Responsible Investment Management and Advisory Services

Leveraging Risk Management for Future Growth: A Business Case of UNTU Microfinance in Zimbabwe

UNTU, founded in 2009, is a leading MFI in Zimbabwe, with a gross loan portfolio of $4.4 million, with 10.000 clients. The organisation is relatively young and growing quickly, and consequently they have a largely undocumented and informal risk management process. As such, the organisation identified the need to establish a risk management function.

At the request of UNTU, TJAS worked with the ‘Risk Management in Microfinance Initiative’ (RIM Initiative), of which TJ is a founder member. UNTU identified four key areas, based on the RIM Initiative’s graduation model. The key areas were:

1. the organisations current risk management profile
2. how ready they are to implement a risk management framework
3. what is required to improve their risk management
4. a feasible work plan to improve their risk management.

After the initial identification phase, the consultant provided practical support to begin implementing the risk management framework. This involved working with the Senior Management Team and Board to develop policies and procedures which would allow for appropriate risk management, based on the RIM Initiative’s graduation model.

Thanks to this project, UNTU found four fundamental benefits:

• Going through a process with all stakeholders that yields a shared conceptual understanding of the risk management process using a comprehensive framework
• Identifying the key risk management gaps using world-class benchmarks that also takes into account future issues arising from institutional growth
• Developing an action plan which will result in the more effective management of key risks and greater ability to meet institutional objectives
• Having the ability to measure progress using a robust framework which can communicate specifically how the institution has attained company-wide goals

Upon reflecting on UNTU’s own risk management improvement process and the adoption of the Risk Management Graduation Model, CEO Clive Msipha stated, “This exercise has allowed us to critically think through the key risk management issues, using best-in-class tools, with a specific view of better meeting the company’s objectives.”