‘The Trackline Way’

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

Short-Medium Term Strategy

Presented By: Fred Quainoo, C.E.O.

Approved By: Board of Directors Dated: 28th July, 2010

 ‘The Trackline Way’

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 challenges
and this Short-Medium Term Strategy is to help us address these challenges. This Strategic
Plan was developed with the active involvement of the management of TLFS and some
Board members.

The Strategic Plan captures the opportunities to

leverage and realign TLFS’s strengths and to address
the customer, financial, operational, and
organizational initiatives necessary for future growth
and success.

Since its inception TLFS has given credit facilities to

poor people who engaged in small and medium scale
businesses to help them grow their businesses. TLFS
has a unique opportunity to make a real difference in
the lives of the economically active poor who have
traditionally been sidelined by commercial banks. Fred Quainoo, C. E. O.

Challenges:

The main challenge of TLFS is its inability to mobilize enough funds to expand operation.
There has also been keen competition in the micro finance business and this has called for
redesigning of various products that TLFS offers.

Opportunities:

TLFS intends to open outlets at various market centers to enable market women have easy
access 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 intend
give them out as loans.

With the continued commitment and hard work of TLFS employees, we will improve
TLFS’s performance and reputation and successfully implement the policies as contained in
this Short-Medium Term Strategic Plan.

Sincerely,

Signed

Fred Quainoo
Chief Executive Officer

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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 has
emanated from a number of key factors that include:

a. The fact that the poor needs access to productive resources, with financial services being
a 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 to
low-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 cost
recovery;

SHORT-MEDIUM TERM GOALS OF TLFS

Our corporate goals will be the guiding principles for all decision-making by the TLFS.

1. Increase Revenue
a. 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 Share

It 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 Satisfaction

a. 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 competitor
activity.

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5. Good Working Conditions

TLFS will help its people share in the company’s success which they make possible. This
will be achieved by:
a. Sustain a working environment that attracts, retain and develop committed
employees who share in the success of the company
company.
b. To recognize individual achievements.
c. To help our people gain a sense of satisfaction and accomplishment from work.

Historical Focus Renewed Focus

1. Customer Satisfaction
2. Corporate Profitability
3. Business Profitability
1. Increase Revenue
2. To be Profitable
3. Increase Market Share
4. Strong Customer Satisfaction
5. Good Working Conditions

LONG TERM GOALS

It has always been the vision of TLFS to transform its operations into a full-grown
grown Savings and
Loans Company and this vision is still alive. The currentt Bank of Ghana requirement is
Gh¢77 million and 25% of this amount is required to be kept as a statutory reserve. The current
amount being owed by our customers is Gh
Gh¢214,426.44
214,426.44 and 85% of it is expected to be
recovered, representing Gh¢182,262.99.
182,262.99. Therefore, TLFS’s revenue is expected to reach
Gh¢4,671,201.08 in eight (8) years
ears,, with our average interest rate pegged at 50%.
50% [Thus, Future
Value = Present Value (1+Interest Rate)Time]. Our current annual expense is around

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Gh¢130,000.00 which is expected to increase at 10% a year, bringing our total expense for the
next eight (8) years to Gh¢1,486,665.45.
[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
Gh¢3.18 million (thus exp. revenue of Gh¢4,671,201.08 less exp. expenses of
Gh¢1,486,665.45). 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 the
remaining 40% to be disbursed as loans.
b. TLFS will disburse 100% of customers’ investments in the Fixed Deposit Accounts as
loans.
c. TLFS will disburse 70% of its loans to groups and the rest to cover individual loans.
d. Application forms will be sold at Gh¢5.00 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 OpeningGh¢5.00
Minimum Balance of Gh¢5.00 will be maintained.
Minimum Savings of Gh¢2.00

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Account Maintenance Fee per month is as follows:

Range Monthly Fee
0 - Gh¢100.00 Gh¢1.00
Gh¢101.00 – Gh¢200.00 Gh¢1.50
Gh¢201.00 and above Gh¢2.00

a. The balance on customers’ total deposit at any given time qualifies a person for two (2)
times the amount saved. Amount saved will therefore be used as collateral until
completion of payment.
b. 7% interest will be charged per month.
c. Customers can apply for overdraft facility subject to interest rate of 10% per month.
d. Passbooks
assbooks will be provided to customers.

HOW DO WE ACHIEVE OUR GOALS?

TLFS will meet the above stated goals by introducing innovative product on the market. It is
estimated that only about 10% of the micro finance market in Ghana is being serviced. TLFS will
have to execute step by step action plan with visionary leadership to bbee a market leader in micro
finance in Ghana. In view of this the following product will be rolled out onto the market with
effect from 2nd August, 2010.

Nkosuo
Investment
Account

Trackline
Coins
New NLA Lotto
Marketing
Account
Products Agent

Consumer
Credit

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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 of
Ghana’s base rate changes.
b. Existing customers of TLFS 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 Gh¢200.00 and above. An
amount 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 charge
on turnover (COT).
h. As a policy, proceeds from this product will be kept in separate bank accounts to ensure
that the funds are properly managed.
i. The scheme also will be available to staff of TLFS who desire to invest portions of their
salaries.
j. The interest accrue will be paid up front but the customer loses the interest if who decides
to 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 Gh¢200.00 for the first three (3) months.

Targeted Income: Nkosuo Investment is expected to generate an amount of Gh¢20,000.00

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 attract Gh¢4,200.00 gross return for the
first three (3) months.
Promotion on Nkosuo Investment
Code-named “Gyina Ho Gye Promo” which will run from 1st 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 AGENT

The 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 Jackpot
2. Monday Special
3. Lucky Tuesday
4. Midweek
5. Fortune Thursday
6. Friday Bonanza
7. National Weekly Lotto

TLFS has been requested by NLA to pay an initial deposit of Gh¢5,000.00 and a license fee of
Gh200.00 bringing the amount payable to NLA to Gh¢5,200.00.

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 Gh¢100.00.

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 Gh¢6,000.00 (thus Gh¢100 * 10 * 24*25% =Gh¢6,000.00).

2. OPENING OF A NEW BRANCHES

TLFS 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 of
the 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 more
funds for loans.
c. We have realized that people from who are far away from our two branches (Lapaz and
Abeka) 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 those
localities.
Procedure:
a. An arrangement have been made to have a start-up capital of Gh¢20,000.00 for the first
outlet/ 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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c. There will not be management staff located there but supervisor will be appointed to help
head office (Lapaz) manage activities there. The staff strength of the new branch will be
as follows:
- 6 Client Service Persons/ Marketing Executives
- 1 Credit Officer

Timeline: It is expected that the outlet/ branch office will be operational by 30th December,
2010.

3. INVESTMENT OPTIONS (FIXED DEPOSIT/ TREASURY BILL)

TLFS will institute an investment strategy where an amount of Gh¢500.00 is paid monthly into
either a Fixed Deposit Account or buy a Treasury Bill with our bankers. This can serve as cash
collateral for assessing loans or temporary overdrafts from our bankers. It will also serve as the
25% Statutory Reserve requirement by Bank of Ghana for financial institutions. We can always
fall on such fund to meet emergency situations.

Timeline: It is expected that the first payment will be made on 30th September, 2010.

4. CONSUMER CREDIT SCHEME

TLFS intends to commence a consumer credit schemes. This will be for both salaried workers
and Susu contributors. TLFS has started negotiations with some of the dealers, specifically
Ashfoam, Somovision and Sumsung on the consumer credit and they intend to give us their
products at wholesale prices.

Product List
a. Foam Products
b. TV Sets
c. Microwaves
d. Standing Fan
e. Home Theatres
f. Blenders

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g. Mobile Phones
h. Iron
i. 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 ACCOUNTS

TLFS 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 customer’s 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 Gh¢1.00. 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 BIKES

TLFS 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 that
daily 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 VEHICLE
TLFS 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 Gh¢10,000.00 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 Gh¢1,920.00 per
month.

8. MISCILLANEOUS
TLFS 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. CONCLUSION
The 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 of TLFS 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.

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