all positions within the bank, • Implementation of our software LFS MicroBank System®, • Implementation of appropriate credit technologies for loans to micro and small entrepreneurs, housing loans and consumer loans; • Diversification of the shareholder structure, • Increasing share capital, • Gaining new creditors for Socremo, • Introduction of deposit products (current and savings account, time deposits), • Launch of new credit products (automatic loans, special loans, housing loans, and consumer loans), • Expansion of branch network, • Establishment of an internal audit function.