BRAC Lent US$330K TO 27K Clients (US$8.9M/27,010); Interest 21% (US$1.8/US$8.9M)


By J. Yanquui Zaza

A few days ago, I reviewed BRAC’s 2017 Financial Statement after I read an interesting, excellent, and detailed covered story of the 7/30/18 about “…Agriculture, Food Security and Livelihood (AFSL) program…” published by the Daily Observer newspaper. The contents of the 7/30/18 article of the two-day Seminar held to discuss issues about BRAC-Liberia’s programs had lured me to the Financial Statements of BRAC, a nongovernmental agency.

This is because I had hoped that BRAC’s food program would help in making Liberia food-self-sufficient, which could allow the new Government to continue to focus on raising and spending US$3.4B on “road connectivity.” Why did I study BRAC’s Financial Statements (i.e., a profit/(loss) statement and balance sheet)?

Well, investors study financial statements to put money into a joint venture, lending institutions rely on it to determine a debtor’s ability to repay a loan; some taxing authorities can reclassify some excessive compensation for its officers reported on the profit/loss statement as constructive dividends and taxable and/or the Liberian National Investment Commission uses it to determine tax incentives, etc.

More so, similar to an individual’s US federal personal income tax returns, a financial statement of an entity (i.e., a monetary information statement) might disclose certain facts that are different from an entity’s claims. For example, if the United States President, Mr. Donald Trump, refuses to disclose his Federal personal tax returns because some facts might be different from his assertions?

An individual’s US Federal personal tax return would indicate if he/she was sick, not saving for rainy days; does not give donations to religious institutions, schools, etc., lives in an expensive house; is self-employed or his/her profession or education is not the source of income on the tax return. In the case of BRAC Liberia, information within its financial statement does not support countless assertions.

For example, the Nongovernmental Agency instituted a high interest rate (21%) and collected US$1.8M of interest income of its total revenue of US$1.8 from the clients it promises to help. Worse, it collected 90% of the loan within the same year it lent the money, limiting the time for its clients to properly invest the borrowed money. Further, it lent a minuscule amount of US$330 (i.e., US$8.9M divided by 27,010 clients), which is inadequate to generate profit.

Most importantly, BRAC’s financial statement did not disclose how much money it donated to schools, healthcare centers or whether it built schools, healthcare centers, etc. Neither did it disclose any progress its clients (27,010 borrowers) have made since 2008. For example, if an entrepreneur (i.e., poultry farmer, fish farmer, etc.) has improved its business since BRAC became a lender or adviser?

Or how many students attending the (“…33 public schools…” successfully wrote the Entrance Exams of the University of Liberia and, or the WASSCE Exams? BRAC’s Annual Report stated, “We were contracted as the second largest implementing partner of the Ministry of Education in its “Partnership School for Liberia (PSL)” project in 2017 with 33 public schools based on the success of the first year.” Let us review excerpts of BRAC Liberia Microfinance Company Limited Independent Auditor’s Report and Financial Statements for the Year ended December 31, 2017 as shown below.

On page number 66 through 74, the external auditor reported:

ITEM 2017 2016
Revenue: Service charge on Loans $1,828,979 $1,389,908
Cash Disbursements to Borrowers 8,913,669 6,642,010
INTEREST RATE (Interest divided by disbursement) 20.51% 20.92%
Number of Borrowers 27,010 19,333
 Loan Per borrower (Disbursement divided by # of borrowers) $330 $343

The interest rate of 21% (which is high for NGO to charge) was calculated by dividing the charges collected on loans by the total cash disbursed in 2017 and, or 2016. Also, the $300 loan per 27,010 clients was determined by dividing the total cash disbursed by the number of borrowers in 2017 and, or 2016.

How did the borrowers make a profit, if any, since BRAC’s charge rate was high? Also, was the minuscule amount of US$330K lent to the 27,010 borrowers adequate to make profit, especially so if the entrepreneurs resided within expensive communities, including Monrovia? More so, how is it possible for entrepreneurs to make profit since they are required to pay the loan within a twelve-month period?

BRAC Microfinance Liberia reported high staff cost (US$770k) and huge administrative expenses of (US$689K) from a total revenue of US$2M in 2017. Interestingly, from the US$2M revenue, it amassed a profit of $600K (i.e., 30% of revenue) in 2017 from its poor clients. Okay, how did the other entity (BRAC Liberia) allocate donors’ funds on agriculture, education and healthcare?

Its information on allocation was troubling. For instance, on page No. 33 of the separate Financial Statements, BRAC Liberia (i.e., the second entity) reported that it allocated US$2.1M to programs, implying that about 90% of donors’ donation was spent on agriculture, education, healthcare. However, on pages No. 49 and 52 of the same separate Financial Statement, it reported that it spent US$689K on programs, while it spent US$406K on external training, US$650K on staff cost and US$208K on travel.

So, was the US$689K adequate to fulfill many of the programs BRAC reported on the pages at the beginning of the combined Financial Statements? I do not think so. Well, BRAC’s 16 officers (i.e., 3 officers for BRAC, 5 for BRAC Microfinance and (8) management team members) say their employer is doing a good job. The Nongovernmental Agency claims that it will help people build “…A World That Works for All of US.”

It stated in its 2017 Annual Report that “We act as a catalyst, creating opportunities for people living in poverty to realize their potential…We empower people and communities in situations of poverty, illiteracy, disease and social injustice. Our interventions aim to achieve large scale, positive changes through economic and social programmes that enable women and men to realize their potential.

Continuing, the Financial Statements stated “we reached 12,574 agriculture and livestock smallholder farmers and enabled them to increase their income and resilience, and increased access to sufficient and nutritious food. Our poultry hatchery and feed mill produced 18,983 day-old-chicks and 79.5 metric ton of feed.

Our Seed Farm produced 1.5 tons of quality rice seed (Nerica L 19 variety) and distributed among 1,500 project beneficiaries.” These promising words made me to believe that BRAC was prepared to help Liberia until I reviewed its income statement and balance sheet, which indicate that BRAC is not different from many of those “money eating” agencies.


  1. I write to commend Mr. Zaza for his thourough review and we’ll balanced analysis of the BRAC annual report.
    It is good that Mr Zaza pointed out the flaws in BRAC’s annual report and the false claim of success the report presents about BRAC works in Liberia.
    BRAC is no different from other loan sharks in the country.
    This is time the relevant government agencies review BRAC activities and ask BRAC to class it’s operations as “for profit” institution and remove the shroud of NGO.
    Our government needs to make its policies and laws work.
    There is urgent need to weed out these fake NGOs or appropriately regulate the NGO activities and help our people fight poverty in a much improve way.
    Thank you Mr Zara, this is a positive contribution.


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