CASE ADF is a Microfinance Institution based in Mwanza Tanzania. The firm has been in operation for about 10 years now. The main products offered by ABF include microcredit facilities and consultancies in all matters relating to business, finance, financial management, accounting and reporting. The main clients of this company are the small entrepreneurs who were not easily Loanable in other financial institutions due to lack of credibility and poor collateral securities to support their borrowing intentions. Since its establishment, ABF's delinquency and default rates have been increasing to a level which the recommended Basel confidence level is inappropriate However, the management of ABF have declared to have tried investing in other profit making businesses, but the pay back and profitability rates were much worse compared to this microfinance business. On the other hand, the Government of the URT instructed all local Government authorities to stop issuing business licences to MFIs with effect from the beginning of the fiscal year 2018/19, the purpose being to revise its regulations concerning the operations of these microfinance firms. Hence after, each microfinance institution might be required to be evaluated by the Central Bank before it can be allowed to proceed in the business, and new standards may be established for improvement of the service provisions within the industry, Taking a self-assessment of its capital adequacy, experience in the business, and the high default rates of its customers, ABF feels less confident if it can be among the allowed firms to remain in business, after the evaluation by the Central Bank Questions: 1. What kind of risks is ABF Company facing? 2. Taking both scenarios, in which riskzone can we categorie ABF Company 3. Basing on your answers in question two (2) above, what response can ABF Company make to deal with these risks, and how should it respond? Jedi 4. Are the measures suggested in question three (3) above, Preventive, Corrective directive or detective CASE ADF is a Microfinance Institution based in Mwanza Tanzania. The firm has been in operation for about 10 years now. The main products offered by ABF include microcredit facilities and consultancies in all matters relating to business, finance, financial management, accounting and reporting. The main clients of this company are the small entrepreneurs who were not easily Loanable in other financial institutions due to lack of credibility and poor collateral securities to support their borrowing intentions. Since its establishment, ABF's delinquency and default rates have been increasing to a level which the recommended Basel confidence level is inappropriate However, the management of ABF have declared to have tried investing in other profit making businesses, but the pay back and profitability rates were much worse compared to this microfinance business. On the other hand, the Government of the URT instructed all local Government authorities to stop issuing business licences to MFIs with effect from the beginning of the fiscal year 2018/19, the purpose being to revise its regulations concerning the operations of these microfinance firms. Hence after, each microfinance institution might be required to be evaluated by the Central Bank before it can be allowed to proceed in the business, and new standards may be established for improvement of the service provisions within the industry, Taking a self-assessment of its capital adequacy, experience in the business, and the high default rates of its customers, ABF feels less confident if it can be among the allowed firms to remain in business, after the evaluation by the Central Bank Questions: 1. What kind of risks is ABF Company facing? 2. Taking both scenarios, in which riskzone can we categorie ABF Company 3. Basing on your answers in question two (2) above, what response can ABF Company make to deal with these risks, and how should it respond? Jedi 4. Are the measures suggested in question three (3) above, Preventive, Corrective directive or detective
