In the microfinance sector, a concentration of loans in a single industry, geographic area, or client segment can expose an institution to significant and often unseen risks. A sudden economic downturn, a localized natural disaster, or a crisis in a specific agricultural value chain can have a devastating effect on an entire loan portfolio. Loan portfolio diversification is the strategic practice of spreading these risks across a variety of client types, sectors, and products, ensuring that the failure of one part of the portfolio does not lead to a systemic failure. This approach is a cornerstone of responsible financial management, protecting both the institution and its clients from external shocks and building a more resilient and sustainable financial system.

This course is designed to provide a comprehensive and practical framework for microfinance professionals to assess, manage, and diversify their loan portfolios effectively. You will learn the analytical tools and strategic methodologies needed to identify concentrations of risk and implement a diversification strategy that aligns with your institution's mission and goals. By mastering the principles of portfolio management, you will be prepared to optimize your institution's risk-return profile, strengthen its financial health, and ensure it can continue to provide vital services to a wide range of clients.

Duration: 5 days

Target Audience:

• Microfinance institution (MFI) managers and executives
• Risk management and credit analysts
• Professionals in charge of product development
• Board members and governance specialists
• Business development professionals
• Financial inclusion practitioners
• Data scientists and analysts
• Social entrepreneurs and startup founders
• Regulatory and policy advisors

Objectives:

• Master the core concepts of loan portfolio diversification.
• Understand the different types of concentration risks.
• Learn how to measure and monitor portfolio concentration.
• Grasp the complexities of a well-diversified portfolio.
• Explore strategies for diversifying across products and sectors.
• Understand the role of geographic and client segmentation.
• Learn how to use data and technology for portfolio analysis.
• Understand the link between diversification and financial sustainability.
• Analyze successful case studies from different regions.
• Develop a strategic roadmap for portfolio diversification.

Module 1: Foundations of Portfolio Diversification

• The importance of diversification in a microfinance context
• The main types of concentration risk
• The relationship between risk and return
• The benefits of a well-diversified portfolio
• The role of diversification in an MFI's financial health

Module 2: Measuring Portfolio Concentration

• The tools for measuring concentration (e.g., Herfindahl-Hirschman Index)
• The importance of a well-defined segmentation
• Analyzing concentration by sector, geography, and product
• Using data visualization to identify risks
• The role of a management information system (MIS)

Module 3: Diversification by Sector

• The importance of lending to a variety of industries
• Strategies for identifying new sectors to lend to
• The challenges of diversifying into new sectors
• The role of market research and due diligence
• Case studies of successful sector diversification

Module 4: Diversification by Geography

• The importance of lending across different regions
• The benefits of a wide geographical presence
• The challenges of managing a geographically dispersed portfolio
• The role of technology in remote monitoring
• Case studies of successful geographic expansion

Module 5: Diversification by Product

• The importance of offering a variety of financial products
• The benefits of a multi-product strategy
• Designing products for different client segments
• The link between product diversification and client retention
• The role of product profitability analysis

Module 6: Client and Segment Diversification

• The importance of lending to a variety of client segments
• Strategies for reaching different client profiles
• The role of gender and age in portfolio diversification
• The link between client segmentation and social impact
• The importance of a well-defined marketing strategy

Module 7: Strategic Planning for Diversification

• The process of developing a diversification strategy
• Setting clear goals and targets
• The importance of a well-defined implementation plan
• The role of a dedicated team
• The importance of a regular review process

Module 8: Risk Management and Governance

• The role of the board and senior management in oversight
• The importance of a risk appetite statement
• The link between diversification and enterprise risk management
• The role of a risk management committee
• The importance of a robust internal control system

Module 9: Technology and Analytics

• The role of data analytics in portfolio management
• Using a CRM to segment clients and identify risks
• The importance of a business intelligence tool
• The role of predictive analytics in risk management
• Using technology to automate monitoring

Module 10: Scaling and Sustainability

• The challenges of managing a diversified portfolio
• The importance of a scalable system
• The long-term financial sustainability of a diversified MFI
• The link between diversification and a more resilient business
• New trends and innovations in the sector

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.