Initiative Development Ghana (ID-Ghana)

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Updated: May 2010

Summary

Initiative Development Ghana (ID-Ghana) is a microfinance institution in Accra, Ghana. (For more on microfinance, see our overview of microfinance.) ID-Ghana provides individual loans, business training,1 and subsidized health insurance2. We reviewed ID-Ghana in late 2009 as part of our process to distribute $250,000 in funds to an economic empowerment organization in Sub-Saharan Africa. We identified ID-Ghana as a candidate through the process described in our overview of how we identified candidates for the economic empowerment grant. Our review consisted of reviewing materials ID-Ghana submitted in response to our questions and a phone conversation3 and email correspondence with Romain Tevels, Executive Director. We believe that ID-Ghana stands out from other microfinance institutions for its commitment to openness and transparency, sharing information with us that illustrates past challenges and allowing us to post these documents publicly. However, we are not fully confident in the answers to key question about whether it is seeing high repayment rates. At this time we cannot confidently recommend ID-Ghana to donors, feeling that the Small Enterprise Foundation provides a better opportunity overall. We do, however, believe that ID-Ghana is a standout for its transparency and may provide a strong opportunity for donors in the future.

Key questions about social impact

In evaluating ID-Ghana, we have used our key questions for evaluating microlending charities. The sections below cover its answers to our key questions (see the previous link for why we consider these questions important).

Is the organization focused on social impact?

How frequently do borrowers drop out of the program?

ID-Ghana reports its "retention" rate. It reports that an average of 78.4% of clients in one loan program and 59.1% of clients in another loan program take out a new loan after repaying their previous loan.4 This high drop out may be, at least in part, due to the fact that ID-Ghana does not always have enough money to disburse loans to all clients who want them.5 According to ID-Ghana's Social Performance Standard report for 2008, its overall drop-out rate was 48% in that year.6 For more information on microfinance drop out rates and how they are calculated, see our microfinance glossary.

Does ID-Ghana monitor why borrowers drop out?

A 2009 assessment of ID-Ghana reported that ID-Ghana has "no medium to obtain feedback from dropouts about their reasons for leaving the scheme."7 ID-Ghana conducted a client satisfaction survey in 2005, which included former clients.8 We have not seen evidence that it has conducted more recent surveys.

Does ID-Ghana prevent client over-indebtedness?

ID-Ghana provides training to clients on avoiding over-indebtedness.9 We do not know what this training involves or whether it is effective.

Are borrowers protected against harassment by loan officers and group members?

ID-Ghana has stated to us that it does not have a specific policy to address this issue.10 Loans are given on an individual basis, but it is possible that there are instances of collection groups, as well as loan officers, harassing members to repay.

What interest rates does ID-Ghana charge?

We didn't ask ID-Ghana for information on their interest rates. At the time we reviewed them (late-2009), interest rates were not a key step in our process. For more information on microfinance interest rates and how we calculate the cost of a loan to borrowers, see our microfinance glossary.

What is ID-Ghana's repayment rate?

ID-Ghana quotes its repayment ratio as 99.0% as of October 2009. However, this is far from the whole picture, as it wrote off a significant portion of its loan portfolio immediately beforehand, and the "write-off ratio" for that month was 27.7%.11 The high degree of write-offs in October 2009 appears to be due to an accounting decision related to a change in loan products offered.12 The write-off ratio for November 2008 to April 2009 was about 5%.13 While we believe that ID-Ghana has been unusually clear about the details of its portfolio and what its quoted repayment rates mean, we remain unclear on what its overall track record of repayment looks like. For more information on collection rates and other forms of microfinance repayment rates, see our microfinance glossary.

What are ID-Ghana's clients' standards of living?

ID-Ghana collects data on the standard of living of (at least some) of its new clients. In a survey of 268 new clients, 0.4% were considered "less poor," 6.3% "poor," 71.6% "very poor," 20.1% "extremely poor," and 1.5% "indigent."14 Clients' poverty levels were based on their scores on ID-Ghana's "Home Visit Form," a list of questions about clients' households.15 The list included such questions as monthly household savings, number of children in school, type of house, number of meals per day, and health status of household members.16 It is not clear to us whether ID-Ghana's poverty level definitions correspond to internationally-recognized definitions, or whether this survey is representative of ID-Ghana's new clients overall. There is limited evidence, from another study, that ID-Ghana may not be serving the poorest residents within the areas it works.17 For more information on standard of living surveys of microfinance clients, see our microfinance glossary.

Bottom line

Based on our review, we applaud ID-Ghana for its commitment to openness and transparency, sharing information with us that illustrates past challenges and allowing us to post these documents publicly (see below). In our experience, aid organizations are very rarely willing to share information along these lines, and ID-Ghana's level of transparency and accountability is unusual. However, we are not confident in the answers to key questions about whether it is seeing high repayment rates. At this time we do not recommend ID-Ghana to donors, feeling that the Small Enterprise Foundation provides a better opportunity overall. We do, however, believe that ID-Ghana is a standout for its transparency and may provide a strong opportunity for donors in the future.

Sources

• Initiative Development Ghana. Annual report (2008) (PDF).
• Initiative Development Ghana. Baseline survey. ID-Ghana asked that we keep this document confidential.
• Initiative Development Ghana. Baseline survey - Agbogbloshie. ID-Ghana asked that we keep this document confidential.
• Initiative Development Ghana. Baseline survey - Chorkor. ID-Ghana asked that we keep this document confidential.
• Initiative Development Ghana. Baseline survey - Dansoman. ID-Ghana asked that we keep this document confidential.
• Initiative Development Ghana. Baseline survey - Glefe, Shiabu & Agege. ID-Ghana asked that we keep this document confidential.
• Initiative Development Ghana. Baseline survey - Kaneshie. ID-Ghana asked that we keep this document confidential.
• Initiative Development Ghana. Baseline survey - Madina market. ID-Ghana asked that we keep this document confidential.
• Initiative Development Ghana. Baseline survey - Nima-New Town. ID-Ghana asked that we keep this document confidential.
• Initiative Development Ghana. GiveWell economic empowerment grant application (PDF).
• Initiative Development Ghana. Home visit form (PDF).
• Initiative Development Ghana. Key findings from ID-Ghana’s NHIS program evaluation here (PDF).
• Initiative Development Ghana. Programme presentation (2010) (PDF).
• Initiative Development Ghana. Report and financial statements (2008) (PDF).
• Initiative Development Ghana. Satisfaction survey (2005) (PDF).
• Initiative Development Ghana. Social performance standards report (2008) (XLS).
• Initiative Development Ghana. SPI report (2008) (PDF).
• Initiative Development Ghana. SPI report (2009).
• Raginel, Laetitia. Initiative Development Ghana representative. Phone call with GiveWell, March 10, 2010.
• Tevels, Romain. Initiative Development Ghana Executive Director. Phone call with GiveWell, December 3, 2009.

• 1. "The weekly pace of collection gives as many opportunities to deliver trainings to all members of the group." ID-Ghana "GiveWell Economic Empowerment Grant Application," Pg 4.
• 2. "The enrolling of our partners (clients) in the National Health Insurance Scheme, which we subsidize on a degressive basis over a 3 year period in a bid to encourage the long term registration of the most deprived communities of Accra (see SNV survey)." Initiative Development Ghana, "GiveWell Economic Empowerment Grant Application," Pg 4.
• 3. Romain Tevels, phone conversation with Givewell, December 3, 2009.
• 4. "The new Front Desk product, implemented in market areas (as opposed to Onipa Nua, implemented in residential area) has suffered less from the chaotic disbursement pattern than the previous product: retention ratio has been in the benchmark zone since last summer and is currently standing at 78.4%. All in all, Onipa Nua retention ratio is 59.1% only." Initiative Development Ghana, "GiveWell Economic Empowerment Grant Application," Pg 3.
• 5. "The retention ratio has suffered a lot from the problems of disbursement. ID-Ghana has faced in 2009 an acute cash flow crisis which has led the organization to hold its disbursements almost throughout the year." Initiative Development Ghana, "GiveWell Economic Empowerment Grant Application," Pg 3.
• 6. Initiative Development Ghana, "Social Performance Standards Report (2008)." This rate is calculated as (Number of clients at the beginning of the year + Number of new clients - Number of clients at the end of the year) divided by (Average of number of clients at the beginning and at the end of the year).
• 7. Initiative Development Ghana, "SPI report (2009)," Pg 7.
• 8. "209 persons have been interviewed in ID’s areas of activity: - 110 Clients (53%), - 20 Former Clients (10 %), - 79 Non-clients (38%)." Initiative Development Ghana, "Satisfaction Survey (2005)," Pg 5.
• 9. Romain Tevels, phone conversation with Givewell, December 3, 2009.
• 10. Romain Tevels, phone conversation with Givewell, December 3, 2009.
• 11. "Our repayment ratio is 99.0% as of Oct-09." Initiative Development Ghana, "GiveWell Economic Empowerment Grant Application," Pg 2. "This ratio stands as of Oct-09 at 27.7%, which brought down the portfolio at risk at 30 days at 3.0%." Initiative Development Ghana, "GiveWell Economic Empowerment Grant Application," Pg 3.
• 12. "The write-off ratio has shot up lately because of the clean up that followed the phase out of our old loan products which proved to be inefficient and impactless. This clean-up process happened in two steps: first step in May-09, which is the normal time of the year when ID-Ghana processes its write-offs for loans in arrears for more than 365 days, and second step in October after the Executive Council (the upper most governance body of the institution) passed a resolution to write off the portfolio linked to the phased out loan products, so as to follow-up on these loans without hampering the quality indicators of the global loan portfolio." Initiative Development Ghana, "GiveWell Economic Empowerment Grant Application," Pg 2.
• 13. Initiative Development Ghana, "GiveWell Economic Empowerment Grant Application," Pg 2.
• 14. Initiative Development Ghana, "GiveWell Economic Empowerment Grant Application," Pg 5.
• 15. Laetitia Raginel, phone conversation with GiveWell, March 10, 2010.
• 16. Initiative Development Ghana, "Home Visit Form."
• 17. "It appears that the branches are naturally attracted by wealthy areas. In many branches, the most deprived areas tend to be abandoned for wealthier ones like for instance Sodom & Gomorrah, Zongo and the fish mongers of Chorkor where only a few partners remain. In some area close to the Branches the penetration is very small because the partners won’t pay." Initiative Development Ghana, "Baseline Survey," Pg 13.