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CONDUCT AREA SCANNING/MAPPING

Microfinance institutions (MFIs)

undergo an area selection process
before establishing a new branch or
forming additional clusters1 for an
existing branch. Whichever objective the
MFI wishes to achieve, this activity
should be part of the business plan of
the whole institution.

The specific steps in selecting a potential area for microfinance operations are briefly
presented below:
Step 1. Conduct Area Scanning/Mapping. The first step involves visiting the
potential area to assess its economic activities.
Step 2. Coordinate with concerned government office. This step requires
the Loan Officer to pay a courtesy visit to the government offices and barangay officials
and introduce his or her MFI and its microfinance program.
Step 3. Review Barangay Profile. The second step is the gathering of
existing area profile from the barangay or other government agencies. This would allow
the MFIs to get more accurate data on the target area's socio-demographic
characteristics and economic activities.
Step 3. Conduct Area Survey. In conducting an area survey, the Loan
Officer verifies initial information gathered from government offices and local officials. At
this stage, the Loan Officer also identifies potential interviewees to the survey.
Step 4. Conduct Interviews. Community leaders and microentrepreneurs in
the target area are interviewed to gather information about the area’s peace and order
situation, economic activities, informal lending practices, and business needs.
Step 5. Processing Survey and Interview Results. At this step, results of the
area survey and interview are consolidated.
Step 6. Submit Survey and Interview Results to Branch Manager.
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A written report of the survey and interview results prepared and submitted to the
branch manager.
Determining Potential Area

All the activities mentioned above

will be done once the potential area has
been identified. In most MFIs, the Program
Manager or the Operations Head is the one
who decides where a new branch will be
put up based on the MFI’s criteria and
business plan. The general criteria in
selecting potential area for microfinance
operations used by most MFIs are the
following:

Enough number of potential clients - the number of potential clients should be

enough to form a group or cluster of groups based on the standard set by the MFI.
Some MFI uses poverty index in identifying potential clients, other MFIs use percentage
of poor household (30%-50%).
Distance and accessibility from the office – most MFIs set a radius of 5-7km.
from the branch office for their area of coverage. This is to ensure efficiency in terms of
time travel of the Loan Officer to and from the branch and within centers.
Transportation – availability of public vehicles for easier accessibility.
Existing microeconomic activity – this covers the types and levels of
businesses in the area.
Existing MFIs and other lending institutions – presence of financial institutions
operating in the area indicates that the economy in the area is progressive. However,
the MFI should also analyze the products and services offered by other financial
institutions as the market may be saturated already.
Peace and order – the area should have low incidence of holdups and
robbery to ensure the security of the Loan Officer and cash collected.
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Presence of banks to deposit collections – there should be a depository bank

to facilitate transactions and minimize security risk.

Data Collection

The preliminary step in the area selection process requires MFIs to gather data
related to the target area. Data refer to the information on various things such as socio-
demographic characteristics and responses to interviews. These are collected in order
to establish a factual basis for making decisions.

Prior to collecting data, it is important to answer five key questions.

1. What is the purpose of collecting the data?
2. What type of data is needed?
3. Where will this be collected?
4. When will this be collected?
5. Who will collect the data?

In the case of the MFIs, data collection is important to determine the viability of a
certain area for microfinance products and services. For example, data on economic
profile provides the MFI information on the number of potential clients in the area.
If the MFI has a research unit or personnel assigned to conduct research, he or she
conducts the data gathering; otherwise, a senior officer may initiate it. It is usually the
Branch Manager who scans the area and collects preliminary data to assess if a
barangay is a potential expansion area2.

The Loan Officer has limited participation in selecting a potential area. The
common tasks include identifying the area and gathering secondary information.
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However, it is important for the Loan Officer to understand the activities involved in area
selection. The succeeding section will discuss how area scanning is done.

AREA SCANNING

Area scanning involves going around a potential area and assessing its economic
activities. It provides the MFI a general picture of the target area – volume of business,
the types of enterprises, the sources of livelihood, and the operating financial
institutions.

Steps in Area Scanning

Step 1. Secure a road map
A road map can be bought from a
bookstore or obtained from the
barangay office of your target
area. If you are getting any
document from the barangay, a
courtesy call to the barangay
officials should be done first. The
process on how this is done will
be discussed in the succeeding
Learning Element: Coordinate with concerned government offices.

Step 2. Walk through the streets

Using the road map, walk though each street. Note the location of the enterprises in the
area and identify the type of businesses present (i.e. retail, services, manufacturing,
agriculture, etc). Also, take a note of the landmarks such as bridges, hospitals, schools,
churches, and financial institutions operating in the area.

Step 3. Visit the public market

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Go to the public market and note the number of active stalls. Also, note the businesses
present according to the types i.e. fresh or processed food, non-food, and services. This
will provide information on the common types of products traded in the community.
Some public markets have a map posted outside the office of the market administrator.
Taking note of the map would make it easier for you to identify what types of products
are being sold in the market.

Step 4. Gather data from municipal or barangay office

You can get other data on the existing enterprises in your target area from the municipal
or barangay office. The learning element on reviewing barangay profile will provide the
process on how this is conducted.

Some practical tips in area scanning are also discussed below to help you in carrying-
out this activity.

Practical Tips in Area Scanning

1. When conducting area scan, wear comfortable clothes and footwear since you will be
walking around the area.
2. If you would be taking photos of enterprises like store, ask permission first from the
owner or staff.
3. Ask for the best means of transportation around the area. Some MFIs allow
the staff to bring his/her own motorcycle, especially in upland areas where public
transportation is limited. It is best coordinate with your branch manager regarding the
policy on doing field work and get his recommendation for this particular activity.
4. Keep in mind the criteria set by the MFI and the indicators of a good microfinance
market.

Once you are done with the area scanning, consolidate the results.

Consolidating Results of the Area Scanning/Mapping

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It is important to consolidate the results of your area scanning so that it would be easier
for your supervisor to identify the type and level of business activity in the target area.
The Rural Bankers Association of the Philippines-Microenterprise Access to Banking
Services (RBAP-MABS) has developed a market assessment form that can be used in
presenting the results of area mapping.
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The area map gives the MFI a general picture of the economic activities in the
area but it does not reflect the preferences and attitude of the microentrepreneurs
towards financial institutions. As such, it is important to interview potential clients and
other members in the community.
If an MFI is going to put up a new branch, the head office decides which area it
would be. If the area is an additional cluster to an existing branch, the branch manager
initiates the selection of the area.

Prior to collecting data, it is important to determine the following:

Purpose of collecting data;
What data will be collected;
Where will it be gathered;
When will it be collected;
Who will do the actual data collection
The general criteria in selecting potential area for microfinance operation are:
Enough number of potential clients;
Distance and accessibility from the office;
Existing microeconomic activity;
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Peace and order; and,

Banks are present to deposit collections.
Doing an ocular visit provides the MFI a general picture of the economic activities in
the target market.
When scanning an area, make sure to note the location of the enterprises and what
type it is.

TERMINOLOGIES
Amortization Gradual paying off of a loan in regular installments over a
period of time.
Asset Everything that a business owns like cash, equipment,
machines, and land.
Background The act of checking and verifying personal information about
Investigation the applicant, this includes his or her character, reputation in
the community. This can be usually verified with neighbors,
other money lenders, customers and suppliers.
Capacity Ability to pay loan amortization when due.
Capital Build-Up A form of compulsory savings required by a microfinance
institution from its clients. This can be usually withdrawn
when a client no longer wants to avail of loan.
Capital The personal (movable) and real (immovable) properties
owned by a client.
Cash Flow Movement of cash into and out of the microenterprise,
equals total cash receipts minus total cash payments.
Character Refers to integrity, honesty, trustworthiness and credibility.
Client Individuals who avail of microfinance services. Also referred
to as “borrowers” or “members”.
Clusters Group of centers managed by a Loan Officer
Co-Maker A person who promises that the loan of the borrower will be
paid by him/herself once the borrower fails to pay the loan.
Collateral Anything of value that a client pledges as an alternate
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repayment source for the loan. A secondary source of

repayment e.g. savings, appliances.
Condition External factors that might adversely affect a loan applicant
e.g. economic crisis.
Expansion Area Potential Area of operations in other municipalities within the
area or district coverage of the MFI
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INFORMATION SHEET 1.2

COORDINATE WITH CONCERNED GOVERNMENT OFFICE

In selecting a potential area, the MFI needs to gather information in order to

know if the target area satisfies the criteria of the MFI. The data needed can be
obtained from government offices such as the barangay office or municipal hall. As
such, it is important to coordinate with the government offices where the needed
information can be gathered.

Setting an Appointment
The first activity that the Loan Officer should do is to set an appointment with the
concerned government official upon the instruction of your supervisor. There are two
ways by which an appointment can be set. One way is to call the concerned office or to
send a letter to the head of the government unit such as the mayor or barangay captain.
This type of letter is called a business letter.
A business letter is a formal communication between two or more parties. It
strives to be informative, specific, persuasive, direct to the point, and accurate. This
means that the message has to be delivered in the shortest way possible that can be
understood.

Different Parts of the Letter

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A business letter has various parts – the addressee, salutation, body, and closing. Each
part has a specific function so it follows that the content for each section differs.

Addressee. The first information that should be seen in your letter is the date when you
wrote it, the name of the person to whom it is addressed, the person's designation, and
his/her address.

Salutation. The salutation is a formal greeting used in letters. It normally begins with Dear
and the name or title of the person you are writing to. If you are writing to a government
official, you use Hon. + Last Name: or Atty + Last Name: for a lawyer. The most commonly
used salutation is Ms./Mrs./Mr.+Last Name. Note that the abbreviated form is used in the
salutation and a colon or comma is written at the end of the salutation.

Body. The body contains the message of the letter. Begin by briefly introducing the
organization you represent. Then, explain why you are writing the letter and what help you
need from them. Be careful, however, when you use the pronoun we in behalf of your
organization, since it commits your company to what you have written. A simple guideline is
to use I when stating opinions, and we when presenting company policy. End your letter
politely with a note that tells the reader what action will follow or an instruction of what he or
she will do or appreciation of thanks for a help that will be given.
The body of the letter should be single spaced. Then, skip a line between each paragraph.
When you are finished writing the body, skip a line before signing-off.

Closing. Sign off the letter with Yours truly, or Sincerely, if its a formal business letter. Use
a comma at the end of the closing, then place your signature and name three lines below
the sign-off.

There are different formats in writing a business letter. The most common is the block
format. Figure 1 shows you a sample of a business letter in block format.

Organizations usually have a standard letter format when setting appointments

with government offices. The Loan Officer only needs to fill up the required information
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such as the details of the addressee and proposed schedule for the meeting. If there is
none, the Branch Manager usually prepares the written communication. Although it is
the Branch Manager who writes the letter, it is also important that you know the basic
rules in writing a business letter.

Do not forget to attach the profile of your organization since you have only
provided a short background in the body of your letter. Providing a more comprehensive
write-up would allow the reader to know more about your organization. After writing the
letter and sending it to the addressee, make sure that you follow-up the response to
your request. Call or visit the person in making a follow-up.

CONDUCTING A COURTESY CALL

Conducting a courtesy call means that a representative of the organization pays
a visit to the head of another institution. A courtesy call is one way to introduce
a new organization to the local authorities. “The meeting is usually of symbolic value
and rarely involves a detailed discussion of issues” (Wikipedia, 2010).
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MFIs through representatives do a courtesy call to a local official, usually the barangay
captain or the Mayor of the area being considered as a possible market for microfinance
services. It is also an opportunity to request permission from the local leaders even
before any pre-operation activities in a municipality or barangay, such as conducting
area survey and interviewing community members.

The Branch Manager takes the lead when conducting a courtesy call. You, as the
Loan Officer, accompany the Branch Manager so you can be introduced as the one who
will be assigned in the area in case you will operate there. It is also your opportunity to
share other services offered by your MFI which may not be mentioned by your Branch
Manager.
During courtesy calls, remember to do the following:
1. Dress simply, neatly, and appropriately or wear your office uniform if you have
any. Also wear your company ID which serves as proof that you are a
legitimate employee of the organization you are representing.
2. Extend your hand or give a business card when introduced by your Branch
Manager.
3. Explain clearly the purpose of your visit.
4. Thank the barangay chairman as well, even if your Branch Manager has
already said it.
5. Leave a company brochure or flyer so he or she can learn more about the
MFI.

MEETING WITH THE BARANGAY COUNCIL

Meeting with the barangay council allows the MFI to introduce itself and promote
its products and services. It is, in effect, conducting an orientation program for the
community officials. It is also a way of getting the assistance of the local leaders in
implementing the MFI activities. A good time to meet the barangay council is during one
of their regular meetings. You can request them to include in their agenda an orientation
about your MFI.
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Step 1. Prepare for the orientation

It is important that you are well prepared for any meeting. You should be very
clear with your agenda so that you will know what to prepare considering the time
allotted to you for the orientation. Once the agenda, time, and venue have been
finalized, start preparing for the meeting.

a. Prepare the outline and review the details of the topics to be discussed. As
mentioned, the purpose of meeting with the barangay council is to orient them about
your MFI. The topics commonly discussed during the orientation are:
- Description of MFI
- Vision / Mission and Officers of MFI
- Year MFI was established
- Size of MFI in terms of number of branches and employees
- Strength of MFI (e.g. future plans)
- Products and services offered
b. Prepare the materials before the orientation. The basic materials to prepare are the:
- orientation kit or flip chart
- pens
- attendance sheet
- brochures
- audio-visual presentation about your MFI
c. Set up the orientation venue at least 30 minutes before the session. Prepare the
chairs and ensure that there is enough space and seats for the participants.

Step 2. Welcome the barangay council.

Treat your audience like guests and make them feel welcome. Create a good
impression with them by being genuinely enthusiastic and polite.

a. Greet your audience warmly as you start the session. Use the vernacular to put them
at ease.
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b. Introduce yourself. Mention your first name or preferably by your nickname to make
the session less formal
c. State the purpose of the gathering. This gives them an idea of what will be the focus
of discussion.

Step 3. Discuss the orientation topics

Introduce the MFI to your audience to establish the MFI’s credibility and stability.
There are basic elements to include in introducing MFIs, namely, the description of MFI,
its vision and mission, the founders and officers, the year it was established, its size,
and the products and services it offers. Explain your activity plan and which places you
intend to visit. For example, mention that you will be interviewing market vendors the
following week to know their attitude towards financial services. Also, state the
assistance you need from them if there is any.
Encourage group discussions in order to get all ideas and questions out. Keep
conversations focused on the topic and answer their questions tactfully.

Step 4. End the orientation

Use phrases to send signal that you are about to end your presentation. Ask the
participants if they have questions and make sure that everybody hear your explanation.
If you do not know the answer, politely say so. Then ask assistance from your
Supervisor or Branch Manager.
After the question-and-answer part, distribute brochures or flyers that contain details
about the products and services of the MFI. Do not forget to thank them for their time.

It is important to take note what has been discussed during the meeting. Ensure that the
important issues and other details are documented such as the date and time, venue,
list of attendees. It is not necessary to write the whole discussion but only the highlights
of the discussion and the major points raised and decisions taken.
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There are two ways by which an appointment can be set – either by calling the
office or sending a letter.
In writing a business letter, the message has to be clear and accurate.
Follow-up your addressee’s response to your letter.
An MFI conducts courtesy call to a local official when his or her town is being
considered as a possible market for microfinance services. A courtesy call allows
the MFI to introduce their organization to the local authorities, as well as inform
them of the MFIs activities.
When meeting with the barangay council, set the agenda and prepares all
materials needed. During the meeting, orient the community leaders about the
MFI – vision and mission, founders and officers, year established, size of the
MFI, and products and services. End the orientation by clarifying any questions
and thanking the attendees.
INFORMATION SHEET 1.3

REVIEW BARANGAY PROFILE

Conducting an area scanning or mapping provides the MFI a quick look of its
target area’s economic activities. To validate the results of your area scanning, you
need to review the existing profile of the municipality or barangay. This is another
important step in selecting potential area for microfinance operations.

Barangay Profile and Secondary Data

A barangay profile describes the physical and demographic characteristics,

economic status, and basic services available in the area. More specifically, it describes
the geographical location, classification (rural or urban), and general description
(mountainous, coastal, etc) of the area. In terms of demographic characteristics, it
provides data on the population, number of household, number of registered voters and
community workers. It also identifies the basic services and the proximity of service
institutions (i.e. day care centers, medical facilities, and financial institutions). It also
shows data about the public transportation sector (number of operators and modes of
public transportation), sources of income, and types of businesses in the area.
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A barangay profile is an example of secondary data. This is considered

secondary because the information was gathered by someone else and is available
from the barangay office. Thus, secondary data are information that has already been
collected and available for use.

Sources of Secondary Data

The Barangay office is your primary source of secondary data. For example, a
Community Profile Study (CPS) and Barangay Development Plan (BDP) can be
obtained from the barangay hall. The CPS presents the socio-economic profile of the
barangay while the BDP reflects the five-year development plan of the local government
with regard to the economic, social, and infrastructure concerns.

If the CPS and BDP contain all the information you want to know, there is no
need to get data from other government agencies unless you want to validate the
available information. Otherwise, you have to identify what other data you need and
from which department to get it. The table 1 shows the kind of data available from
different government offices and community organizations.
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Aside from government institutions, there are other sources of secondary data.
Database or a collection of numeric data and/or information that may be
In computer-readable form for electronic distribution
Local association and NGOs publish detailed information on a certain industry or
sectors. These materials are published in the form of annual reports, as part of a
regular trade journal, or as special reports. In some cases, they are available only
on request from the association.
Other published sources such as books, dissertations, newspapers, magazines,
and the like that contain information relevant to the sector or community.
Individuals outside your organization with expertise on your industry or activity
which may include university professors and researchers, government officials
associated with the industry, etc.

COLLECTING SECONDARY DATA

As mentioned in the previous inputs, secondary data are available and can be
obtained from various sources. Since the data is already existing, data collection can be
done in a short period of time. A day or two is sometimes enough to collect information
especially if the agency has a good record-keeping system. The challenge with getting
secondary data is that some information may not be readily available or those which are
available may be outdated and do not reflect the current status of the area.

Steps in Gathering Secondary Data

The common ways of getting the social and economic profile (SEP) of a specific
area are visiting government office and doing internet research. Some provinces and
municipalities publish their SEP in the internet which allow for easy access to
information. In most cases, however, you would still have to go to the government office
that collects socio-economic profiles.

From government agencies

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1. Determine which institutions conduct research or gathers information about specific

socioeconomic profiles.
2. Go to appropriate government agencies/units and ask permission to collect the
needed data
3. Collect the needed data.
From the internet
1. Open a search engine such as Google and Yahoo
2. Type in the search box the name of the town/municipality/barangay
3. A list of websites and short description will appear on your screen. Click on the
link of website that might contain the information you need.

The information generated from the barangay profile and other documents can
be used to validate the results of the area scanning. While an ocular inspection provides
you a general picture of the area, secondary data gives you more accurate statistics
and description of a specific barangay. Data on the number of households, sources of
income, number of businesses, and credit sources which can be found in secondary
data are important information to the MFIs.

INFORMATION SHEET 1.4

CONDUCT AREA SURVEY

The delivery of microfinance products and services starts with area selection, to
either establish a new branch or expand the operations in an existing municipality or
city. Whichever objective the MFI wishes to achieve, this activity should be part of the
business plan of the whole institution.

The Branch Manager is the one who initiates the activity and assigns a specific
area for Loan Officers to assess. The Loan Officer’s primary responsibility starts with
the data collection and then submits his or her initial recommendations in a
report based on the gathered data to the Branch Manager.
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Data Collection

Data collection is not a supplementary task of the Loan Officer. It is one

of his or her main functions. The results of the data gathering affect the
microfinance operation of the institution, thus it is important that the Loan Officer
conduct it systematically.

There are two (2) pointers to remember in collecting data:

1. Understand the rationale and relevance of the datato be able to determine the extent
of data collection needed; and,
2. Identify the sources to be able to gather reliable data and save resources.

Criteria in Selecting Potential Area

Most microfinance institutions follow general criteria in selecting potential area

for their microfinance operation, regardless of the microfinance methodology they
implement. Knowing this will help the Loan Officer come up with informed
recommendation, and help the Branch Manager make informed decision.

The general criteria in selecting potential area for microfinance operation are:

• Enough number of potential clients - the number of potential clients should be enough
to form a group or cluster of groups with 15-30 members. If the area where the Loan
Officer collects data is for the establishment of a new branch, the total number of
groups in one cluster depends on the branch viability model or standard of the MFI
• Distance and accessibility from the office - the distance should not be more
than 5-7 km from the branch office specifically for ASA methodology
implementers. This is to ensure efficiency in terms of time travel of the Loan Officer to
and from the branch and within centers.
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• Existing microeconomic activity - the level of economic activity in the area

determines the need for microfinance products and services.
• Peace and order - the area should not be high risk to holdups and robbery, to ensure
the security of the collected cash and the Loan Officer. This incidence may be difficult
to avoid for MFIs serving the high poverty areas, thus, security measures must be
set to manage the risk.
• Presence of banks to deposit collections - if the potential microfinance area is being
selected for the establishment of a new branch, there should be banks
near the prospective branch office to allow easy transactions and minimize
security risk.

Procedures in Selecting Potential Area

The initial step in selecting potential area is to conduct an area survey.

Scanning the area involves walking around the central business district to assess the
economic activities. While doing so, the Loan Officer can develop an area map, and plot
the establishments and major institutions like schools, church, and barangay hall.

The area map could become the basis for selecting potential respondents during the
area survey.

The Loan Officer validates his or her observations made during the area
scanning alongside other documents about the area to come up with more information
that is reliable.

This initial information provides a general profile of the area, but does not reflect
yet the behavior of the microentrepreneurs toward financial services. Thus, the next
steps in the process of selecting potential area are equally important. The focus of the
next sections will be the discussion on how to conduct area survey. We will discuss the
other steps in a separate learning element.
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CONDUCTING AREA SURVEY

Once the Loan Officer has established the general profile and the area map of the
potential area for microfinance operation, he or she is now ready to conduct area
survey. A survey is a method used to gather primary data to come up with an estimate
of the size of potential market.

Steps in Conducting Area Survey

For selecting a potential area, the Loan Officer has four (4) steps to follow in conducting
survey.
1. Identify size of sample respondents;
2. Contact the community leaders;
3. Assess the general characteristics of the area; and,
4. Conduct a competitor’s analysis.

Step 1. Identify Size of Sample Respondents

In conducting the area survey, the Loan Officer need not go to all the
micro entrepreneurs in the area, but rather get samples. A sample is any part of
the population of individuals from whom the Loan Officer gathers information.

The Loan Officer selects randomly a sample of survey informants from the total
population in the area. He or she must remember that a genuine area survey follows a
scientific process, and does not involve only one person. Otherwise, the result will not
be reliable and may have a negative effect on the microfinance operations.

There are generally two ways to get the sample size: one is through a random
sampling, the other one is through a non-random sampling.

In a random sampling, the MFI must determine a significant sample size for its
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respondents. For example, the sample size is 100. To obtain a sample size of 100
from a population of 1,500 microenterprises, the Loan Officer just need to select
100 out of the total entrepreneurs. One of the ways to do this is to select from
the area map earlier developed. The Loan Officer assigns each selected survey
respondent with a number for easy identification. He or she can further divide the
sample like pre-allocating a number of respondents from different population. Figure 2
illustrates this process.

The other way is non-random sampling or systematic sampling method. In this

process, the Loan Officer gets every nth individual in the population list to be
included in the survey. To know the interval (nth),the Loan Officer has to divide the total
population by the desired sample size, then select from the list until he or she has
determined the desired number of respondents. The sample in Figure 3 illustrates this
process.
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Step 2. Contact the Community Leaders

After identifying the size of the respondents, it is time to talk with the
community leaders. Before the Loan Officer conducts area survey, the first
groups that he or she should visit are the barangay officials, as a sign of courtesy. The
other community leaders are those coming from the religious groups, socio-civic
groups, business groups, and others.

Leaders in the community can help identify the appropriate respondents.

Although the Loan Officer has to be very clear with the criteria for choosing
respondents, otherwise they may identify those who could not provide significant
information.

The Loan Officer should introduce himself or herself first and present a business
card, the MFI’s brochure, or flyer to the community leaders. This creates an
atmosphere of professionalism and trust to the institution. He or she then
introduces the MFI’s purpose, key officers, location, and the purpose of the visit.
The Loan Officer must also provide all the necessary information about the MFI
to the community leaders, as they could be the best medium to market the
products and services to their constituents.

Step 3. Assess the General Characteristics of the Area

Once the community leaders allowed the Loan Officer to conduct the area survey,
he or she can do the initial ocular survey of the general characteristics of the area by
going around the area where there is high economic activity.
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The specific aspects to observe are the following:

• Is the community neat and clean?

• Are the main roads paved?
• Are businesses located in permanent structure?
• How close are people living to each other?

This initial observation will give the Loan Officer an idea of the behavior of
the people in the community, the means to transport goods and services, and allow him
or her to calculate the flow of economic activities.

Step 4. Conduct a Competitors’ Analysis

It is important to conduct a
competitors’ analysis to determine how
many MFIs are operating in the area and
estimate the size of the potential clients
who will avail of the products and
services.

The Loan Officer can get the information

from the community leaders or by asking
people in the community about the
profile of financial service providers in the area.

In analyzing the competition, the Loan Officer should focus on the main features of
their products and services.

The following questions can guide the Loan Officer:

1. Interest rate and service charge
Is the interest rate of competing institutions lower, higher, or same as your MFI?
Do the competitors pre-deduct the interest from loans?
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What are the additional charges by your competitors?

Are their service charges higher, lower, or same as your MFI?
2. Term
Is the loan term offering of the competitors shorter or longer?
3. Manner of delivery
Does the competition release fund at the location of the clients, or the clients go to the
MFI?
4. Services offered
What services do competitors offer?
Do the competitors offer their services for free orfor a fee?
INFORMATION SHEET 1.5

CONDUCT INTERVIEWS

THE BASICS OF CONDUCTING INTERVIEWS

After Learning on the importance of conducting area survey as part of the
process in selecting potential area for microfinance operations, it is important that the
Loan Officer understands the next step of the process which is conducting interviews.

Why Conduct Interviews?

In the selection of potential area for microfinance operation, the Loan Officer’s
primary involvement is data gathering. The interview is conducted after the area survey.

Aside from secondary data from public sources, the Loan Officer conducts
interviews with individuals or groups which allows him or her to validate the data
gathered from other sources and make informed recommendation to the Branch
Manager if the area passed the criteria of the MFI.

Through interviews with people at various

levels in the community, the Loan Officer, is
able to:
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• officially introduce his or her organization and loan programs to local leaders and the
potential clients;
• enlist the support of the community by being partners in the cause of helping the poor
in the area; and,
• determine that applicants to the microfinance programs are actually what the MFI is
targeting to help.

Who Will be Interviewed?

Interview with the following individuals or groups are important to make an
informed decision about the potential area for microfinance operation. These include:
a) Local Government Officials
The Loan Officer primarily works in the smallest unit of the local government
which is the barangay. The highest form of local government unit is the province,
followed by the cities/municipalities, then the barangay. Opening communications with
barangay officials (i.e. Barangay Captain, “Kagawad” or Council Leaders of different
political organizations in the barangay,) is a way of knowing more about the state of the
community, economic activities, peace and order situation, population, political setting,
and other data. Details were provided on the previous Module on Conduct Area Survey.
Interviews with local officials in higher elective positions i.e. municipal/town/city mayors
and provincial governors are undertaken by MFI area management in the opening of
new branches.

b) Organized groups in the village/community1

Choose groups which have high concentrations of potential clients. Encourage
women and men who are actively involved in income generating activities to participate
in the group interview. Microentrepreneurs who have been involved in their
microbusinesses for a long time know how to wisely use resources such as loans and
savings and can evaluate the risk of extending loans to future clients who are from their
area.
Organized groups are also knowledgeable of the major economic activities,
informal sector practices, information of existing microfinance competitors, including
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how much is being charge for services, value added services and other lending
activities. They can provide data on where the barangays where economically active but
poor community members can be found.

Organized groups include:

- Women’s Club;
- Home Owners Association;
- Market Vendor’s Association (no. of public market stall holders, etc.)
- Public Market Administrators
- Tricycle Owners and Drivers Associations (# of transport operators/units)
- Groups of local entrepreneurs of industries where the community is known (i.e. group
of mat weavers, basket-makers, clay pot makers, etc.)
- Religious leaders

c) Local Government Units/Departments

Secondary information are provided by the following organizations. Nevertheless
an interview with key people from the organization can provide additional information
which can go beyond the needed data as indicated below.

Data Element Source

Population National Statistics Office
No. of households National Statistics Office
No. of registered enterprises Municipal Treasurer’s Office Barangay
Major sources of income Municipal Planning & Development Office

d) Applicants to the Program/Potential Clients

It is important to describe the basic characteristics and needs of the group of
target clients. Some microfinance organizations, after a formal meeting with the
barangay officials and after a formal introduction of the loan program to the community,
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conducts interview with potential clients. Home visitations are already undertaken.
Information that the Loan Officer gather during the interview includes:
1. Income data:
a. Main source of income
b. Estimated monthly income of the family
c. Estimated monthly family expenses
d. Net earnings of the family
2. Experience in Microenterprise - previous involvement in small income generating
activities
3. Existing Loans with other institutions/informal money lenders
4. Family Data: number of family members in the household
5. Number of children of school age: how many are studying
6. Capitalization needs for existing/future business.
7. Asset data: the material things does the potential client have such as appliances,
goods, furniture, business tools/equipment, etc.

Data will help the loan officer determine the kind of assistance needed by the potential
client in their income-generating activities. The data is also useful in determining if the
financial services will be appropriate to the potential clients.

PREPARING FOR THE INTERVIEW

The Loan Officer must make sure that all his or her information is complete and
that he or she has the latest information. The following should be done as part of the
preparation for the interview:

Before the Interview

1. The Loan Officer must coordinate with the local executives of the local government
units covering the area. In this case, it will be the Barangay Captain, members of the
council and leaders of different political organizations in the barangay. For local
agencies or organized groups in the community, the head of the group should also be
notified.
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2. An official letter signed by the Branch Manager must be given a few days before the
interview. It shall contain the date, time and purpose of the visit to the interviewee’s2
office. Be specific of the data that are needed to give those to be interviewed time to
prepare any requested documents related to the meeting.
3. For visits with the Municipal Hall or City Hall, inform them of the interview/survey to
be conducted in the area. State in your letter about your request for the following data:
a. Population per barangay
b. No. of households
c. No. of registered businesses
d. No. of establishments
e. No. of banks and other MFIs
f. Information on transport sector
g. Five-year plan
h. Map
4. Use other networks such as friends, families, barangays, and small businesses that
the Loan Officer were in contact with daily in the community.
5. Prepare a list of questions to make the interview flow easier. If there is a
survey/interview format, be familiar with the questions.
6. Do mock interviews. Practice with 1 or 2 other people to get a feel of the exercise.

What to Bring on the Day of the Interview

1. Bring money, identification card, company uniform, date book, journal, pens, and
plastic envelopes for documents, and celllular phone
2. Photocopy of the MFI’s Securities and Exchange Commission’s (SEC) Registration.
This is proof that the Loan Officer belongs to a legal and credible organization
3. Coordination letter signed by the Branch Manager
4. Brochures, flyers, annual reports
5. Questionnaire for the potential client
6. Area survey checklist
7. List of competitors as provided from the Municipal/City Treasurer’s Office
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8. Area Profile for reference

INTERVIEW DAY
During interviews, the Loan Officer comes face to face with the interviewee.
As a representative of the MFI, he or she should be able to present himself or herself
well. The Loan Officer should appear professional. His or her clothing should be
presentable (clean pants/slacks and polo shirt/anything with collar for men;
slacks/blouse for women), with the company identification card worn in the area. The
succeeding discussions pertain to the sequence for the interview. It also contains tips
on how to conduct the interview well3.

Introduction
1. Identify yourself and the Microfinance Institution you represent.
2. Explain your purpose, what information do you need, and how do you intend to use it.
3. Make sure that you are interviewing the right person.
4. Emphasize that the loan program’s main objective is to provide business capital to
microentrepreneurs and give the community opportunities to earn income through the
development of small enterprises.
5. Stress that all information from the interviewee will be kept confidential.
6. Ask permission to proceed with the interview.

Interview
1. Ask exact question (as written).
2. Listen/determine relevant information.
3. Record answers in the right boxes/places. Write down important notes on the side, or
information that needs more clarification.
4. Probe (i.e. ask follow-up questions to get the answer that you need; investigate) to
increase accuracy, clarity, and completeness.

5. Avoid unnecessary reinforcement, such as “Oh, that’s very good.”

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6. Avoid discussing anything about politics or religion which may come up during the
discussion.
7. Never suggest an answer.

Ending the interview

1. Thank the respondent. Say the result of the interview is important/helpful information
to the MFI’s program.
2. Ask if interviewee has any questions about the interview.
3. Answer interviewee’s questions.

Post interview (Right after each interview)

1. Proofread completed questionnaire; find and correct errors.
2. Clarify handwriting; add clarifying notes.

IMPROVING INTERVIEWING SKILLS: HOW TO PROBE

In dealing with others, communication is very critical. It pays that the Loan Officer
has the basic interview skills that will make the session successful. The answers to be
given by the person being interviewed is dependent on the kind of questions that the
interviewer will ask. The role of the interviewer in making the interview session smooth
is important. Asking the right questions, the manner of questioning, the attitude of the
interviewer, the way the interviewer presents himself or herself, are among the
considerations. A more in-depth discussion on communication tips will be made in the
latter parts of this module. Basic to interviews is the ability to ask questions in order to
gather accurate, complete, and relevant information from the interviewee. Remember
that there is a limited time with the interviewee. It is a waste of time, energy, and
resources to go back for the missing data.

If focus will be on prospective clients, they may have a limitation on expressing

themselves. It pays to speak in Tagalog to facilitate communication. It is important to
deliver the questions rightly so as not to make them feel uneasy. In asking for income
details, it pays to be more sensitive. Like when you ask a spouse of tricycle driver, “Sa
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inyo pong palagay, magkano ang karaniwang kinikita ng isang tricycle driver sa
maghapon?” (What do you think is the daily earning of your husband?). It is indirectly
asking the interviewee of how much the husband earns.
Asking probing questions means the interviewer can make follow up questions to help
the interviewee answer the question better. Here are some pointers for better
probing:

A. Paraphrasing: restating in your own words what another person has said. Listen
carefully to what the interviewee is saying. Paraphrase often to get used to it. Use
phrases such as:
- In other words (“samakatuwid,” “ang ibig ninyong sabihin po ba ay…”)
- I gather that ( “nakalap ko,” “nalaman ko”)
- What I hear you saying (“ang sinabi ninyo po ay,” “ang pagkakarinig ko po
ay…”)
- Pardon my interruption, but let me see if I understood you correctly (Mawalang galang
na po, tama po ba ang pagkakaintindi ko na….”)

B. Summarizing: highlighting, reviewing, and organizing the discussion that has

transpired between you and the interviewee. Summarizing phrases include:
- If I understand you correctly, your main concerns are (“Kung tama ang aking
pagkakaunawa/pagkakaintindi, ay inyong mga pinakaimportanteng sinabi
ay…”)

C. Questioning: Probing when multiple answers are possible, or when initial responses
are unclear. Questions are classified as:
a. Closed questions: answerable by Yes or No or other one-word answers.
The interviewer uses this when he or she wants precise, quick answers. This
does not encourage more sharing of information from interviewer.
Example: “May trabaho ba ang inyong asawa?” (Does your husband have work?)
Answerable by “Oo” or “Wala” (“Yes” or “No”). If the answer is “hindi regular” (not
on a regular basis) interviewer must make a follow up questions. “Ano po ang
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ibig ninyong sabihin? (What do you mean?) “Bakit po?” (Why?). This is an open-
ended question.

b. Open-ended question: inviting an actual question for a response.

Questions begin with “how,” “what,” and “why/why not,” are openended.

c. Return question: puts the question back to the questioner or group. Example:
“What do you think about that?” (“Ano po sa inyong palagay?”) or “Let us go back
to the question.” (“Balikan po natin ang tanong.”). In cases when the
interviewee/s get to talk about something which is no longer related to the
original question.
d. General overview question: used to initiate a discussion or set up a
thoughtful exercise.
Example: “How would you respond to a situation?” (“Ano ang gagawin ninyo sa
ganoong sitwasyon?”)

e. Hypothetical question: tests the respondent’s problem solving skills by

asking a hypothetical situation.
Example: “If sales are not good during rainy season, what will you do to earn a
profit?” (“Kung matumal ang benta sa tag-ulan, ano po ang inyong gagawin para
kumita?)
INFORMATION SHEET 1.6

PROCESS SURVEY AND INTERVIEW DATA

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After conducting the interview, what do you do with the information you
gathered? How can you consolidate the data to make it more meaningful? How do you
analyze the information that you got from your survey?

PROCESSING SURVEY RESULTS

Data processing is the stage between data collection and data analysis. It
involves classification and summarizing of data for analysis. There are several steps
involved in data processing.

Step 1. Data Screening.

It is important to check the questionnaire’s completeness and accuracy. Doing this right
away will allow you to go back to the respondent and clarify any problems or errors.
There are several questions you should ask as part of this initial data screening:
-administered, are the responses legible or readable?

time, place,
interviewer)?

Questionnaires that have incomplete answers should be separated from those

that were answered completely. For example, if the form has 2 parts – awareness of the
MFI and business information, and the clients only answered 1 of the 2 parts, the results
of the survey is insignificant. As such, those partial results should be discarded to clean
the data pool, unless you can get in touch again with your respondent to complete the
form. There are questionnaires, however, that are designed in such a way that the
interviewee will have to skip certain questions because of his/her answer in one item. If
this is the case, then the questionnaire is still valid.

Step 2. Coding the questionnaire.

Coding means assigning a corresponding number to each response item.
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When assigning codes, you should start with the smallest single digit number except
zero and ensure that the coding is consistent.
A response item is a possible answer to the question such as Male or Female for the
question on Sex. Once you have finished coding your questionnaire, you can start
entering data into the database.

Step 3. Tabulating the responses.

Tabulation can be done manually or by using a computer. Manual encoding is
suitable when the sample size is small, while electronic tabulation is useful for large and
complex studies. Regardless of which method is done, a tabulation form should be
created where the responses will be inputted. MS Excel or OpenOffice can be used for
tabulating the result of the survey.

It is important that the data is recorded accurately and systematically. Leahy

(2004) provided some guidelines for some of the most common problems in entering
data into the tabulation sheet.

e two responses for a question that only requires one, treat the
question as unanswered.

unanswered if you are not sure of the response.

-ended response is incomplete, enter the given data.

ANALYZING AND PRESENTING DATA

Data Processing
The kind of analysis that will be done is dependent upon the information that you want
to generate. The most basic way to analyze survey results is through frequency counts
and percentages. A frequency count refers to the total number of responses per
question. Excel or Calc can automatically generate the total number of responses for
each question and its corresponding percentage once you input the necessary formula.
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Ordinal scales can also be used if you want to rank the responses such as
“what are the top three reasons why microentrepreneurs apply for a loan”.

Presenting Survey Results

Tables and graphs can be used in presenting survey results.

A frequency table can be made to show the number of responses per question
and its corresponding percentage. For questions with more than 10 different responses
like age and years in the business, the responses can be grouped in ranges such as
below 10, 10-19, 20-29, and so forth. Figure 3 shows a sample of frequency table.

A pie chart or bar graph can be used to synthesize findings and emphasize
relationships between variables. When using a graph, make sure that it is clearly
labeled, the values are reflected, a legend is specified, and the axes in the bar graph
are labeled. Figure 4 shows a sample of pie chart.
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Results can also be presented in a narrative format. When doing so, describe the
highest proportions in the table or chart first. Using the table in Figure 3 as an example,
you can write the results as “70% of the respondents answered yes while 30%
answered no”.
Regardless of how the data is presented, it is important that the results are
presented clearly and completely. Learning Element 1.7 Submit Survey and
Interview Report will guide you on how to make a market research report which reflects
the results of your area scanning, data gathering, and interviews.

Questionnaires should be checked for its completeness and accuracy right after
conducting the interview

analysis.

want to get from the questionnaire. The most basic way is to use frequency
counts and percentages.

SUBMIT SURVEY AND INTERVIEW REPORT TO BRANCH MANAGER

1. The Area Survey Report or Market Research Report is a consolidation of the

important details about a potential area for microfinance operations. The Loan
Officer should be reminded of the following reasons why a survey is conducted:
• To have measurable data on the financial services needed;
• Assist in identifying opportunities for microenterprises;
• Use data to design microfinance products/services; and,
• Estimate number of prospective clients/size of potential market for
Microfinance Institution.
2. Although formats among Microfinance Institutions may vary, there are general
data that are usually included in the report. The Loan Officer prepares the report for
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submission to the Branch Manager after data gathering and interviews with
concerned individuals.

3. Primary data are those gathered and prepared by the Loan Officer himself or
herself after going through his or her own survey while secondary data are those that
are based on previous documents prepared by other people.

4. A Survey Report can be divided into the following main headings:

a. Profile of the Area, Market size, Market risks, Recommendation/Conclusion

5. The recommendations made by the Loan Officer are important in the decision
making process by the Branch Manager. It can affect the overall performance of the
branch in terms of reaching its targets.