TLFS Strategy, Staff

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Trackline Financial Services Co. Ltd (TLFS Co. Ltd)

Short-Medium Term Strategy

PresentedBy: Fred Quainoo, C.E.O.Approved By:Board of Directors Dated:28th July, 2010


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TLFS Short-Medium Term Strategy Page 1All Rights Reserved

Table of Content

Page

Message from the C. E. O. 2

Introduction 3

Short-Medium Term Goals 3

Long Term Goals ... 4

Revision of Policies 5

Nkosuo Investment (Fixed Deposit) .. 7

Licensed Lotto Agent .. 9

Opening A New Branch 10

Investment Options 11

Consumer Credit Scheme .. 11

Trackline Coins Accounts .. 12

Acquisition of Motor Bikes 13

Acquisition of Mini Buses . 13

Miscellaneous . 14

Conclusion . 14


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Message from the C. E. O.

TLFS is operating in business environments that continue to change with many challengesand this Short-Medium Term Strategy is to help us address these challenges. This StrategicPlan was developed with the active involvement of the management of TLFS and some

Board members.

The Strategic Plan captures the opportunities toleverage and realign TLFSs strengths and to addressthe customer, financial, operational, andorganizational initiatives necessary for future growthand success.

Since its inception TLFShas given credit facilities topoor people who engaged in small and medium scale

businesses to help them grow their businesses. TLFShas a unique opportunity to make a real difference inthe lives of the economically active poor who havetraditionally been sidelined by commercial banks.

Challenges:

The main challenge ofTLFSis its inability to mobilize enough funds to expand operation.There has also been keen competition in the micro finance business and this has called forredesigning of various products that TLFSoffers.

Opportunities:

TLFSintends to open outlets at various market centers to enable market women have easyaccess to the place and the first of such outlets will be operational by 30th December, 2010.

This will also help us to mobilize enough Susu from the market women which we will intendgive them out as loans.

With the continued commitment and hard work ofTLFS employees, we will improveTLFSs performance and reputation and successfully implement the policies as contained inthis Short-Medium Term Strategic Plan.

Sincerely,

Signed

Fred Quainoo

Chief Executive Officer

Fred Quainoo, C. E. O.


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INTRODUCTION

Trackline Financial Services Co. Ltd (TLFS Co. Ltd) provides microfinance loans, savings

(Susu) and training to its customers with the view of helping them work their way out of poverty.

TLFS has realized through its operations that microfinance has become a critical dimension of

the broad range of financial tools for the poor, and its increasing role in development hasemanated from a number of key factors that include:

a. The fact that the poor needs access to productive resources, with financial services beinga key resource, if they are to be able to improve their conditions of life;

b. The realization that the poor have the capacity to use loans effectively for income-generation, to save and re-pay loans;

c. The observation that the formal financial sector has provided very little or no services tolow-income people, creating a high demand for credit and savings services amongst the

poor;

d. The view that microfinance is viable and can become sustainable and achieve full costrecovery;

SHORT-MEDIUM TERM GOALS OF TLFSOur corporate goals will be the guiding principles for all decision-making by the TLFS.

1. Increase Revenuea. Increase the number of customers by 100%.b. Increase the value (interest) on each product sale made to customers comparable to key

competitors.

c. Increase transaction value.2. To be Profitable

TLFS will strive to achieve sufficient profit to finance its growth and to provide the

resources needed to achieve other corporate objectives.

3. Increase Market ShareIt will be the responsibility of every TLFS member to identify, attract, satisfy and retain

customers. This will be the basis for increasing our market share.

4. Strong Customer Satisfactiona. TLFS will provide products and services of the highest quality and greatest possible value

to our customers, thereby gaining and holding their respect and loyalty.

b. We will excel in anticipating and quickly responding to customer needs and competitoractivity.


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TLFS Short-Medium Term Strat

5. Good Working ConditioTLFS will help its people

will be achieved by:

a.

Sustain a workiemployees who s

b. To recognize indic. To help our peopl

LONG TERM GOALS

It has always been the vision of

Loans Company and this visi

Gh7 million and 25% of this a

amount being owed by our cu

recovered, representing Gh18

Gh4,671,201.08 in eight (8) ye

Value = Present Value (1+I

1. Customer Satisfaction

2. Corporate Profitability

3. Business Profitability

Historical Focus

The Tr

egyAl

s

share in the companys success which they ma

g environment that attracts, retain and deare in the success of the company.

vidual achievements.

e gain a sense of satisfaction and accomplishm

TLFS to transform its operations into a full-gr

n is still alive. The current Bank of Ghan

mount is required to be kept as a statutory res

stomers is Gh214,426.44 and 85% of it is

2,262.99. Therefore, TLFSs revenue is ex

ars, with our average interest rate pegged at 50

terest Rate)Time

]. Our current annual ex

1. Increase Revenue

2. To be Profitable

3. Increase Market Share

4. Strong Customer Satisfa

5. Good Working Conditio

Renewed Focus

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Page 4Rights Reserved

ke possible. This

elop committed

nt from work.

wn Savings and

requirement is

rve. The current

expected to be

pected to reach

%. [Thus, Future

ense is around

ction

s


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Gh130,000.00 which is expected to increase at 10% a year, bringing our total expense for the

next eight (8) years to Gh1,486,665.45.

[Thus Future Value of Annuity = PV(1+Int. Rate)Time

].

Rate

Therefore, without any further investment, the net worth of TLFS in 8 years will be about

Gh3.18 million (thus exp. revenue of Gh4,671,201.08 less exp. expenses of

Gh1,486,665.45). TLFS will therefore be able to satisfy the statutory requirement of 25% in 8

years or less and be able to become a full-fledge Savings and Loans Company. Alliance with

our sister company, Smart Micro Finance will reduce the years to between 3 to 5 years. Further

investments into the company and well-focused income generation drive could further reduce the

number of years.

REVISION OF POLICIES

Treatment of Savings and Investment Accounts

a. TLFS will always reserve 60% of total Susu savings to meet withdrawals with theremaining 40% to be disbursed as loans.

b. TLFS will disburse 100% of customers investments in the Fixed Deposit Accounts asloans.

c.

TLFS will disburse 70% of its loans to groups and the rest to cover individual loans.d. Application forms will be sold at Gh5.00 subject to change.e. There will be a charge of 2% procession fee on all loans.f. TLFS will deduct an additional amount of 1.5% to cover insurance for the loans.

TLFS Susu Savings Accounts (Transaction Accounts)

The operation of the our transaction accounts is similar to current accounts.

Modalities:

Account OpeningGh5.00

Minimum Balance of Gh5.00 will be maintained.

Minimum Savings of Gh2.00


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Account Maintenance Fee per

Range

0 - Gh100.00

Gh101.00 Gh200.00

Gh201.00 and above

a. The balance on custometimes the amount save

completion of payment.

b. 7% interest will be chargc. Customers can apply ford. Passbooks will be provid

HOW DO WE ACHIEVE OUR

TLFS will meet the above state

estimated that only about 10% o

have to execute step by step acti

finance in Ghana. In view of thi

effect from 2nd August, 2010.

Trackline

Coins

Account

The Tr

egyAl

month is as follows:

Monthly Fee

Gh1.00

Gh1.50

Gh2.00

s total deposit at any given time qualifies a p

. Amount saved will therefore be used as

d per month.

overdraft facility subject to interest rate of 10%

d to customers.

GOALS?

d goals by introducing innovative product on

the micro finance market in Ghana is being se

on plan with visionary leadership to be a mark

s the following product will be rolled out ont

New

Products

Nkosuo

Investment

Account

NLA Lotto

Marketing

Agent

Consumer

Credit

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rson for two (2)

collateral until

per month.

the market. It is

viced. TLFS will

t leader in micro

the market with


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TLFS NKOSUO (FIXED DEPOSITS)

Customers who deposit fixed amount for a specific period of time ranging from a minimum of

three (3) months upwards will attract very competitive interest rates.

Modalities:

a. The interest rate will be subject to change based on economic conditions and Bank ofGhanas base rate changes.

b. Existing customers ofTLFS will be introduced to this product.c. Marketing Executives and Client Service Executives will be tasked to educate and market

the product on personal contact basis.

d. The minimum amount to enjoy this facility will be pegged at Gh200.00 and above. Anamount will only attract interest if it remains in our coffers for the next three months.

e. An interest will be pro-rated if a client request for his/her money before the due date.f. A client who wants his/her money before the due date will have to give us five (5)

working days notice.

g. TLFS will neither be any charge for maintaining the account nor any commission chargeon turnover (COT).

h. As a policy, proceeds from this product will be kept in separate bank accounts to ensurethat the funds are properly managed.

i. The scheme also will be available to staff ofTLFS who desire to invest portions of theirsalaries.

j. The interest accrue will be paid up front but the customer loses the interest if who decidesto withdraw the deposit before due date.

k. The following interest will be earned by depositors:1. Holdings for 3 months: 20% p.a. (Monthly = 1.67%)2. Holdings for 6 months: 23% p.a. (Monthly = 1.92%)3. Holdings for 9 months: 25% p.a. (Monthly = 2.08%)4. Holdings for 12 months: 28% p.a. (Monthly = 2.33%)


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Note: It should be noted that the current average Fixed Deposit Accounts rate for three (3)

months ranges from 16% - 17% p.a.

Basic Assumptions on Nkosuo Investment

Timeline:Nkosua Investment is expected to be operational by 2nd

August, 2010.

Targeted No. of Customers:At least 100 customers are expected to be part of the package, with

each client contributing at least Gh200.00 for the first three (3) months.

Targeted Income: Nkosuo Investment is expected to generate an amount of Gh20,000.00

during the first three (3) months which will be used to grant loans to our customers at a

minimum monthly interest rate of 7% (84% p.a.).

Expected Return: Nkosuo Investment is expected to attractGh4,200.00 gross return for the

first three (3) months.

Promotion on Nkosuo Investment

Code-named Gyina Ho Gye Promo which will run from 1 st June till December each year. New

and existing customers will be made to open a special account called Smart-Save Account and

maintain Gh200.00 or more in the account for a minimum of three (3) months without any

withdrawals.

There is an instant prize for each customer who opens the promotion account. The instant prize

to be given constitutes 3% on the face value of the deposit. The higher the amount saved the

higher the prize. The customer can also decide to roll-over the 3% interest.

The instant prize includes: Wax prints, Mobile Phones, Rice Cookers, Wall Clocks, Trackline T-

Shirts and many more. The customer will the get an additional 5% interest on the face value after

the initial three (3) months bringing the total interest accrue to the customer to 8% for the three

(3) months (thus 32% p.a.).

Note: The two in one benefit (thus the instant prize of 3% and 5% interest after three (3) months)

will attract more people to deposit more into the Smart-Save. The company in turn gives the

proceeds for short term loans at 23% (92% p. a.) interest rate for the three (3) months (thus 7%


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interest per month for the three months and 2% processing fee). We will earn interest of 15%

(60% p.a.) whiles the customer gets 8% (32% p.a.).

1. LICENSED NLA MARKETING AGENTThe National Lottery Authority (NLA) is a key government revenue generating entity established

by an Act of Parliament (Act 722) in 2006. It was formed to streamline and regulate the lottery

business in Ghana. The NLA has been mandated under Act 722 of 2006 to license as many Lotto

Marketing Companies as possible to sell its products across the country. TLFS has applied for

license as a Lotto Marketing Company and will be paid commission based on products we retail.

The NLA currently operates seven (7) different lottery products, namely:

1. Mobi-Game Jackpot2. Monday Special3. Lucky Tuesday4. Midweek5. Fortune Thursday6. Friday Bonanza7. National Weekly Lotto

TLFS has been requested by NLA to pay an initial deposit of Gh5,000.00 and a license fee ofGh200.00 bringing the amount payable to NLA to Gh5,200.00.

Mode of Operation

a. TLFS will be paid a commission of 25% on sales per day.b. NLA will charge 3% on total commission as Income Tax.c. TLFS is required to determine its own terms with retailers.d. TLFS will use already established retailers to break into the market by offering them

better deals. This will help us eliminate cost in erecting new kiosks for retailers and other

associated costs.

Basic Assumptions on TLFS Lotto Agency

Timeline:It is expected that the lotto agency will be operational by 13th

September, 2010.


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Targeted No. of Retailers:At least 10 retailers are expected to be part of our scheme with each

retailer making daily sales of at least Gh100.00.

Targeted Income: The retailers are expected to work six (6) days a week (from Monday-

Saturday) tallying to twenty-four (24) days in a month. Therefore the total gross income per

month will be Gh6,000.00 (thus Gh100 * 10 * 24*25% =Gh6,000.00).

2. OPENING OF A NEW BRANCHESTLFS has plans to open outlets/ branches in some principal market centres in and around Accra.

Locations under consideration are Kasoa, Anyaa, Amasaman, Agona Swedru among others. The

first outlet is planned to be operational by December, 2010.

Benefits to TLFS:

a. We also believe that, having outlets/ branches at market centres will encourage more ofthe market women to patronize our new products especially the Nkosuo Investment and

the consumer credit scheme (see page 7).

b. TLFS will also be able to mobilize more Susu at the market which will help us raise morefunds for loans.

c.

We have realized that people from who are far away from our two branches (Lapaz andAbeka) are more skeptical about saving with TLFS because of the distance but locating

an office around those areas will partly erase those fears.

d. Having other outlets/branches will also help us extend the NLA Lotto services to thoselocalities.

Procedure:

a. An arrangement have been made to have a start-up capital of Gh20,000.00 for the firstoutlet/ branch office. Interest generated from such an initial capital will be able to cater

for monthly expenses at that office. Other services to be provided will however help

mobilize funds for expansion.

b. Loan applications will be processed at Lapaz.


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g. Mobile Phonesh. Ironi. DVD Players etc

The items will be purchased at the wholesale price and sold to the client at the retail price plus a

determined interest rate over an agreed period of time.

Modalities will be as follows:

Salaried Workers

Verify place of employment Seek employer consent Guarantor needed Item to be sold at retailed price plus 5% interest.

Susu Contributors

Repayment period to be negotiated through Susu contributions Item to be sold at retailed price plus 5% interest. Guarantor needed.

TFLS will identify credible schools, hospitals, and businesses, especially in its environs and

make the necessary contacts to sell this particular product.

Timeline:It is expected that the consumer credit scheme will commence on 1st

September, 2010.

Expected Return: We expect to generate at least 100% p.a. from any given product over three

(3) months period (thus 60% p.a. from TLFS interest rate plus 40% p.a. mark-up on wholesale

prices of items).

5. TRACKLINE COINS ACCOUNTSTLFS will use this as a special drive to encourage coins savings. With this, prospective will be

provided with a special Savings Box which enables them make their daily deposits of coins.

The key to this savings box will be kept by our officers (client service persons) who open the box


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once every week for the customers contribution, check with the customer and is recorded in his/

her passbook.

Since it involves deposits of coins, the customer will be advised to start withdrawal after six (6)

months of initial deposit to enable them have enough funds to meet their pressing needs or for

investment purposes. The savings will attract 3% interest for the entire six (6) months.

However, if a customer decides to withdraw any amount prematurely, it attracts a charge of 2%

or not less than Gh1.00. Existing customers will be encouraged to operate this account along

their normal Susu savings.

Amount raised from this special account will be given out as short term loan to our customers to

generate interest on it.

Timeline:It is expected that the coins accounts will commence on 2nd

August, 2010.

6. ACQUISITION OF MOTOR BIKESTLFS will acquire an initial two (2) motor bikes to help in mobilization efforts and for debt

recovery. The bikes will also be used to monitor our anticipated Lotto Retailers to ensure thatdaily returns reach the office on time.

Plans are far advanced to hired six (6) additional Client Service Persons, two (2) of whom will be

required to use the motor bikes for the mobilization.

Timeline:We expect to acquire one (1) bike in August and another one (1) in September, 2010.

7. ACQUISITION OF VEHICLETLFS intends to acquire two (2) mini buses to start its transport business to generate income for

the company. The proceeds from this venture will be specifically be used to cater for staff

emoluments. Staff emoluments which is around Gh10,000.00 per month constitute about 90%

of office expenses. The buses will be auctioned out to Board members and staff after recouping

our total investment.


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Timeline:It is expected that one (1) bus will be acquired in February, 2011 and another April,

2011.

Expected Income: Both buses are expected to generate a gross income of Gh1,920.00 per

month.

8. MISCILLANEOUSTLFS will institute a policy where every member of staff will be made to be part of the recovery

team, from top management to the lowest staff. Each member will also be responsible for

attracting new customers. A commission of 1.5%- 2% will be paid on all such recoveries and

sales through staff members.

TLFS will institute promotions to attract new customers. Such promotions may include giving

out wax prints and other souvenirs for deposits of a specified amount.

All our products will be redesigned to make them very attractive to the customer and also make

profit oriented.

9. CONCLUSIONThe vision of TLFS being a full-grown Savings and Loans Company will guide us in all our

operations. This vision is still alive. All efforts ofTLFS will be directed towards expanding our

operation thereby becoming the leader in financial services. We are not going to limit our

challenges, we will challenge our limits. Our passion will pave the path for our success.

The future is as certain as the promises of God. Nothing is impossible with God (Luke 1:37).

May God Be Our Guide.

TLFS Strategy, Staff

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