Reliance Financial Services Company Limited

Reliance 46 Reliance Plaza Kairaba Avenue KSMD, The Gambia www.reliancegambia.com Annual Report 2008

r e p o r t b a s e d o n PUBLIC RECOGNITION Contents

Voted by the private Sector and Business Community under the umbrella of the General Information 5 Gambia Chamber of Commerce and Industry for best Business Performance, Vision & Mission statements Good Governance and Leadership, as well as Entrepreneurship in Year 2007 in 6 the following categories: Key Performance Indicators 7 Chairperson’s Statement 8 Chief Executive Officer’s Statement 12 Organisation chart 22 Corporate Governance Statement 23 Directors’ Report 30 Independent Auditors’ Report 32 Income Statement 33 Balance Sheet SME Young Entrepreneur Business Person 34 of the year 2007 of the year 2007 of the year 2007 Statement of changes in equity ‘The Vision has Fully Crystallized’ ‘You All had a Choice’ ‘The drive to Strive 35 GCCI GCCI & Succeed with You’ Statement of cash flows GCCI 35 Notes to the Financial Statements 36 Global Reporting Initiative In 2008 nominated yet again in three categories out of eight as follows: and Triple Bottom Line Performance index 42 • Businessman of the Year (Leadership) Network of Branches, Kiosks and agencies 44 • Small and Medium size enterprise of the year • Service Provider of the year

  annual report 2008

GENERAL INFORMATION

Directors

Mrs. Amie N. D. Bensouda (Chairperson) Representing Local Shareholders Mr. Baboucarr Khan Chief Executive Officer Mr. Kenny Nwosu Representing ShoreCap International Mr. Jacco Minnaar Representing Stichting Triodos Doen Mr. Alpha Barry (Resigned 16th March 2008) Representing International Shareholders Mr. Alieu Secka (Appointed 21st July 2008) Representing International Shareholders Mr. Ebenezer Olufowose Representing Founding Shareholders

Secretary Mr. Seedy A.B. Njie

Bankers

Trust Bank Limited 3/4 Ecowas Avenue, Banjul Standard Chartered Bank (Gambia) Limited Ecowas Avenue, Banjul Guaranty Trust Bank Limited 56 Kairaba Avenue, KMC Access Bank Limited 56 Kairaba Avenue, KMC First International Bank Limited Kairaba Avenue, KMC EcoBank Limited Kairaba Avenue, KMC

Auditors

PKF Accountants and business advisers 3/4 Ecowas Avenue P.O. Box 431 Banjul, The Gambia

Solicitors

“Only in growth, reform, Amie Bensouda & Co. 78 Hagan Street Banjul, The Gambia and change, is true Registered office

security to be found.” Reliance Plaza 46A Kairaba Avenue KSMD Anne Morrow Lindbergh The Gambia

  annual report 2008 Vision and Mission Key Performance Statements Indicators

2008 2007 2006 Increase/ The vision of Reliance is “to be the leading and preferred financial services D’000 D’000 D’000 (decrease) 2008 vs 2007 provider for the mass individuals, small and medium sized businesses Financial Structure Capital to Asset Ratio 15% 15% 55% - (SMEs) and micro enterprises in West Africa”. Debt/Equity Ratio (Times) 0.01 5.49 0.82 5.48 Deposits to loans 187% 143% 547% (44%) Deposits to Total Assets 81% 68% 4% (13%) Gross Loans Portfolio to Total Assets 43% 47% 1% (4%) Outreach Indicators Mission Values Total Number of Borrowers 2,895 624 2 2,271 Our mission is to deliver innovative, value added The manner in which we conduct our business with our Number of active borrowers 2,595 574 2 2,021 products and unrivalled services to our customers using customers, regulators, and other stakeholders will be Total Value of Loans Disbursed (GMD’000) 104,800 89,500 350 15,300 state of the art technology in an environment conducive governed by our corporate values namely: Average Size of Loans Disbursed (GMD’000) 20 143 175 123 to promoting strong organizational culture and values Gross Loan Portfolio outstanding (GMD’000) 63,081 58,627 350 4,454 which enable us to attract, nurture and retain talented • Creativity Average loan balance per borrower (GMD’000) 24 102 175 78 staff. We will uphold the principles of good corporate • Approachability Voluntary Savings (GMD’000) 115,057 82,560 1,900 32,497 governance and implement effective risk management • Reliability Number of voluntary savings accounts 23,575 8,825 371 14,750 systems with a firm commitment to delivering • Professionalism Average savings balance per saver (GMD’000) 4.8 9.36 5.12 (4.56) sustainable and competitive returns to our shareholders • Ethics & Teamwork Number of Branches, Agencies and Kiosks 26 7 1 20 while changing lives in the communities we serve. Range of Loan Sizes (GMD’000) 1.5 - 2,000 2 - 1,500 50 - 300 - The above translate into the mnemonic CARPET Financial Performance which is fundamental to our service philosophy of Operational Self-sufficiency 63% 61% 22% 2% delivering the RED CARPET treatment to all our Financial Revenue Ratio 23% 13% 2% 10% customers regardless of their status, tribal affiliations, Yield on gross Portfolio (Nominal) 23% 33% 8% (10%) race or creed. Loan Loss Provision Expense Ratio 1.04% 0.59% 0.02% 0.45% Administrative Expense Ratio 17% 6% 4% (11%) Efficiency & Productivity Operating Expense/Loan Portfolio 69% 80% 2525% 11% Personnel expense/Loan Portfolio 30% 31% 569% (1%) Cost per borrower (GMD’000) 17 81 4,369 64 Borrowers per staff member 21 8 0.09 13 Borrowers per loan officer 118 34 0.25 84 Voluntary savers per staff member 198 123 16 75 Risk and liquidity Portfolio at Risk > 30 Days 15% 5.60% Nil (9.40%) Portfolio at Risk > 90 Days 5.30% 2.34% Nil (2.96%) Risk coverage 14.79% 7.92% Nil (6.87%) Non-earning liquid assets as % Total Assets 8.75% 3.89% 29.86% (4.86%) Macro Economic Indicators Inflation Rate 6.6% 6.02% 5.20% 0.58% Exchange Rate (Customs Valuation) GMD/USD 26.88 22.66 N/A (4.22) GDP Growth Rate 6.1% 6.90% 7.70% (0.80) GDP Per Capita (USD) 300 330 320 (30)

  annual report 2008 Chairperson’s statement

“I am delighted to present to you the annual report and audited financial Financial Performance statements of Reliance Financial Services for the year ended 31st December During the period under review Reliance continued 2008. This year marks Reliance’s second full year of operations and I am proud to offer existing and new clients a one-stop shop for to share the outcome of the strategies developed by the board and implemented all their financial services requirements including a broadening credit and savings product range, by management based on our business activities. The thrust of our strategy remittances, retail foreign exchange, business for 2008 was one of building the infrastructure for growth of the Company development and advisory services. Reliance has which covered: geographic expansion; improving our lending methodology; once again been able to provide access to finance improving the robustness of our Information technology as well as productivity to the majority of entrepreneurs cutting across all the real sector of the economy, particularly women and effectiveness of our operations; building the future leaders of the Company; entrepreneurs. and increasing our marketing positioning, brand awareness and community main reduced inflows from remittances, foreign direct partnerships.” investment (FDI), and tourism. The Dalasi depreciated The Company reported an operating loss of GMD14.9 against the US dollar, CFA and Euro by 23.0 million in 2008, explained largely by the heavy percent, 9.7 percent and 9.9 percent respectively but investment in infrastructural development, capacity strengthened against the Pound Sterling by 7.0 percent building and human resource development in between November 2007 and November 2008. preparation for the growth of the Company in the years to come. Total assets grew by 16% from 2007 while During 2008, Reliance set the record by completing the micro entrepreneurs in particular market vendors The rapid changes in the banking sector following the deposits registered an increase of 38% compared to and operationalising seventeen agencies thus taking to offer access to loans within 24 hours. The above financial crisis of 2002 dovetailing into 2003 and the 2007. The Company experienced a shift in its liability the number of customer touch points to twenty six; the strategies have propelled Reliance as the premier relative stability achieved in the economy make The structure, reducing its concentration risk, with an largest service delivery network by a private financial Non-Bank Financial Institution by deposit size, loan Gambian sector an attractive market for the regional expanding small depositor base and declining average services company in The Gambia. This unprecedented portfolio outstanding and total assets. foreign banks particularly from Nigeria. Since 2006, size of deposits, following the contraction from the expansion took the Reliance brand to communities six new commercial banks entered the sector, four corporate segment under our Deposit for Development. in the two municipalities – Banjul City and Kanifing The operating environment through organic growth and two through acquisitions Municipal Councils and two administrative regions (one of which is an Islamic Bank) thus taking the In September 2008, the shareholders agreed to - Western and Northern regions which were largely According to the Central Bank of the Gambia number of banks to eleven by end of the year. Another re-capitalize the Company with an injection of unbanked. The Company also strengthened and Monetary Policy Committee press release of December four commercial banks have been approved licences in additional GMD15 million through a rights issue to improved the network infrastructure by ensuring 2008, The Gambia’s financial system is not directly principle and slated to commence operations before the strengthen the capital structure of Reliance following that all the outlets were connected to the head office affected by the global financial crisis, but it is evident end of the second quarter of 2009. The supervisory the impairment from start-up operating losses and central server to deliver on-line real time transaction that the economy may be impacted upon by the global and regulatory framework of financial institutions has investments. The capital raise was funded mainly processing. In the last quarter of the year the Company slowdown. The volume of exports, travel income, been strengthened. The primary capital for commercial by conversion of the long term debts by the two developed an express loan product in response to the remittances and foreign direct investment has started banks has been increased from GMD60 million to International shareholders ShoreCap International and voice of customers, targeted at meeting the needs of declining. All these have been reflected in the projected GMD150 million, effective by 2010 and will increase Stichting Triodos Doen. decline in the growth of the economy. To mitigate further to GMD200 million by 2012. the impact of the crisis on the economy, the fiscal authorities have embarked upon more prudent fiscal In the near term moderate economic growth is management while the Central Bank will continue to expected, largely due to developments in the global be proactive in the conduct of monetary policy. economy as exports, remittances, foreign direct investment and tourism are expected to contract in Interest rates as measured by the yield on the 91-day both 2008 and 2009. End-period inflation is expected Treasury bills rose to 11% in October 2008 from to exceed the December 2008 target of 6.0%. The 9% in September 2008, while the Dalasi depreciated risks to the outlook relates to the volatility in the against the major internationally traded currencies in international commodity markets and the uncertainties the interbank foreign exchange market reflecting in the in the financial markets.

  Chairperson’s statement

This was a strategic decision as the Company was continues to enjoy the fruits of the already very liquid and a further injection of cash would Highly Indebted Poor Countries (HIPC) and not provide any significant returns when matched Multilateral Debt Relief Initiative (MDRI) debt relief against the cost of maintaining the current loans. approved by the International Monetary Fund in December 2007. Corporate Governance At the company level we would focus on further Reliance continues to adhere to the principles of best re-capitalising the Company in lieu of the new corporate governance in line with international best capital adequacy requirements of the Central Bank practices. In the last two years, a series of measures has as well as for financing the growth of our business been taken to improve the various control functions, and strengthening our basic infrastructure. This increase transparency in the reporting of financial and will position us to invest in latest smart technologies non-financial information – being the first Company to that will enable us to extend outreach to the remote adopt the Global Reporting Initiatives (GRI) standards communities of The Gambia that need financial as well as the Consultative Group to Assist the Poor services the most. (CGAP) Social Performance Taskforce Indicators. This is further reflection of our commitment to corporate 2009 will be a year of consolidation for the Company social responsibility as we seek to develop relations with as we seek to leverage on our extensive network and communities and civil society. improve the productivity of our people. This will enable us to deliver exceptional services to our customers with To support the Company’s continued growth, we the objective of increasing the footprint in our outlets recognised the importance of best corporate governance for all products and service offerings. With increasing practices and consistency throughout the organisation. competition within the financial services sector, In that regard, we created the position of Chief Credit evidenced by the increasing number of new commercial Officer, promoting from within in early 2008 to reflect banks slated to open during the first half of the year, the importance of our microfinance business. Separate we would focus on our core microfinance business, statements on Corporate Governance and Social which traditionally is more resilient during economic Responsibility are contained elsewhere in this report. downturns anchored on our Blue Ocean Strategy in which we seek to create an uncontested market space, Outlook break the cost leadership and differentiation trade off, and through the Voice of our customers develop huge The current financial crisis and the global credit crunch demand for our products and services. will continue to cast a shadow over the global economic performances, particularly for developing countries. Conclusion The outlook for The Gambia is re-assuring as the Government and the Central Bank of The Gambia I wish to conclude by placing on record my Board’s “Change always comes are committed to ensuring sound fiscal and monetary gratitude to all stakeholders who helped us make 2008 a policies that continue to position the country as a remarkable year, you the Shareholders, the Government preferred destination for Foreign Direct Investment. and the Central Bank. We express particular gratitude bearing gifts.” Economic growth will no doubt slow down and the to our development and business partners, our esteemed declining prices of fuel and other basic commodities customers as well as our dedicated and professional staff Price Pritchett will most likely stem the inflationary pressures. Interest at Reliance. I trust all of you will continue supporting rate will remain relatively stable as the Government our endeavour to use financial services as a platform to change lives of our people and communities. Mrs.Amie N.D.Bensouda Chairperson of the Board of Directors 10 11 annual report 2008 Chief Executive Officer’s Statement

from Stichting Triodos Doen of Euro 0.09 million was “It gives me great pleasure to report to you the performance of your company’s also received in the first quarter of the year. for the period ended 31st December 2008, the plans and aspirations for the year and beyond.2008 marked a milestone for Reliance Financial Services. It was Branch, Agency and Kiosk Network a year of investment in our infrastructural network, our people and systems During the year under review the Company grew its in laying the foundations for the future growth of our company in the years to number of outlets from seven in 2007 to twenty six by come. The groundwork laid during the last year is a reflection of the wisdom December 2008; an addition of nineteen new locations. and commitment of the Shareholders, Board of Directors and employees to the This geographic expansion was mainly driven by the long term development of the Company to deliver our mission of changing lives following factors: in the communities in which we do business. ” depositors, anecdotal evidence shows us that the • The lack of access (unbanked) for major towns majority of these previously did not keep their surrounded by satellite villages such as Sukuta, savings with financial institutions; and in the Lamin, Sanyang (following the liquidation of the process mobilized deposits of over GMD115 million Village Savings and Credit Association (VISACA); as at end of the year; Old Yundum, Amdalaye, Brusubi; • Disbursed loans totaling GMD104.8 million to • Communities with a large concentration of 2,895 borrowers cutting across all sectors of the micro and small businesses in cosmopolitan economy with active borrowers at year end standing neighbourhoods such as Bundung, Old Jeshwang, Financial and Operational Overview institutions has been strengthened in the period by 2,595 with a portfolio outstanding of GMD63.1 Banjul Gamtel and Tobacco Road, Manjai Kunda the Central Bank of the Gambia, particularly with million. During the year the average loan balance and Churchill’s Town as well as Westfield; and It gives me great pleasure to report to you the Non-Bank Financial Institutions (NBFI’s). NBFI’s are reduced significantly by 86% from GMD0.143 • Markets wherein our target segments are present but performance of your company’s for the period ended now required to be incorporated companies. Capital million in 2007 to GMD0.02 million in 2008 are under-served by the current providers such as 31st December 2008, the plans and aspirations for the requirements have been increased significantly and the reflecting our reach to the unbanked and under- Farrafenni. year and beyond. minimum Capital Adequacy Ratio (CAR) has been served particularly women folks; raised from 8% to 16%, with more stringent weightings • Recorded a loan to deposit ration of 53% which is Traditionally, microfinance was supply led with all the 2008 marked a milestone for Reliance Financial for the various asset categories. still way above the industry average and a reflection emphasis and focus being on the provision of loans. Services. It was a year of investment in our of our commitment to lending to the productive The business philosophy at Reliance is different. The infrastructural network, our people and systems in The financial performance during the year showed sector in continued support of the micro, small and organisation whilst receptive to the idea of external laying the foundations for the future growth of our modest growth, the highlights of which are: medium enterprises of the economy; and loans to fund loan growth is also aware of the enormous company in the years to come. The groundwork laid • Raised capital of GMD15 million through a rights potential for increasing savings from the majority of during the last year is a reflection of the wisdom and • Gross revenue from operations increased by 88% issue funded largely through the conversion of the Gambian where the national savings averages only commitment of the Shareholders, Board of Directors from GMD19.6 million to GMD36.9 million; long debt by the two international shareholders. 6%. Additionally, the lack of appropriate hedging and employees to the long term development of the with total operating expenses before provision for mechanisms to manage foreign exchange risks make Company to deliver our mission of changing lives in credit losses and tax registering similar increases the communities in which we do business. at 87% from GMD23 million the previous year to Technical Assistance GMD43 million despite the significant investments The total assets of the financial services industry in infrastructure; The donor committee of ShoreCap Exchange approved stood at GMD12.5 billion as at end of December • 64% of other revenue is income from our retail a follow on technical assistance program for Reliance 2008 representing an increase of 19.5% year on year foreign exchange business anchored on our in March 2008 amounting to USD0.491 million according to the Central Bank Monetary Policy international remittances business through the earmarked for funding for credit, operations, human Committee Press release of 27th February 2009. Of principal agency agreement with Western Union resources, savings mobilization, supplementary MIS this total private sector credit accounted for GMD3.8 Money Transfer; while the GMD2.8 million support, and training and development. The first half billion an increase of 41.3% from the previous year. represented the final tranche of the Operating of the plan was co-paid at rate of 15% and the second Grant from Stichting-Triodos Doen; half will be at a rate of 25% for a period of eighteen The supervisory and regulatory framework of financial • Provided access to savings to an additional 14,750 months. The third and final tranche of operating grant

12 13 annual report 2008 Chief Executive Officer’s Statement

Deposit Portfolio by Product in %

7 Remittances this option too risking due to the market volatilities. Deposit for Development While local currency loans from the Company’s 22 Fixed Deposit During the period under review, Reliance developed to D24, 309 which signals a change in our strategic correspondent banks offer an alternative, this comes Entrepreneurial remittance as a strategic business unit to further focus away from medium segment on to smaller micro at high price averaging 23%; thus having a significant Entrepreneurial Individual diversify the revenue generation base particularly non- loans. An Express Loan product was designed and Minor impact on margins. It is against this background funded income by leveraging on our extensive network. piloted to address the credit needs of micro business 2 Premium that we have chosen to invest in our own network to 61 Regular Savings Account This was marked with an official launching ceremony owners previously not qualified for the typical Reliance mobilise stable low cost deposits thereby supporting 10 51 at the Head Office following the soft launch in the business loans and to increase the quantity of small our mission of financial inclusion for mass individuals, last quarter of 2007. This business also had positive depositors. The Express Loan product, along with other micro-enterprises and small businesses. synergies in terms of the shared clients’ base that strategic initiatives, has gradually shifted the focus from The table above shows that 51% of Reliance’s deposits predominantly form the majority of the recipients of servicing the larger small and medium size business These additional locations coupled with the low entry come from the Regular Savings Account. The major remittances. Reliance was appointed to lead the annual owners to the typical market seller with a limited barriers of GMD100 (USD4) to open an account has attraction for this product is the low entry barriers, the countrywide Back to School marketing campaign amount of inventory. helped to significantly increase the number of new relatively unrestrictive nature of the account and the Loan Disbursement in % voluntary active savers from 8,825 in 2007 to 23,575 accessibility of branches to the communities. in 2008. It is very gratifying to report that Reliance 3.01.710.1 has exceeded the GMD100 million (USD4.1Million) 1.4 Other deposit liability threshold and closing the year with 25.5 Personal GMD115 million and hence commanding the largest Fishing market share in the informal sector. The average Above 300,000 Agriculture account balance during the year was GMD4,880 50,001 - 300,000 1.2 Electronics & Communications 10,001 - 50,000 (USD195) reducing from GMD9,360 (USD374) the Food processing 1,001 - 10,000 0.50.8 previous year. 1 - 1,000 Transport 55.8 Textiles & Fashion From the breakdown above, 63% of the active savers are Construction male compared to 58% as at end December 2007. This represents a modest increase of 5%. The percentage of women active savers however dropped by 3% to 35% by The average account balance during the year with our initial investment fund of USD50,000 The loan portfolio grew modestly to D63 Million end December 2008. This factor is partly explained by was GMD4880.00 (USD195) reducing from which was matched equally by the other direct agents compared to GMD58.6 Million the previous year, the fact that early lending program which was a major GMD9,360.00 the previous year. Of the total number giving a budget of USD100,000. The highlight of the representing a 7% growth. This modest portfolio catalyst for new accounts was skewed mainly towards of 23,575 active savers, 7,680 active savers have a closing campaign being the awarding of prizes to 60 winners of growth was in part due to a decline in large loans as a SMEs which are predominantly owned by men and balance of less than GMD250. This represents 33% of the raffle receiving a total of GMD600,000 to support result of a strategic shift to concentrate on smaller sized tend to apply for larger loan amounts. This however our total active savers. This is in line with Reliance’s educational expenses. Foreign exchange income from loans during the third quarter coupled with a change in will change following the development and successful mission of financial inclusion. remittances contributed to over 30% of total income of our lending methodology which required a significant pilot of the Reliance Express Loan Product specially the institution. The Company as part of its channels of amount of investment in building the capacity of our targeting women micro-enterprises. distribution developed dedicated Western Union Kiosks loan officers. The loan portfolio is very in strategic locations in Tallinding, Bakoteh (Tipper diversified covering all real sectors of the 10,000 Female Deposit Mobilisation Garage) and Bakau in the latter part of 2008. economy ranging from agriculture, 8,000 Male textiles, fisheries, telecommunications, It is very gratifying to report that Reliance has exceeded 6,000 Borrowers and Portfolio Structure construction, food processing, the GMD100 million (USD4.1Million) deposit liability and so on. 4,000 threshold and closing the year with GMD115 million During 2008, Reliance disbursed a total of 2,895 loans and hence commanding the largest market share in the 2,000 with a total value of GMD 104.8Million an increase

informal sector. 0 of 264% and 17% respectively from the previous year. Above 300,000 1 - 1,000 1,00 10,00 50,00 The average loan size has declined from D143, 000 1 - 1 0,000 1 - 50,000 1 - 300,000

14 15 annual report 2008 Chief Executive Officer’s Statement

MAIN INDICATORS DECEMBER Of the number of loans disbursed, 1,087 of the clients During the year Mr Feinberg supported by the Chief relatively young and inexperienced credit team on the 2008 were given loans of GMD5, 000 or less. 37% of our Credit Officer successfully implemented the individual more reliable individual cash flow based methodology Number of loans disbursed 2,271 borrowing clients were women. This high penetration lending methodology developed, tried and tested by with emphasis on effective screening and monitoring. of women is a testament of Reliance’s attempt to reach ProCredit to replace the previous one through both Loans disbursement 104.8 (million GMD) the historically underserved segment of the population classroom-based learning and practical application at Business Development and to contribute to the empowerment of women who site visits and client interviewing. He also developed and Advisory Services (BDAS) Number of Outstanding loans 2,595 form the bulk of the market vendors and are integral in and introduced a financial incentive to incentivise loan as at year end socio-economic development. officers as well as a credit scoring system to assist in After the successful partnership with the International Loan portfolio outstanding 63.0 profiling the credit worthiness of loan customers. Mr. Finance Corporation (IFC), the local Chamber of (million GMD) Share of loan portfolio Bosco Sambou was also seconded to assist in setting Commerce and Sahel Investment Consultants, we have up the delinquency management unit and developing not resolved to translate our classroom based training Average loan size of 24.0 Loan portfolio of 20 largest 29% recovery processes and procedures to guide in the to individual one on one session with our borrowing outstanding loans borrowers (GMD’000) recovery process. clients in particular in the areas of book keeping and Largest single borrower’s 9.6% financial management. To promote book keeping, we Range of loans disbursed 1,500 – 2,000 exposure have based on discussions with our clients developed (GMD’000) Loan Portfolio Quality Loan portfolio to related Prohibited under a Reliance branded four columnar cashbook to enable parties our Shareholders During the year, the portfolio quality as measured our clients to record on a daily basis their opening cash Agreements by the PaR (adjusted for cash contribution) increased balance, receipts, payments and closing balance which /VNCFS
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JO to 13.7% as at end of the year. The relatively high we sell for a fee of GMD150.00 (USD6). PaR was attributed to many factors, some of which  include inadequate MIS, inexperienced staff, challenges In addition our credit appraisal document summarised  Credit Management in monitoring, concentration of SME borrowers in a Facility Approval Memorandum provides proxy >[J (contributing to 62% of PaR), and inadequate financial information in the form of Balance Sheet and   The Credit Policy and other relevant manuals were methodology prior to April 2008. To improve quality, Profit and Loss Statements preferably based on actual  revised and updated by the Board and continue to management has embarked on portfolio quality performance over a three month period. Our clients  serve as guiding documents for the Credit Department. management through product redesign, refocusing on found these to be very useful in terms of how their   Credit approval is vested in Board and Management lower loan sizes, embarking on loan officer incentives, businesses’ are performing and hence does provide a Credit Committees. The credit approval limit for engaging in more responsive recovery activities good knowledge and input to our loan officers on the  the Management Credit Committee is set at GMD1 including continuous monitoring of clients, and credit decision. Inventory management and collection million with loans above GMD500, 000 to be tabled working to improve the MIS to allow better monitoring of receivables including overall credit controls is always to the following Board Credit and Risk Committee with more detailed reporting. a source of good discussion with our clients. meeting for noting and ratification.

Number of Loans Disbursed, by gender The incentive scheme was revitalized through a new In late 2007, the board resolved that our lending tracking system and the scheme has been put in place business was too important to be combined under the to encourage loan officers to monitor loans and engage responsibility of the Chief Operating Officer amongst preemptively with clients. A team incentive was 500 456 Female other duties such as deposit mobilization, branch also introduced for team leaders to encourage more 403 400 Male expansion and product development. Hence in late disciplined supervision of their team and to encourage January 2008, Mr. Craig Feinberg was appointed as the microfinance officer to closely scrutinize the credit 300 a follow on credit consultant to help with the setting analyses, as well as to encourage recovery officers to 200 129 up of the lending department following its separation focus on better collection efforts. In addition, there 109 100 100 71 53 from the ambit of the Chief Operating Officer. In continues to be more lending discipline. Also, the 45 38 17 0 April 2008 a full time Chief Credit Officer was also introduction of a credit rating system as well as forging Above 300,000 1 - 25,000 25,00 50,00 100,00 appointed to provide the leadership and drive the relationships to share information about borrowers with 1 - 50,000 1 - 1 1 - 300,000 00,000 strategic agenda our lending business. other service providers like MFI’s and banks remain to be very helpful. There continues to be training of the

16 17 annual report 2008 Chief Executive Officer’s Statement

Risk Management framework

Our risk management statement is “to be the most The objective was to further strengthen the ERM effectively risk managed financial company in The focusing on all the risk and compliance issues across Gambia through active board and senior management the organisation. The outcome of the risk evaluations oversight, adequate policies and procedures, robust and assessments were used as input by the internal audit risk measurement and reporting systems, and department to verify probability as well as impact on comprehensive internal controls.” In this regard, we the organisation and more importantly whether the need to foster a very strong risk management culture action plans were being implemented. and has since embarked on effective risk management activities which are embedded in all aspects of the The compliance unit was charged with the company’s business line. responsibility of ensuring full adherence to the recommendations of the risk committees at the board The risk management philosophy of Reliance is and management levels including legal, statutory, to ensure that risks associated with the company’s internal policies and procedures. To strengthen business operations are managed on an Enterprise the control further it was ensured that the risk and Risk Management (ERM) system. Effective risk compliance reports are discussed at the Board Risk and future growth of the company, we have contracted Close behind was the need to focus on performance management is integral to Reliance’s success. As such, Credit Committee while internal audit report is tabled the same IT consulting firm to conduct data cleaning management – how Reliance’s managers define strong the company’s risk management is guided by sound at the Board Finance and Audit Committee. up, training of our staff, enhance system performance performance, monitor it, give feedback, reward it, principles. These principles encompass: through a review of the various data transmission options and cope with under-performance. Job descriptions, Reliance has been in compliance with the legal, as well as the development of a robust user manual for employee performance targets, individual Personal • active management and board oversight; statutory and ALCO recommended limits throughout the system which will roll over into next year. Development Plans, and a “Fair & Firm” program have • articulating the objectives of the organization; the year except in the last quarter with the new capital been created or improved. To ensure that employees • determining the risk appetite of the organization; adequacy requirements. An augmentation plan has been Human resources are properly prepared to meet their performance targets • creating an appropriate risk management put in place which seeks to redress the non-compliance and their supervisors are able to manage effectively, framework; no later than the end of the first half of 2009. Reliance is committed to being an employer of attention is being given to training and development. • identifying potential risks and the likelihood and choice underscored by its mission of ‘Changing Lives’ The core training plan for the employees of the impact of their occurrence; Information Technology which existing and prospective staff are encouraged Company for the year ahead has been completed. An • identifying appropriate responses and controls to the to embrace. The red carpet service promised to our assessment of additional training needs and a review risks; and We upgraded our operating software to version 4 which customers can only be delivered by people who are of the induction process are under way. In the area of • monitoring and communicating the risk has enhanced features designed to improve the overall passionate about the mission. talent management, the Reliance Human Resources management processes and outcomes. management information system and the lending Committee has conducted a Succession Planning module. With the upgrade comes a lot of possibilities Early in 2008, Prinny Anderson was appointed session and initiated an informal program for Risk Management Systems in terms of integrating various solutions that can be as Human Resources consultant to support the high potential managers. Finally, the HR deployed seamlessly and enhance communication development of the Human Resources function at department has outlined a strategy for The risk management system comprises of the Board amongst users, suppliers and customers. Reliance Financial Services working closely with the promoting retention. Risk and Credit committee, a Risk and compliance Head of Human Resources and the Officer assisting. and internal audit department staffed adequately to A diagnostics review of the operating software Bankers The first step has been to align the priorities of the proactively respond to systemic risk and risk that may Realm was commissioned with the view to strengthen department to the strategic direction of Reliance, and arise as a result of strategic options of the Company. and leverage the management information system to then to define the roadmap for the Human Resource better support the operations of the business as well function to support the business in achieving its goals. as evaluate the adequacy and capacity of the system Since Reliance is a young and growing organization, During the year we created the Business Inspection to establish whether it can support our growth and the first operational area to receive attention was and Control Unit; an amalgamation of the risk expansion plans. While we are pleased with the recruiting, and the department has upgraded its management, internal audit and compliance units. outcome of the adequacy of the system to support the procedures and methods.

18 19 annual report 2008 Chief Executive Officer’s Statement

Through the technical assistance program, the Group Corporate Social Responsibility In furtherance of our commitment to sustainability solutions that suit the needs of our target clientele; Head of Human Resources and the HR officer management, we have also resolved at the management participated in a peer learning forum in Luxemburg In every community, there is work to be done. For us level not to print credit proposals but rather to have • Continue to expose Management to external where the theme was “Leveraging Human Capital for we are more than just a financial services provider. these circulated via the intranet and to get members leadership and strategic management and Performance and Growth. A program for executive We are a community partner focused on the socio- of the credit committee to bring along their laptops development courses and programs that are relevant coaching was developed to focus on leadership and economic development of the neighbourhoods we to credit committee meetings for their review and to the growth and strategic development of the strategy for ShoreCap investee institutions and Reliance operate in. We help where was can as we firmly believe discussion. The same principle is applicable to our Company; and was selected to be one of the first beneficiaries. The that the communities we serve – and the people and monthly standing management meetings including the CEO also attended a workshop at Insead in France on micro entrepreneurs that breathes life into them- should strategic review, performance review, risk management, • Continue to improve our Triple Bottom Line and Blue Ocean Strategy which Reliance initially adopted prosper. In 2008 we contributed over GMD0.3 million Assets and Liability Committee review, Human sustainability management systems. as its strategic management framework. The technical in support of worthy causes ranging from education, Resources. assistance program also facilitated the training of junior sports, science, cultural groups and other civil society Conclusions managers in micro lending management in Ghana organisations. Aspirations for the Years Ahead organized by the Applied Microfinance Institute. I would like to thank the shareholders, management Reliance is for profit, but its objectives go beyond profit The first full two years of operation for Reliance has and staff for their confidence and faith in Reliance. The Internally the Human Resources Unit along with the to truly ‘changing lives’ in the communities we serve. seen us through the start up phase of the company. Government in particular the Central Bank deserves departmental Heads and Managers conducted the This was amply demonstrated by our commitment The second business cycle of the Company (2009 our special thanks for their continued cooperation and following training programs: to taking financial services to the communities that – 2011) will herald the implementation of Reliance’s support. Finally, we register our sincere gratitude to • Sales and marketing training was conducted for all are lagging behind in the business infrastructural newly developed ‘Blue Ocean Strategy’. In this period, our valued customers for their support and patronage. sales and marketing officers; development such as electricity such as Old Yundum Reliance aspires to achieve the following key objectives: Reliance is well positioned to change lives through • Credit/loan officers underwent classroom and and using renewable energies such as solar panels to financial inclusion and empowering the entrepreneur. field related training on the lending methodology supply the energy requirements to deliver our services. • To get additional investors to increase the introduced in the period; and In addition we have continued to research other ways Company’s capital with a view to comply with • A selection of middle and senior management of providing back up power supply that are friendly to capital adequacy requirements and support Mr. Baboucarr Khan received leadership training and coaching in the environment using AC Back up batteries as opposed implementation of strategic activities; Chief Executive Officer conjunction with a managerial team form to generators where feasible. We have achieved good Beiersdorf, Belgium facilitated by the Dutch based success in using this alternative for our kiosks and • Breakeven in 2009; while building the Leadership Consultancy firm, Better Future. agencies that suffer infrequent power outages and where infrastructure of the company from an the energy consumption is manageable by the capacity organizational structure review, improving portfolio We also hosted the Rotterdam School of Management of the batteries available in the market. quality, promoting an Enterprise Wide Risk Eramus University and Better Future which gave Culture, continued development of the middle birth to the development of the ‘Leading Reliance and senior management cadres, strengthening the 2008’, bespoke management training and leadership internal controls, policies, processes and procedures development targeted at the top thirty employees of the and improving the overall branding and visibility of company. the company;

In the period to December 2008, 70 staff were • Consolidate on the momentum achieved in the start recruited from managerial to junior officer levels. In up phase in 2009 with an optimal network size of addition, 20 interns were taken on at the junior level as 40 (branches and agencies and kiosks) and continue part of a program of assisting young Gambians exposed on our drive to reach in the second business cycle; to financial services delivery. The number of staff at the end of the year stood at 122 distributed evenly between • Enhance the capacity and functionality of the males and females. Staff turnover of 17% was recorded operating system including the Management in the period. Some left voluntarily mainly to pursue Information System as well as explore the potentials further education locally and abroad while some were of introducing technology enabled banking managed-out through the ‘fair and firm initiative’.

20 21 annual report 2008 ORGANISATION Corporate CHART 4IBSFIPMEFST Governance statement

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22 23 annual report 2008 BOARD OF DIRECTORS

Ebenezer Olufowose Amie Bensouda (Chairperson) Ebenezer Olufowose is an Executive Director at Access Bank Plc, Nigeria. Prior to Head of Law Firm Amie Bensouda & Co. Firm of 4 Lawyers specialising in Corporate, joining Access Bank in June 2007, he was a Director with Citigroup, and an Executive Property, Banking and Finance, among other things, and human rights. She is the Director and Head of Corporate Finance at Nigeria International Bank Limited, a President of The Gambia Bar Association and also the Chairperson of the Institute subsidiary of Citigroup in Nigeria. for Human Rights Development in Africa and Takaful Insurance Company Limited. Amie was Solicitor General and Legal Secretary, Attorney General’s Chambers and Prior to joining Citigroup in 2002, he was pioneer Managing Director of Guaranty Ministry of Justice from 1990 -1995 and also acted as Attorney General and Minister Trust Bank (Gambia) Limited, on secondment from Guaranty Trust Bank plc of Justice July/August, in 1994. She is Founder member of the Gambia Women Nigeria, where he was General Manager and Head of Corporate Finance & Finance Association GAWFA (an N.G.O set up to improve women’s access to credit). Investment Banking. The clientele portfolio includes the multilateral agencies, multi-national corporations, public enterprises, private companies etc. Amie graduated from the University of Lagos Ebenezer is a first class honours Economics graduate of the University of Lagos, with a Bachelor of Laws (LLB Honours) and was admitted to the Nigeria Law School Nigeria. He also holds a masters degree in International Economics from the where she obtained her Barrister-at-law degree. She also attended Kenya School of Law University of Sussex, Brighton, England, where he studied as a Sir Adams Thompson to pursue a post graduate diploma in legislative drafting. Amie also trained at Royal Scholar. Ebenezer also attended the International Law Institute, Washington DC, Institute of Public Administration U.K; the International Development Law Institute, Lagos Business School, Nigeria on Advanced Management Program as well as the Rome, International Law Institute in Washington D.C. on, among other subjects, Institute of Management Development, Lausanne, Switzerland. advance training on legislative drafting, privatisation of public enterprises, public enterprise reform, petroleum law, human rights.

Baboucarr Khan Jacco Minnaar Before joining Reliance, Baboucarr was the Head of Consumer Banking at Standard Chartered Bank (SCB) in The Gambia and a member of the bank’s management team. Jacco currently works as Senior Investment Officer at Triodos Bank, responsible for Baboucarr managed a revenue budget of $7 million (about 60% of SCB’s budget) and investments in financial institutions in Africa. He has over 10 years of experience a team of 70 people with overall responsibility for strategy, budget, product innovation, working with the financial sector in the Netherlands, Cambodia, Lao PDR and staff motivation and training, risk management and service delivery. In 2004, Baboucarr Vietnam. Before joining Triodos Bank in October 2006, Jacco worked as manager and his team won the bank’s coveted Cowbell award for achieving the highest year on of the Financial Markets Development Program of the International Finance year revenue growth in the entire SCB group, 53%, a feat that was repeated in 2005 with Corporation in the Mekong region. Prior to that he worked with a Dutch consultancy another group award with the highest year on year growth in deposits. Additionally, firm and did most of his assignments with ING Bank and Postbank NV. in line with the consumer banking division’s asset led growth strategy, Baboucarr re- Jacco holds a Master of Science degree in Industrial Engineering and Management launched the personal installment loan product with the introduction of direct sales Science and he is a candidate for the Chartered Financial Analyst (CFA) designation. representatives, which resulted in the portfolio increasing from $1.6 million to $3.8 He is a Dutch citizen. Jacco was nominated as a director to the Reliance board by million in six months representing an increase in market share from 10% to 50%. Triodos-Doen foundation, a microfinance investment fund managed by Triodos Baboucarr was also instrumental in developing and launching the first ever-residential Bank. Since 1994 Triodos Bank has contributed its unique expertise as a socially mortgage product in the Gambia. Before working at Standard Chartered, Baboucarr responsible bank to the microfinance sector. Triodos Bank strongly believes that was Head of Audit at KPMG. The clientele portfolio included Banking, Insurance, professional provision of financial services in developing countries, in particular to Telecommunications, Groundnut processing, Development Organizations, Multi-lateral micro entrepreneurs, is crucial for the development of a local economy. It enables Organizations, Port and Harbour and Pensions. Baboucarr is a Fellow of the Association businesses to grow, to generate income and to create jobs. Professional microfinance, of Chartered and Certified Accountants (ACCA) in the UK. He has attended several therefore, has significant impact on the reduction of poverty. Management and Leadership training programmes at distinguished institutions such as INSEAD, France and HENLEY, England.

24 25 annual report 2008 BOARD OF DIRECTORS

Kenny Nwosu

Kenny is an Investment Officer with ShoreCap and responsible for the African In line with the Combined Code and Sarbanes Oxley we have Portfolio. Prior to joining ShoreCap in 2006, Kenny worked at Whitehall Capital; during this year under review formed three board committees an emerging markets focused investment and advisory firm. From 1998 to 2002, he comprising of non-executive directors as follows: was an Associate at Deutsche Bank and previously served as a Financial Advisor to SMEs and private clients for a financial advisory group. Kenny received his MBA Risk and Credit Board Committee from the London Business School and his MSc in Artificial Intelligence from the University of Aberdeen. He also holds a BA Honors in Economics from the University Chairman: Mr. Ebenezer Olufowose of Nottingham. Members: Mr. Jacobus Minnaar Mr. Baboucarr Khan Kenny was nominated as a director to the Reliance board by ShoreCap International Mr. Ismaila Faal Limited, an international private equity company that invests in small business Mr. Seedy Njie banks and regulated microfinance institutions. ShoreCap was created by ShoreBank Mr. Assan Jallow (Secretary) Corporation, a $2 billion asset U.S. community development bank holding company with over 30 years experience in building sustainable development financial Finance and Audit committee institutions. In addition to its own regulated banking operations, ShoreBank has been a leading provider of technical assistance and capacity building services to the financial Chairman: Mr. Alieu Secka institutions in developing economies around the world. Members: Mr. Kenny Nwosu Mr. Jacobus Minnaar Mr. Assan Jallow (Secretary)

Human Resources and Alieu Secka Compensation Committee

Alieu Secka is the General Manager of Golden Beach Hotel, and Chairman of Chairman: Mr. Kenny Nwosu Gambia Hotel Association since 2006. He is also the Resident Director of FJP Members: Mr. Ebenezer Olufowose Management Engineering The Gambia. Mr. Alieu Secka Mrs. Fatou Lowe (Secretary) Alieu started his professional career with KPMG Banjul as Audit Senior in 1991, moved to Senegambia Beach Hotel in 1992 as Chief Accountant and rose to Financial Controller & Company Secretary and Deputy Managing Director before starting his own hotel in 2005. He was an executive member of Gambia Chamber of Commerce & Industry for several years, and have chaired or served in various task forces in the tourism & services industry. His professional & consulting experience include audit & review of several financial & private institutions, the privatisation of Gambia’s largest hotel, Executive Search, tourism linkages with agriculture, commercial strategy of Sierra Leone’s National Tourist Board, institutional setting up of the National Planning Commission, amongst others. He is an active Rotarian & past President of the Rotary Club of Fajara, as well as President of Fajara Golf & Sports Club.

Alieu studied Business & Finance, is a Fellow of the Chartered Institute of Secretaries (FCIS), Member of the Chartered Management Institute (MCMI) and FMAAT of UK, in addition to Certification in Hospitality General Management from the prestigious Cornell University.

26 27 annual report 2008 EXECUTIVE MANAGEMENT

Baboucarr Khan Chief Executive Officer

Baboucarr Khan is a Fellow of the Association of Chartered Certified Accountants (FCCA). He has seven years experience as a practicing accountant during which time he was Head of Audit at KPMG and four years experience in the banking industry. Prior to joining Reliance, Baboucarr served as Head of Consumer Banking with Standard Chartered Bank (Gambia) Limited for three years.

Ismaila Faal Chief Operating Officer

Ismaila Faal was most recently the head of SME Banking at Standard Chartered Bank ( Gambia ) Limited. He has nearly 15 years experience in the financial services industry and has worked both in The Gambia and the United Kingdom, where he worked with Norwich Union Insurance Plc. Ismaila was part of the team that set up Guaranty Trust Bank (GTB) in The Gambia, he held the role of Deputy Manager in GTB’s consumer banking division. Ismaila is a graduate of London Metropolitan University.

Seedy A.B Njie Chief Financial Officer

Seedy is a member of the Association of Chartered and Certified Accountants (ACCA) in UK. He has a wide range of experience, from auditing to providing fiduciary advisory services to multilateral agency funded programs. Seedy has significant experience auditing financial institutions and development related programs. Prior to assuming the role of Chief Financial Officer, Seedy was the Head of the Financial Advisory Services (FAS) unit of Deloitte, The Gambia. “When we are no longer able Assan O. Jallow Chief Risk Officer to change a situation, we

Assan worked as a Bank Examiner for the Federal Reserve Bank, Atlanta, Georgia for are challenged to change eight years and as a Statistical Reports Analyst for one year. During his tenure as a Bank Examiner, Assan audited banks to ensure that they were operating in accordance with sound banking principles and in compliance with U.S. central banking laws and ourselves.” Victor Frankl regulations. Assan received his undergraduate degree in Economics from Morehouse College, Atlanta, Georgia in 1995 and a Master of Arts degree in Economics in 1997 and a Master of Science degree in Finance in 2001, both from Georgia State University.

28 29 annual report 2008 Directors’ REPORT

irregularities. Auditors The directors present their report and financial statements for the year ended 31 December 2008. Principal activities The auditors, PKF have indicated their willingness to continue in office pursuant to Section 155 (2) of the Companies Act 1955. Statement of Directors’ responsibilities The company’s principal activity is that of non-bank financial intermediation. Company law requires the directors to prepare financial statements for each financial year, which give a true Results for the year By order of the board of directors and fair view of the state of affairs of the company and of the profit or loss of the company for that year. In The results for the year are as presented in the preparing those financial statements, the directors are accompanying financial statements. required to: Significant changes in fixed assets • select suitable accounting policies and then apply them consistently; Changes in fixed assets are shown in note 12 to the • make judgements and estimates that are reasonable financial statements. and prudent; • state whether applicable accounting standards have Directors and directors’ interest been followed, subject to any material departures Mr. Seedy A.B. Njie - Secretary disclosed and explained in the financial statements; The directors who held office during the year Dated 1st of April 2009 • prepare the financial statements on the going are shown on page 4. concern basis unless it is inappropriate to presume that the company will continue in business. In accordance with the company’s Articles of Association, the term of office for board membership The directors are responsible for keeping proper is three years and board members can serve two accounting records which disclose with reasonable consecutive terms on a rotational basis. Initial rotation accuracy at any time the financial position of the should be at least one-third of the outgoing board company and to enable them to ensure that the members. Accordingly all the directors remain in financial statements comply with the Companies Act office. 1955 and the Financial Institutions Act 2003. They are also responsible for safeguarding the assets of The directors’ beneficial interest in the ordinary shares the company and hence for taking reasonable steps of the company is shown below. No other changes have for the prevention and detection of fraud and other occurred between 31 December 2008 and the date of this report.

MAIN INDICATORS NUMBER OF SHARES HELD 2008 2007 Mr. Baboucarr Khan 2,117,067 1,210,800 Mrs. Amie Bensouda 2,275,000 1,000,000 Mr. Ebenezer Olufowose 450,000 300,000 4,842,067 2,960,800

30 31 annual report 2008 Independent Auditors’ REPORT

To the Members of Reliance Income Statement Financial Services Company Limited for the year ended 31st December 2008

We have audited the accompanying balance sheet of Reliance Financial Services Company Limited as of 31st December 2008 and the related statements of income, changes in equity and cash flows for the year then ended. Notes 31 December 2008 31 December 2007 These financial statements are the responsibility of the directors. Our responsibility is to express an opinion on the D‘000 D‘000 financial statements based on our audit. Interest income 2 14,571 7,039 We conducted our audit in accordance with International Standards on Auditing as promulgated by the Interest expense 3 (8,288) (2,790) International Federation of Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes Net interest income 6,283 4,249 examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit Interest income from investments 5,707 3,391 also includes assessing the accounting principles used and significant estimates made by the directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our Fees and commission income 4,886 2,901 opinion. Other revenue 4 11,784 6,275

In our opinion, the financial statements give a true and fair view of the financial position of the company as of 31st Total operating revenue 28,660 16,816 December 2008 and of the result of its operations and its cash flows for the year then ended and have been properly Operating expenses prepared in accordance with the requirements of the Companies Act 1955 and the Financial Institutions Act 2003. Personnel cost 5 (18,804) (9,067)

(13,684) (9,333) General and administration cost

(4,303) (1,855) Premise and equipment

(6,250) (2,954) Depreciation

Total operating expenses (43,041) (23,209)

Operating loss (14,381) (6,393)

Provision for credit losses (606) (866)

Loss before taxation 6 (14,987) (7,259)

Income tax expense 7 (14,987) -

Accountants and business advisers Loss for the year after taxation (7,259) (7,259) Registered Auditors Banjul The Gambia

Dated 1st of April 2009 The attached notes form part of these financial statements.

32 33 annual report 2008

Balance Sheet Statement of changes in equity as at 31st December 2008 for the year ended 31st December 2008 Share Capital Accumulated Total Notes 31 December 2008 31 December 2007 D’000 Deficit D’000 D’000 D‘000 D‘000 Balance as at 1st January 2007 29,510 (3,399) 26,111 Assets Loss for the year - (7,259) (7,259)

st Cash and cash equivalents 8 12,428 4,756 Balance as at 31 December 2007 29,510 (10,658) 18,852 Balance as at 1st January 2008 Treasury bills and other investments 9 24,282 31,846 29,510 (10,658) 18,852 Loss for the year - (14,987) (14,987) Loans and advances 10 61,598 57,750 Shares issued and fully paid for 13,728 - 13,728 Other assets 11 9,832 1,637 Balance as at 31st December 2008 43,235 (25,645) 17,593 Property, Plant & Equipment 12 33,920 26,289 Total assets 142,060 122,278 Statement of cash flows for the year ended 31st December 2008 Liabilities Notes 31 December 31 December Deposits 13 115,057 82,565 2008 D‘000 2007 D‘000 Payables 14 9,192 9,159 Operating activities

Total liabilities 124,249 91,724 Operating loss (14,987) (7,259) Depreciation 6,250 2,989 Non current liability Increase in operating assets 17 (12,043) (58,054) Medium term loan 15 218 11,702 Increase in operating liabilities 18 32,525 84,233 Total liabilities 124,467 103,426 Loss on disposal of fixed asset 2 - Equity and reserves Cash generated from operations 11,747 21,909 Share capital 16 43,238 29,510 Company tax paid - - Accumulated deficit (25,645) (10,658) Cash flows from operating activities 11,747 21,909

Total equity and reserves 17,593 18,852 Investing activities Acquisition of property, plant and equipment (13,883) (15,831) Total equity and liabilities 142,060 122,278 Cash flows from investing activities (13,883) (15,831) Financing activities The attached notes form part of these financial statements. Proceeds from issue of shares 13,728 - These financial statements were approved by the board of directors on the 1st of April 2009 Loan repayment (11,484) - and were signed on its behalf by: Loans received - 371 Exchange income - (2,669) Cash flows from financing activities 2,244 (2,298) Net increase in cash and cash equivalent 108 3,780 Cash and cash equivalent at 1st January 36,602 32,822 Mrs. Amie N. D. Bensouda Mr. Baboucarr Khan Mr. Alieu Secka Cash and cash equivalent at 31st December 36,710 36,602 Chairperson - Director Chief Executive - Director Chairman

34 The attached notes form part of these financial statements. 35 annual report 2008

NOTES to the financial statements

1. Principal Accounting Policies

The following accounting policies have been applied Advances are written off when the extent of any loss Subsequent expenditure 2. Interest income consistently in dealing with items, which are considered has been confirmed. Expenditure incurred to replace a component material to the Company’s financial statements. f) Property, equipment and others of an item of property, plant and equipment 31 December 31 December Owned assets that is accounted for separately, including 2008 D‘000 2007 D‘000 (a) Statement of compliance Items of property, plant, equipment and others are major inspection and overhaul expenditure, is The financial statements have been prepared in stated at cost less accumulated depreciation. capitalised. Other subsequent expenditure is Loans 14,571 7,039 accordance with Accounting Standards issued by Freehold and leasehold premises are included in the capitalised only when it increases the future the International Accounting Standards Board accounts at their historical costs and the amount of economic benefits embodied in the item of (IASB), requirements of the Companies Act 1955 any subsequent valuation. property, plant and equipment. and also the Financial Institutions Act 2003. g) Treasury bills 3. Interest expense b) Basis of preparation Depreciation Treasury bills are stated at cost. Credit is taken for The financial statements have been prepared under Depreciation of fixed assets is calculated and charged related income in the period when it accrues. 31 December 31 December the historical cost convention. to the income statement on a straight-line basis by h) Foreign currencies 2008 D‘000 2007 D‘000 c) Interest income reference to the expected useful lives of the assets at Transactions in foreign currencies are translated Interest earned comprises interest on loans, the following rates: to Dalasi at the exchange rate ruling at the date Savings 1,818 613 treasury bills and bonds and is accounted for on of the transaction. Monetary assets and liabilities Time deposits 5,579 1,031 an accruals basis. In respect of loans, recognition Land is not depreciated. It is the company’s policy denominated in foreign currencies at the balance of interest income ceases when payment of interest to maintain freehold and long leasehold premises in sheet date are translated to Dalasi at the exchange Shorecap 334 559 or principal is in doubt and any interest already a good state of repair and it is considered that the rate ruling at that date. Foreign exchange International recognised during that accounting period is residual values, based on price prevailing at the time differences arising on translation are recognised Triodos 341 572 reversed. Interest is thereafter included in income of acquisition or subsequent valuation, are such that in the income statement. Non-monetary assets only when received. any depreciation will not be significant. Accordingly, and liabilities denominated in foreign currencies, Social 48 15 d) Fee income depreciation for freehold buildings is over the which are historical cost, are translated to Dalasi Development Loan fees are credited to income when the loan is estimated useful economic life to a maximum of 50 at the foreign exchange rate ruling at the date of Fund granted. years. Short leasehold premises are depreciated over the transaction. Bank Overdraft 168 - e) Loans and advances the unexpired period of the lease. i) Employee benefits Interest Loans are stated after deduction of applicable Obligations for contributions to the government 8,288 2,790 unearned income and provisions for possible credit Premises - leasehold Shorter of the remaining administered retirement benefit plan are losses. Provision for bad and doubtful debts are period of the lease or 50 years recognised as expense in the income statement as held in respect of loans taking into consideration incurred. 4. Other Income both specific and general risks. Fixtures and fittings 10 years j) Provisions A provision is recognised in the balance sheet Furniture and equipment 5 years 31 December 31 December Provisions against loans are based on an appraisal when the company has a legal or constructive 2008 D‘000 2007 D‘000 of the loan portfolio. Specific provisions are made Motor vehicles 5 years obligation as a result of a past event, it is probable where the repayment of identified loans is in doubt that an outflow of economic benefits will be Grant income 2,870 3,285 Other fixed assets 5 years and reflect an estimate of the amount of loss required to settle the obligation. Exchange gain 5 2,669 expected. Computer hardware 3 years k) Income tax Income tax on the profit for the year comprises Computer software 4 years Exchange income 6,842 165 Provisions made during the year less amounts current tax and is recognised in the income (banking software) released and recoveries of advances previously statement. Sundry income 1,324 156 written off are charged as a separate amount in the Computer consumables Written off in year of purchase Western union 743 - profit and loss account. income

11,784 6,275

36 37 annual report 2008

5. Staff numbers and cost 7. Income tax expense 10. Loans and advances 11. Other assets

The average number of staff employed during the year The company is in possession of a GIPFZA Special 31 December 31 December 31 December 31 December (including directors) analysed by category, is as follows: Investment Certificate which exempts it from 2008 2007 2008 2007 corporation tax calculated on the basis of turnover, D‘000 D‘000 D‘000 D‘000 31 December 31 December which basis of taxation applies when a company records SME Loan 14,357 10,615 Receivables 3,816 173 2008 2007 a taxable loss. Therefore, having met all the conditions in the Investment Certificate and having a taxable loss Micro Enterprises 30,637 45,496 Prepayments 6,008 1,456 Executive 1 1 for purpose of corporation tax, the company has a nil directors tax liability for the year. (2007: Nil) Others 18,087 2,516 Tax deposit 8 8 Management staff 9 8 63,081 58,627 9,832 1,637

General staff 112 63 8. Cash and local bank balances Less: Provision (1,483) (877) for bad debts 122 72 31 December 31 December 61,598 57,750 2008 2007 The aggregate payroll costs of these persons D‘000 D‘000 were as follows: Cash 5,846 957 12. Property, Plant and Equipment 31 December 31 December 2008 2007 Balances with 6,582 3,799 Work Equipment Motor Other Land & Total D‘000 D‘000 banks In Progress Furniture Vehicle Fixed Building D’000 D’000 & Fittings D’000 Assets D’000 Wages and 7,022 3,485 12,428 4,756 D’000 D’000 salaries Cost Allowances 9,121 4,158 including bonuses At 1 January 695 15,539 5,846 1,670 5,695 29,445 9. Investments Other staff costs 2,661 1,424 Additions 1,930 10,513 - - 1,440 13,883

18,804 9,067 31 December 31 December Disposal - - - (37) - (37) 2008 2007 D‘000 D‘000 At 31 Dec. 2008 2,625 26,052 5,846 1,670 7,135 43,291 6. Loss before taxation Depreciation Treasury bills 1,125 14,145 The loss before taxation is stated after: At 1 January - 2,163 628 206 159 3,156

Placements 23,157 17,701 Charge for the year - 4,051 1,461 289 449 6,250 31 December 31 December with banks 2008 2007 Disposal - - - (35) - (35) 24,282 31,846 Charging: D‘000 D‘000 At 31 Dec. 2008 - 6,214 2,089 460 608 9,371

Directors’ 47 32 Net book value remuneration At 31 December 2008 2,625 19,838 3,757 1,173 6,527 33,920 Audit fees 267 307 At 31 December 2007 695 13,376 5,218 1,464 5,536 26,289

Work in progress represents the cost so far spent on Signages and Kiosks, the construction of which was not completed at the year end.

38 39 annual report 2008

13. Customer deposits 16. Share Capital 19. Contingent liabilities

31 December 31 December (i) This is the Dalasi equivalent of US$ 250,000 The total number of authorised ordinary shares at year 31 December 31 December 2008 2007 secured from ShoreCap International Limited end was 45 million with a par value of D1.00 per share 2008 2007 D‘000 D‘000 for the purpose of financing the growth of the (2007: 30 million ordinary shares with a par value of D‘000 D‘000 company’s loan portfolio to Small and Medium D 1 each). Savings 82,188 54,452 Enterprises. Repayment is in equal semi-annual Acceptances, - - endorsements and Deposit accounts 32,869 28,113 installments of US$ 31,250, the first due after During the year, there was a rights issue of 15,275,000 a fifteen months moratorium period from 15th shares to existing shareholders. Out of this, other obligations 115,057 82,565 October 2006, the date on which the loan was D13,728,000 was fully paid for, increasing the total disbursed. Interest is fixed throughout the period number of issued and fully paid shares at the end of the of the loan and it is at the rate of 9% per annum year to D43,238,000 ( 2007: D29,510,000). accruing on the basis of a 360 day year. The loan 20. Capital commitments 14. Other payables is unsecured. The outstanding balance as at 30th September was converted to equity following a 17. Increase in operating assets 31 December 31 December 31 December 31 December rights issue during the year. 2008 2007 2008 2007 31 December 31 December D‘000 D‘000 D‘000 D‘000 (ii) This is the Dalasi equivalent of US$ 250,000 2008 2007 Authorised by 2,266,375 - secured from Stichting Triodos Doen for the D‘000 D‘000 Accruals 7,210 7,098 purpose of financing the growth of the company’s the Board and Funds advanced (3,848) (57,404) contracted for Interest earned 766 1,920 loan portfolio to Small and Medium Enterprises. to customers - investment Repayment is in equal semi-annual installments Authorised by - - of US$ 31,250, the first due on 1st April 2008. Other assets (8,195) (650) the Board but not Social Security 105 84 Interest is fixed throughout the period of the contracted for Contribution loan and it is at the rate of 9% per annum but (12,043) (58,054) charged quarterly in arrears over the outstanding Income Tax 152 57 loan amount and is payable quarterly. The loan Other Accruals 959 is unsecured. The outstanding balance as at 30th 21. Related Party Transactions September was converted to equity following a 18. Increase in operating liabilities 9,192 9,159 rights issue during the year. There were related party transactions during the year 31 December 31 December in the form of loans received from and interest paid to (iii) These are funds contracted from Social 2008 2007 international shareholders. All these transactions were Development Funds (SDF) for lending to the D‘000 D‘000 at arms length. 15. Medium term loan fisheries sector. Interest is payable quarterly at a rate of 15% per annum. Repayments are in equal Deposits from 32,492 80,674 customers 31 December 31 December quarterly installments of principal and interest. 2008 2007 The loan is unsecured. Other payables 33 3,559 D‘000 D‘000 32,525 84,233 ShoreCap - 5,665 International (i)

Stichting Triodos - 5,665 Doen (ii)

Social 218 372 Development Fund

218 11,702

40 41 annual report 2008 Global Reporting Initiative and Triple Bottom Line Performance index

Some indicators mentioned in the Global Reporting Initiative (GRI) Reporting Guidelines are available in CGAP Social Performance Taskforce indicators 5 Description / reference Reliance’s Management Information System. Efforts are being made simplify capture and presentation of Social Objectives about outreach Described in the vision and mission statement, information in a comprehensive way. Other indicators are considered relevant for our activities, but these are not (to poor, low income, SME, women) elaborated under ‘target group identification’ -yet- captured in the GRI list of indicators. Social Objectives about observing change Described in the vision and mission statement (in the lives of clients, in communities) The overview below relates the content of this Annual Report to the Global Reporting Initiative reporting guidelines (version 3.0) where applicable. In addition, it refers to reporting standards and guidelines, currently under Board, Management use of social performance In progress development by the CGAP Social Performance Taskforce. information Staff incentives Described in the HR chapter Training on Social Mission Described in the HR chapter Indicator page Indicator page Entering client poverty level measurement systems In progress Vision and Strategy Governance Services geared toward women’s empowerment Described under ‘target group identification’ 1.1 Statement of sustainable development 6 4.1 Governance structure 10, 12, 26 and gender issues 1.2 Statement of key elements 6 4.2 Management structure 26 Client satisfaction Surveys In progress Corporate Profile 4.3 Independence 32 Dropout rate reviews and exit surveys In progress 2.1 Name 49 4.4 Shareholders recommendations 26 Social responsibility to clients Described in Business Development and Advisory paragraph 2.2 Principal Activities 31 4.5 Compensation 41 Social responsibility to staff Described in the HR chapter 2.3 Structure 25 4.6 Conflicts of interest 32 Social responsibility to community Described in the Triple Bottom Line paragraph 2.4 Location of Head Quarters 49 4.7 Qualifications 26 Social responsibility to the environment Described in the Triple Bottom Line paragraph 2.5 Country 49 4.8 Mission statement 6 Outreach depth and width information Described in the Products and Services paragraph 2.6 Ownership and Legal form 31 4.9 Oversight 25 Achievement of change (3-5 yr clients) In progress 2.7 Markets served 14-20 4.10 Performance evaluation 22 2.8 Key figures 7 4.11 Precautionary principle 23 2.9 Shareholders 32 4.12 Professional memberships 2 2.10 Awards received 2 Performance Indicators 1 Reporting Parameters Economic Performance 2 3.1 Reporting Period 9 EC1 Direct economic value added 10 3.2 Date of most recent report 9 EC2 Implication of climate change 16 3.3 Reporting cycle 9 EC3 Defined benefit plans 21 3.4 Contact point 49 EC7 Local hiring 21 3.5 Defining report content process 21 EC9 Indirect economic impacts 20 3.6 Re-statements 9 Environmental Performance 3 3.7 Significant changes 9 EN 1 Paper consumption 23 1 Reference to the indicators that are being covered in this report, either qualitative or quantitative. Other (GRI) 3.8 GRI content index 48 EN 4 Energy consumption 23 indicators are either considered not relevant or information is not available 3.9 External assurance 33 EN 7 Energy reduction initiatives 23 2 Economic indicators that are not included, but are being considered for future reports are: local suppliers, local hiring Social Performance 4 3 Environmental indicators that are not included, but are LA 10 Staff Training 21 being considered for future reports are: water consumption 4 Social indicators that are not included, but are being LA 11 Support of life-long training 21 considered for future reports are: health and safety, child labour, security practices LA 12 Career development 21 5 See www.microfinancegateway.org/

42 43 Network of Branches, Kiosks and agencies

Branches Bundung Borehole Dedicated Western Union Kanifing Municipal Council Head Office Telephone: xx Reliance Plaza, 46A Kairaba Avenue Bakau Dedicated Western Union K.S.M.D. The Gambia Kanifing Municipal Council Telephone: 00 (220) 4390526 Telephone: xx

Barra Branch Agencies Opposite the Ferry Terminal Barra, North Bank Region Banjul Branch The Gambia Clarkson Street Telephone: 00 (220) 5710644 (Gamtel Roundabout), Banjul Telephone: 00 (220) 6777669 Kiosks Tobacco Road Agency Box Bar Road, Banjul Banjul Terminal Kiosk Telephone: 00 (220) 6777647 Banjul Ferry Terminal Banjul, The Gambia Manjai Agency Telephone: 00 (220) 8860456 Kololi Highway, K.S.M.D. Albert Market Kiosk Telephone: 00 (220) 6777646 Banjul, The Gambia Telephone: 00 (220) 8860459 Serrekunda Branch Churchill’s Town, K.S.M.D. Serrekunda Car Park Kiosk Telephone: 00 (220) 6777641 Serrekunda Market “Nowadays change is Serrekunda, The Gambia Sukuta Agency Telephone: 00 (220) 4390618 Imres Building, Western Region around every corner; Telephone: 00 (220) 6777642 Tanji Fishing Community Centre Kombo South Old Jeswang in my day it was only Western Region, The Gambia Opp. community Market, K.S.M.D. Telephone: 00 (220) 88 66542 Telephone: 00 (220) 6777644 around the expected Tallinding Dedicated Western Union Bundung Agency Kanifing Municipal Council Bundung Highway, K.S.M.D. ones. Telephone: xx Telephone: 00 (220) 6777643

V.L. Allineare Tippa Garage Old Yundum Agency Dedicated Western Union Old Yundum Community Market Bakoteh, Kanifing Municipal Council Western Region Telephone: xx Telephone: 00 (220) 6777645

44 45 Network of Branches,

Kiosks and agencies continued

Lamin Market Brikama Kombo North Gamtel House Western Region, The Gambia Western Region, The Gambia Telephone: 00 (220) 4390070/1 Telephone: xx

Latrikunda Sabiji Basse Latrikunda Sabiji, KMC, The Gambia Upper River Region Telephone: 00 (220) 88 60457 Telephone: xx

Sanyang Agency Brikamaba Opposite Sanyang Car Park Central River Region Western Region Telephone: xx Telephone: 00 (220) 6777638 Some Farafenni Agency Lower River Region Ferry Crossing Highway Telephone: xx North Bank Region Telephone: 00 (220) 6777631 Bansang Central River Region Westfield Agency Telephone: xx Mamadi Manjang Highway, K.S.M.D. Telephone: 00 (220) 6777623

“If nothing ever changed, there’d be no butterflies.” Author Unknown

46 47