CARE Savings and Credit Sourcebook
Waterfield, C. & Duval, A.
Publication Date: 1996
Published by: Care International
Document Type: Other
What factors should be considered when designing lending programmes for microentrepreneurs?
Presents a framework to guide the design of appropriate and sustainable savings and credit programmes for microenterprises
Shows how income can be easily projected for any credit programme, regardless of methodology, by using only seven variables:- number of loans per month per agent
- effective loan term
- average loan size
- repayment conditions
- number of agents
- annual interest rate
- commission rate
Demonstrates how expenses can be easily determined when divided into categories of:- personnel costs
- administrative costs
- loan loss reserve
- cost of funds
- devaluation through inflation
Concludes that:- a detailed examination of different methodologies should be undertaken, as such comparison will show how tradeoffs made in the choice of design features influences income and expenses. If programme designers can understand these tradeoffs they may then optimise their programmes, selecting the most appropriate combination of services, to be offered at the most affordable cost, while maximising the programmes financial viability
- with the aid of a basic model, such as the one illustrated in this book, designers can identify and face critical issues early in the life of a programme. Such an approach is proactive and as a result, programmes will operate better, and the needs of the poor will be better met
[Adapted from authors]
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