For millions of individuals living in poverty, the lack of traditional collateral is a major barrier to accessing credit from formal financial institutions. Village banking and solidarity lending models overcome this challenge by replacing physical collateral with social collateral, a powerful system where small groups of borrowers are collectively responsible for each other's loans. This group-based approach not only mitigates risk for the lender but also creates a system of mutual support, peer monitoring, and shared accountability among members. It fosters a sense of community and financial discipline that is often absent in individual-based lending, making it a highly effective and sustainable method for poverty alleviation and economic empowerment.

This course is designed to provide a comprehensive and practical understanding of how to implement and manage successful village banking and solidarity lending programs. You will learn the critical components of these models, from group formation and training to loan disbursement and repayment management. By mastering the art of leveraging social dynamics for financial success, you will be equipped to build resilient community-based financial systems that not only provide capital but also foster collective action and empowerment among your clients.

Duration: 5 days

Target Audience:

• Microfinance institution (MFI) managers and loan officers
• Development and financial inclusion practitioners
• Community organizers and non-profit staff
• Social entrepreneurs and startup founders
• Professionals in charge of product design
• Risk management and credit analysts
• Researchers in financial behavior
• Regulatory and policy advisors
• Professionals in group savings and loans

Objectives:

• Master the core principles and models of village banking and solidarity lending.
• Understand the concept of social collateral and its role in risk mitigation.
• Learn how to effectively form and train self-governing groups.
• Grasp the mechanics of loan disbursement and repayment in a group setting.
• Identify the key challenges and risks of group-based lending.
• Explore strategies for managing group dynamics and resolving conflicts.
• Understand the social and economic impact on clients and communities.
• Learn to track and measure the performance of group portfolios.
• Analyze successful and failed case studies from around the world.
• Develop a strategic plan for integrating a group-lending model.

Module 1: Foundations of Group Lending

• The history and evolution of group lending
• The difference between village banking and solidarity groups
• The concept of joint liability vs. social collateral
• The business case for group-based lending
• The role of peer support and pressure

Module 2: Group Formation and Training

• Criteria for selecting members and forming groups
• The importance of group cohesion and trust
• Training members on financial literacy and group rules
• Establishing a group constitution and bylaws
• The role of the loan officer as a facilitator

Module 3: Loan Disbursement and Repayment

• The mechanics of a group loan cycle
• How to manage and disburse funds to a group
• The role of the group leader in repayment collection
• Strategies for enforcing repayment and managing arrears
• The importance of a clear and transparent process

Module 4: Risk Management and Mitigation

• The main risks in a group-lending portfolio
• How social collateral mitigates default risk
• Identifying and addressing group-level risks
• The challenge of over-indebtedness within a group
• Developing a risk management framework

Module 5: The Role of the Loan Officer

• Shifting from a transactional to a facilitative role
• Training and empowering the loan officer
• The importance of building trust with groups
• Managing the loan officer's time and portfolio
• The use of technology for group management

Module 6: Managing Group Dynamics

• The signs of a healthy vs. an unhealthy group
• Strategies for resolving conflicts and disputes
• The challenge of free-riders and drop-outs
• The importance of regular group meetings
• Fostering a culture of shared responsibility

Module 7: Client Empowerment and Impact

• The role of group lending in women's empowerment
• The impact on household decision-making
• How group lending builds social capital
• Measuring the social outcomes beyond financial metrics
• The long-term effects on poverty reduction

Module 8: The Financials of Group Lending

• Understanding the cost of a group-lending portfolio
• The profitability of group-based models
• The importance of a well-designed interest rate
• Analyzing group-level financial data
• Diversifying the group's activities

Module 9: The Regulatory Environment

• Navigating the legal status of group-based models
• The role of a supportive policy framework
• The importance of consumer protection
• Addressing the challenges of formal regulation
• Case studies of successful policy advocacy

Module 10: The Future of Group Lending

• The convergence of group lending and digital finance
• The role of technology in automating group processes
• The potential of hybrid models (group and individual)
• The long-term vision for community-based finance
• New trends and innovations in the sector

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.