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Findings - Impact Study of the Zakoura Microcredit Program

Written by: United Nations Capital Development Fund

Article Overview: It must be noted that in general, there were relatively more clients as compared to non-clients who were open and more at ease in answering the questions raised. For example, to a question referring to changes in their income, the proportion of clients who gave no answer was 1.1% as against 9.3 % for non-clients.

Findings - Impact Study of the Zakoura Microcredit Program

It must be noted that in general, there were relatively more clients as compared to non-clients who were open and more at ease in answering the questions raised. For example, to a question referring to changes in their income, the proportion of clients who gave no answer was 1.1% as against 9.3 % for non-clients.
We also observed that 62.7 % of the clients had recorded an increase in income over the preceding twelve months. Of them, 5.3 % considered the increase substantial, whereas for the same questions, the figures stood at 38.9 and 0% in the case of non-clients!


The program’s clients seem to be more actively involved in managing the household budget, potentially because of their increasing and more substantial financial contribution.


The Zakoura program’s clients seem to be better protected against shortages of inputs as compared to non-clients. The same is the case with “events outside their business activities”. However, as with any other entrepreneur, they too are affected by the general economic situation, which impacts on the demand for their products or services.


The Zakoura program seems to have given a boost to entrepreneurship among its participants while making it easier for them to take advantage of possible business opportunities.


Clients’ sales from the two primary activities of their enterprises are higher by 14 % on an average as compared to those of non-clients. However, with regard to the profits calculated, the difference is smaller – 8.9 %. The smaller gap can be explained by the fact that clients are better able to assess their profits as compared to non-clients. In a certain sense, they have better control over the management of their funds.
The results obtained upon going through the answers to questions concerning the functioning of the enterprise itself enabled us to conclude that the Zakoura program had helped its clients to further diversify their activities (their average profits from their secondary business were far higher than those obtained by non-clients).


In most fields of activity, clients’ sales and profits were higher than those in the case of non-clients, which explains the decreasing need for supplementary sources of income (such as wages which means working for others).


Access to a funding source has enabled clients to undertake the necessary investments to promote their business, thereby extending their process turnover ratio, leading to economies of scale (relative reduction of unit costs).


We observed that participation in the ZMC program also promoted diversification in enterprise activities, either through the funding it enables, or through the empowering (network) of the women participating in it.
As far as the opportunities the loan program offers clients, it was observed that, proportionally speaking, clients had made more changes in their business over the 12 months preceding the survey. For example, over the same period, 63.30% of the clients increased the size of their businesses as against 39.3% of non-clients. In the same way, 54.8% of the women who had spent some time in the program expanded their product range as compared to only 35.5% of incoming clients.


Hence, the Zakoura program seems to be fulfilling its role by loosening the financial constraints that held women entrepreneurs back from taking decisions. The access to the credit market that the program offers appears to provide the participants with surplus resources that can be used for strengthening and expanding their enterprise activities. It also gives them the opportunity to think in broader terms about further developing their business. In addition to increased investment, they also expand their distribution network.
Given the prevailing economic situation, clients seem far less disadvantaged than non-clients.


With regard to professionalism in the management of their business, there is no notable difference between clients and non-clients – the majority in both cases keeps the money from their business separate from the money used for family and personal expenses. However, 65.7% of the clients did admit that they only started this practice once they had joined the program. ZMC has also encouraged its clients to calculate their profits on the basis of their record of income and expenses (in this case, 71.6% of the 46.6% admitted that they started this practice only after they joined the ZMC program), which reinforces the idea that the program has contributed substantially to consolidation and professionalism in the management practices of its clients.
Thus, 56.6% of the clients have said that they only learnt which of their products was earning them the highest profits once they started participating in the program.


With regard to the program’s impact on the household, irrespective of the geographic area under consideration, the proportion of clients who have increased spending on education is 10 points higher than in the case of non-clients. All school-aged children go to school in 83.9% of client households (73% in the case of non-clients).


From the viewpoint of population targeting, 37.8% of the clients declared that as far as the profit use was concerned, their first choice was the purchase of food and food products. In contrast, only 26.50% of the non-clients admitted that the profits were primarily used to finance such purchases. In spite of this difference, food remains the primary item as far as the priority goes for using the profits earned, irrespective of the group concerned. This proves that ZMC’s client base is still composed of a population group that sets aside a major proportion of its budget for food and food items, and that, therefore, it is a group of limited means.


However, the summary table of the number of people per household, in particular the number of working persons, allows us to compare the socio-economic profiles of both client and non-client samples, thereby helping us to explain why non-clients sometimes have “household performance” results that are better than those of clients. It would appear that, since loan officers are offered an incentive to collect the maximum number of clients possible (premiums are normally linked to the number of new clients in a portfolio), they have a tendency to "run" after clients and are therefore "less careful" about the fact that they should be from among the "poorest" sections. Hence, new clients sometimes have the profile of working women, who are less disadvantaged than older clients.


Among the clients, more than one-third had observed an improvement in their diet while only 18 % of non-clients remarked on a similar change. On the other hand, a larger number of non-clients felt that their diet had declined in quality.


With regard to empowerment, proportionally speaking, a higher number of the ZMC program’s clients were taking more decisions on their own.


As for the functioning of the program itself, we observed that when the group was properly managed, the clients felt that it was useful since it served as a basis for mutual help if and when required. On the other hand, they also appreciated the fact that Zakoura enabled them to form a fresh solidarity group from one cycle to another, if they liked.

When the clients were asked to give their spontaneous reaction to the program, as far as the overall quality of the program was concerned, the women respondents were unanimous in their opinion. For them, the program’s main attraction was that it provided them with a regular source of working capital. As we had observed in the report, the program led to a relative reduction in shortages of resources for its clients. One of the results obtained from the focus groups was that client satisfaction had increased due to the fact that they were able to reimburse their loans in small installments.


The program’s second major advantage, according to them, was the fact that the interest rates proposed were lower than those associated with other informal credit sources.

However, very few women mentioned the training and technical assistance provided during the program, while previous results had quite clearly highlighted the usefulness of these services.

It also must be noted that some of the clients were disappointed with the fact that solidarity did not necessarily work within the groups.

Micro-Start Program: Local Technical Services Provider-
Impact Study of the Zakoura Microcredit Program
Fouzi MOURJI
(December 2000)

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Article Tags: answers to questions, business activities, business opportunities, economic situation, entrepreneur, gap, household budget, participants, profits, proportion, regard, secondary business, twelve months



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