Introducing Individual Lending
This document aims to provide microfinance institutions (MFIs) that currently provides loans to groups of clients with a detailed understanding of how to introduce lending to individual clients. The manual is designed to support MFIs wishing to introduce individual lending by providing a reference guide that assists throughout the entire process and provides information on best practice and case examples.
The structure of the document is as follows:
- Introduction: the pre-planning phase – designed to help you decide if your institution has met the top-line requirements to introduce individual lending
- Phase 1: planning – how to conduct top-line market, competitor and customer research and to plan for the introduction of individual lending
- Phase 2A: product and process design – how to conduct more detailed market and customer research and build that into designing products and processes
- Phase 2B: pilot test — how to carry out and evaluate your pilot
- Phase 3: roll out and implementation — how to apply lessons learned from the pilot and roll out individual lending across your branches, and
- Phase 4: monitoring and evaluation — how to evaluate the success of individual lending and build a long-term vision around the development of the product.
The guide is set out in a highly readable fashion and is full of practical advice. At the end the key points which MFIs are urged to remember are summarised as follows:
- You must make sure before you start that your organization possesses the right preconditions. It should operate in the appropriate macroeconomic and regulatory environment, be a sound institution, have sufficient management capacity and client demand.
- You must understand your target client in order to design products that effectively meet their needs.
- You must create a sound team to introduce individual lending.
- You should seek external help for phases where your institution lacks the required capabilities.
- Your individual lending team, and your senior management, must plan carefully for the introduction of individual lending.
- You should introduce individual lending gradually and follow the proper sequencing.
- You should conduct at least one successful pilot before you roll out individual lending, and
- You should monitor and evaluate individual lending on an ongoing basis and deal with problems as they arise.