Managing Decentralization at the Small Enterprise Foundation, Northern Province, South Africa

This paper describes the growth of the Small Enterprise Foundation (SEF) in South Africa and the various hurdles it faced in its pursuit of sustainability.

The paper describes the following features of SEF:

• Lending methodology - lending to groups of five members;
• Lending programs - 'Micro-Credit Program' that provides credit to experienced business owners and the 'Tsomishano Program' (TCP) that provides credit and training to women from the poorest households;
• The growth process of SEF and the achievement of 100% repayment;
• The flat organizational structure, market-based salaries and incentives to staff.

The paper states that:

• Branch managers of the MCP came from diverse backgrounds;
• The staff lacked time management, mathematical and financial skills;
• Poverty was widespread in South Africa and income distribution was unequal;
• The economy was dependent on mining and industrial agriculture and there was a huge need to create employment opportunities.

The paper documents SEF's quest for sustainability, discussing:

• The increase in expenses due to expanding operations and unionization of field staff;
• The realization on the part of managers that SEF was not making profits;
• The need to increase revenue and minimize expenses.

The paper concludes by examining decentralization, a decision that the managers took to:

• Improve loan officer productivity and cost efficiency;
• Empower branch managers;
• Add flexibility to the organization;
• Make SEF sustainable.