The verdict in three sentences
An MFI that tracks arrears in spreadsheets consolidated at month end lets its PAR30 drift above 9% with no way to react. Loan portfolio software at 33,000 to 75,000 USD (about 20 to 45 million FCFA), with mobile collection agents and alerts from the first day of arrears, makes a PAR30 below 5% within 6 to 12 months realistic. The choice between a core banking package and a custom build depends mainly on your products (group, individual, agricultural loans) and on the regulatory reporting you must produce.
The real cost of a 9% PAR30
For an MFI with 18,000 borrowers and an average outstanding balance of 750 USD, the portfolio reaches about 13.5 million USD. A 9% PAR30 means 1.2 million USD of portfolio at risk. Prudential rules require progressive provisions based on the age of arrears, which hit the bottom line directly.
The causes are almost always the same: late follow-up, field officers without an up-to-date visit list, cash repayments entered 3 to 7 days late, and no dashboard per branch or loan officer.
| Indicator | Spreadsheet management | Portfolio software |
|---|---|---|
| PAR30 | 9 to 11% | 4 to 5% target |
| Time to record a repayment | 3 to 7 days | Real time (mobile) |
| Time to first reminder | 10 to 20 days | Day 1 of arrears |
| Regulatory reporting effort | 6 to 10 days per month | 1 day |
| Loan files handled per officer per month | 35 to 45 | 60 to 80 |
| Unexplained cash variance | 0.5 to 1.5% of collections | Under 0.1% |
Core banking packages versus custom software
Several microfinance packages are deployed across Africa, with very different licence models. The table gives 2026 orders of magnitude for an MFI with 18,000 borrowers and 8 branches.
| Option | Upfront cost | Annual cost | Strengths | Limits |
|---|---|---|---|---|
| International package (licence) | 58,000 to 133,000 USD | 13,000 to 25,000 USD | Full accounting coverage | Long configuration, remote support |
| Regional package | 25,000 to 58,000 USD | 6,500 to 15,000 USD | Knows local chart of accounts | Hard to adapt to specific products |
| Adapted open source solution | 17,000 to 42,000 USD | 5,000 to 10,000 USD | No licence fee | Depends on a competent integrator |
| Custom software | 33,000 to 75,000 USD | 5,000 to 11,500 USD | Mobile collection and alerts built for you | 6-month lead time |
| Spreadsheets and in-house tools | 0 | Hidden cost in provisions | No investment | PAR30 out of control |
Custom software makes sense when your products go beyond the standard: group loans with joint guarantees, agricultural loans repaid at harvest, repayments via mobile money that must be reconciled automatically.
Scope of a 6-month project
| Module | Content | Share of budget |
|---|---|---|
| Origination | Application, scoring, credit committee, disbursement | 20% |
| Repayment schedules | Declining, flat, grace period, seasonal | 15% |
| Mobile collection app | Routes, collections, SMS receipts, offline mode | 25% |
| Recovery | Alerts at D+1, D+7, D+30, assignment to officers | 15% |
| Regulatory reporting and dashboards | Statutory returns, PAR by branch and officer | 15% |
| Mobile money integration | MTN MoMo and Airtel Money reconciliation | 10% |
Offline mode is essential: in peri-urban areas and rural branches, connectivity remains patchy. Collections are stored on the phone and synchronised when the network returns.
Mini case study
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Joseph, head of operations at an MFI with 18,000 borrowers in Kampala, manages a 13.5 million USD portfolio with a 9.2% PAR30. He invests 57,000 USD in custom software with mobile collection. Within 9 months, PAR30 falls to 5.5%, about 500,000 USD less portfolio at risk. With an average 25% provisioning rate on that bucket, provision savings approach 125,000 USD, not counting the 7 days a month saved on reporting. The project pays back in under 6 months after go-live.
FAQ
How much does microfinance software cost in 2026?
Allow 33,000 to 75,000 USD for custom software covering 15,000 to 25,000 borrowers, plus 5,000 to 11,500 USD a year for maintenance. An international package can exceed 133,000 USD in licence fees.
Does the software produce regulatory reports?
Yes, the periodic returns required by the regulator are generated from portfolio data. Production drops from 6 to 10 days a month to about 1 day.
Can collection agents work without network coverage?
Yes, the mobile app works offline and syncs collections when connectivity returns. Each repayment triggers an SMS receipt to the client, which keeps cash variances below 0.1%.
How long does it take to bring PAR30 down?
First effects show within 3 months thanks to reminders from day 1. A target below 5% is realistic within 6 to 12 months if collection discipline follows.
Can we migrate the history of existing loans?
Yes, migrating 18,000 loan files and their schedules takes 3 to 5 weeks, with balance consistency checks branch by branch.
Let's scope your project. Tell us your number of borrowers, branches and loan products: we will cost software between 33,000 and 75,000 USD, deliverable in 6 months. Detailed quote within 48 h. WhatsApp +221 77 596 93 33.
Mohamed Bah
Fondateur, Kolonell
Passionate about digital and entrepreneurship in Africa, Mohamed has been helping Sénégalese businesses with their digital transformation since 2020. Founder of Kolonell, he believes every SME deserves a professional and accessible online présence.
