After a second evaluation of the pilot project in October 2009, all Drombaya partner organisations had to write a business plan with different scenarios for expansion of their portfolio. These business plans were reviewed by Dr. Mbemap Mamouda and Drombaya founder Sebastian Schmid. After a round of revisions, three of four business plans were approved and Drombaya increased the capital investment in forms of loans to around 10´000 Euro per organisation. This capital was then disbursed in December and January to women or women groups. Totally, around 550 women could benefit so far and are part of Drombayas portfolio. Details about this second phase will be available after the third field evaluation around June.

Besides the microcredit component, Drombaya continues to innovate and currently plans to test various concepts:

• One of our partner organisations decided to start collecting savings on a daily basis of at least CFA 500 / Euro 0.6 of at the womens business site. The main purpose is security fort he partner organisation when it comes to repayment to Drombaya. However, more importantly, through the forced savings the borrower creates her next loan on her own without noticing it or can provide an own cash contribution when there is demand for an increased next loan. We will see how sustainable and practical this approach is but it seems a very good strategy as a security for partner organisations and moreover as a leverage for future loans for borrowers.
• Drombaya started to experiment with investing into a local Njangi (a rotating saving scheme) which has a saving association attached at the same time. These saving associations often consist of people with secure jobs in government or the private sector. However, saving interest rate are apparantly high with 3-5% per month. Drombaya invested a certain amount into one saving association of a Njangi to test the feasibility of using it as an instrument to help to cover Drombayas operational costs in addition to the interest which is charged on the organisations . In the long run it could even allow to reduce the interest rates for its partner organisation.
• At the moment, Drombaya is developing an equity / profit sharing based approach to provide finance to moslem women who cannot provide colletoral and are not allowed to take interest based loans as part of their religious commitment.  We try to adpat concepts from islamic finance and apply them on the microlevel in combination with forced savings. This approach will be piloted from the second quarter of this year.
• For the second half of 2010, Drombaya plans to co-develop a platform which integrates a mobile phone based payment system into a backend system for small MFIs. This could lead to a remarkable cost reduction for MFIs as less field visits would be necessary to collect repayments. Moreover, it would open up new perspectives for the development of new, innovative financial products.

In the world of business it is necessary and vital to stay afloat of current trends and styles. It is the same in the world of microfinance.

To make sure that Drombaya stays on the leading edge of the Microfinance revolution we have enlisted the help of external eyes to thoroughly and critically evaluate our organization. Last month Drombaya had it’s first annual professional evaluation. We hired a Social Worker from France Yvonne Leila. Yvonne has spent the last two years living in Buea, Cameroon and has many years of experience working in Microfinance. This made Yvonne an ideal un-biased evaluator and her critical yet compassionate eye will only aid us in finding ways to make Drombaya even more effective and beneficial in the coming years.

Yvonne spent two weeks giving Drombaya a thorough “white glove” inspection. The evaluation was conducted on a total of 25 borrowers and information from various sources. A questionnaire was used to gather information about the borrowers, their families and their living conditions. The questionnaire also provided valuable information about the economic activities of the borrowers, their performance, the use of their loans and the impact on living conditions.  Yvonne conducted each of these questionnaire’s personally at the homes of the borrowers and with this approach gained valuable insight into the lives of the women Drombaya loans go to.

Our partner organizations records were also evaluated and compared with the field results.

Here is a brief overview of the results:

In Drombaya’s first year it has managed to reach over 148 women.  Estimates of over 320 people have been positively affected by a Drombaya loan. This number shows the impact the loans have had on the immediate family and relatives of the borrowers. Currently Drombaya is at a 92% payback rate. At the beginning of the Pilot project the area of the most direct impact was education. At the end of the first round the area of the most direct impact was health. Most of the women first used the increased income generated from their loans to guarantee their childrens enrolment in school. The results of less financial stress, better education and access to nutritious food and health services directly impacted the quality of health.

Some of the areas that the partner organizations need to work on is having more of a direct contact with the borrowers. To keep overall costs low and interest rates lower for the borrowers many of our partner organizations do not have an adequate number of field workers. Another issue that arose was that many of the groups of borrowers have been placed together and do not have previous relationships with each other. Many of the positive results of microfinance is that the groups of women act as each others collateral, without an existing relationship between the members this social bond will not be as effective. Drombaya and it’s partners will work to remedy both problems in the coming year by paying more attention to the groups. Even without direct support from a field worker that is always present, if the groups are created by the borrowers they will feel that sense of support from their colleagues.

Overall the evaluation highlighted the impact that Drombaya is having and the way in which it needs to head in the coming year to be of greater value to it’s clients.

Give the gift that keeps on giving. Drombaya gift cards are loans that help women in Sub-Saharan Africa change their lives.

How do you make a $25 gift look like a $100 gift… Drombaya gift cards. Your $25 gift will be recycled four times over the course of a year. It helps four women and their families to start businesses and get job training, which enables them to feed and care for their families.

This is how it works.  Go to Gift Cards and buy a gift card for someone (anyone, family, friend, local bus driver etc…) in any amount ($100 is a nice round number:-)). This gift card will be used as a donation to Drombaya in the name of the recipient of the gift (family, friend, neighbour you accidentally hit with your car, anyone!).  The donation will go directly to Drombaya partner organizations and be used as loan money to help women start small businesses and get business training or improve businesses they have already started.

Top Ten Reasons Why Drombaya Gift Cards are THE PERFECT GIFTS!

10- Nothing says I love you more then a gift card

9 – No one will know how much you spent on their gift (except for me but I won’t tell). You can spend $100 and get gift cards for 10 or 20 or more friends and they will never know that you only spent a few dollars on each of their gifts!

8 – If you are sick in bed you don’t have to get up to do your Christmas shopping you can just order these online.

7 – If you aren’t sick but just really like your bed, you can order these online!

6 – Drombaya gift cards are perfect for your friends that live halfway around the world!

5 – One size fits all.

4 – Diamonds get lost, clothes go out of style and perfume runs out, this is a gift that will last FOREVER!

3 -You can avoid the mall.

2 – The gift of good Karma never goes out of style!

1 – Giving someone a chance to have a better life is a pretty awesome gift to give.

While the pilot project was being conducted by our field partner organisations, Drombaya has been actively looking into partnerships and supporters for the next phase. We can proudly announce that we have secured interest free loans of more than 32′000 Euro almost $ 50,000 for the next three years. In addition, many initial investors are extending theirs loan or donating them to Drombaya where they will again be used as an investment tool. Thank-you! This current portfolio size means that Drombaya is now self-sustained as a social business with regards to covering expenses through the interest income.

To maintain a high degree of transparency and professionalism Drombaya has recruited an external partner to conduct a second field evaluation around Buea, Cameroon. Furthermore our field partner organisations are writing business plans with different portfolio scenarios. Based on the field evaluation and the business plans, we will decide together with out partners how to move forward.

Introduction
Drombaya started as a pilot project in summer 2008 through partnering with four Civil Society Organisations (CSOs). In February 2009, it was time for the first field evaluation to monitor the performance and impact. Each CSO was provided with 2000 Euro capital in August 2008 with an annual interest rate of 8%. The repayment date of the loan was set for September 2009.

The evaluation took place between February, 9^th and 24^th. It was structured into individual meetings with the four organisations and a group meeting of all CSOs during the first week. The second week was committed to meet some borrowers of the organisations. This report summarises the results and observations and looks shortly into the future.

CSO performance
All in all, 162 people received loans from the total capital of 8000 Euro. The average loan size was around 76 Euro whereby the lowest loan was 30 Euro and highest 150 Euro. The duration varied between three and ten months. The average recovery rate is around 95%. The missing five per cent represent late repayments due to illness, birth, fire and other reasons. However, all organisations agreed that these five per cent are very likely to be recovered although late. In average the organisations charged an annual interest rate of 21.25%. It is important to note that this is the interest for one year and doesn’t occur for a six months loan where the average interest rate would be around 11% in average for this period. Comparing the interest rate to profit oriented microfinance organisations, it appears to be very low as they often charge around 45% annually[i]. In contrast, organisations which focus on the social impact and poverty alleviation like the Grameen bank charge interest rates around 20%. Drombaya can therefore be attributed to the later.

Procedure
After receiving the loan in August 2008, the CSOs started sensitising their women groups in the communities. Then, all organisations besides one carried out business training for all borrowers. The intensity of the business training varied remarkably between a two hours crash course and a two day full time workshop. Confronting the organisations with the question of the necessity of business training, it was concluded that it is very difficult to measure the impact of business training but it is likely to have a minor influence for the performance. However, the one-to-one coaching which takes place at every repayment meeting was regarded to be very important.

After the training and the loan application from the borrower side, the loans were disbursed to the groups. All organisations besides one work with the principle of social collateral which means that group members have to help repaying if one in the group fails to do so. Repayments were either directly collected by the organisation every month or by the treasurer of a group on a weekly or bi-weekly basis. Each organisation presented at the individual meeting during the evaluation their way of keeping paper-based records. These were kept in detail. Subsequent to the paper based documentation, the organisations had to upload their computer based records plus a picture of each borrower to the Drombaya internet platform to give the investors an insight into their creditors’ life. Some of the borrower portraits were then published on the web platform.

The question of impact
Most loans were used to start a small trading business, to increase the quantity of an existing income generating activity or to buy raw material, proceed and sell it. Trade was done with all different kind of things like shoes, tomatoes, carrots, peanuts, etc.

The interesting question comes with how a small loan actually influences the life of a woman. After seven months, it can be observed that in most cases the loans mainly helped to supplement the low income level. According to the organisations, a real transformation from the generated income could occur from an average loan size of 150 Euro. That means double of the current average amount. However, none of the organisations would have started with that size in the beginning as they see it as crucial to build trust through regular repayments with the 75 Euro loan. Once this has been repaid, they will gradually increase the loan size and allow the borrower to step into bigger business. They all agree that if they had started with too big loans, the recovery rate would have been much smaller. Therefore, it will take about two to three years until a borrower reaches the point whereby a real transformation in terms of living standard can be observed.

However, there are some borrowers who could already change their life remarkably through the small 75 Euro loan. An example is Elisabeth who used the whole amount to buy Manioc on the market and processed it into Garry. She could sell it for 225 Euro and made a profit of over 130 Euros. She used part of the money to pay for the school fees of her children and reinvested the rest to buy more Maniocs. Such enormous profits which resulted into a kind of life transformation were the rare cases and could be observed in about 15 cases (around 10%). However, as soon as the loan size increases, this rate is most likely to boost significantly.

Problems
The main difficulty which all organisations encountered was the limited capital basis they had to operate with. The income they could generate through the interest rate is not enough to cover their own expenses and they are consequently losing. In average, an organisation can reach the break-even point with capital of 17’000 Euro.

Secondly, there were some minor problems with the upload to the internet platform due to one mistake on the platform in the beginning.

Future
The current capital basis of 2000 Euro per organisation has been extended until February 2010. However, the main focus of Drombaya will be to sustain the existing organisations during 2009 and provide each of them with capital of 17’000 Euro. This will allow them to break even their costs and to reach about 150 people per year. Moreover, they will be able to provide bigger loans which will consequently have a more transformative impact. In addition, Drombaya as an organisation would be able to cover its basic costs.

Conclusion
The pilot project has been a success so far: 162 loans could be distributed with a capital of 8000 Euro and the recovery rate is higher than expected with 95% in average. Nonetheless, the transformative impact of the loans could only be achieved for about 10% of the current borrowers which is mainly due to the low loan size and the short duration of the project.  However, starting with a higher amount per person was likely to fail as the relationship between the person and the organisation has to be developed at first. It is very probable that observable transformation with regards to children at school, housing and meals per day can be observed during the gradual process of increasing loans.

The Drombaya team is convinced that the taken approach works and is committed to establish Drombaya as a social business.

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[i] Compare Social Performance Report 2008 from ResponsAbility (p. 11 ), where the average for loan sizes below 500$ is 47%