Tag Archives: credit discipline

Pre-Loan Motivation Processes in Microfinance

Poor people have dreams.

People must identify their goal/s and they will do it with you.

Poor people are not so vocal about their goal in life. Some can totally assume that they do not have any because they are not considering the simple act of having basic needs like food, shelter, and clothing as goal in life. They considered these as life’s supports.

But, when you immerse yourself with them, you will know that they want to be accepted in their community–they want acceptance, they want respect that builds their confidence. Some want to have security as shown by their aspirations of getting their children to school.

You should know their goals in life and re-enforce these goals through pre-loan motivation. This is a must do. Continue reading Pre-Loan Motivation Processes in Microfinance

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The Two Phases of Client Motivation in Microfinance

In my last post, I asserted that motivation is the key to good repayment rate.

It is a salient part in our series on Credit Discipline in Microfinance.

For now,we have to caution you before you engage in microfinance program, we need to know first the phases of motivation.

Pre Loan Motivation

Pre-Entry Motivation is seen to build on the prospective member’s life goals and show how using credit (and in this case, using the microfinance) to develop a business and how can it help her realize her family goals.

Pre-Loan Motivation is initiated through meetings prior to Comprehensive Group Trainings (CGT). This stage of motivation should include the prospective member, her family and intended groups mates.

The expected outcome of this motivation phase is that these prospective members, with the support of their families, will form group and become good and productive members of the program.

On-going Motivation

On-Going Motivation is focused on Credit Discipline and influences to achieve good repayment. To maintain this, we need to utilize several forms of external motivation to activate internal values within the member and her family.

We have to first focused on the benefits of positive motivation forms. The positive motivation forms are:

  1. Efficient Services and Operational Procedures
  2. Effective Social Development Programs
  3. Participative Program Development and Problem Solving
  4. Adaptable Loan, Savings and Micro-Insurance Products and other related Services
  5. Realizable Incentives

The Negative Motivation Forms are:

  1. Peer Pressure
  2. Credit Rating, and
  3. Penalties

Continuous Client Motivation is a process. And, it is a challenge for those who are implementing Credit Discipline among members. A microfinance program can become successful or a failure through this.

A shortcut on this motivation process is a shortcut to an impending failure of your microfinance program.

You can only have effective motivation if you know your prospective members.

I will be dealing on each of the motivation forms in my succeeding posts.

Keep in touch, subscribe now.

So long…

Florentino

photo credit: Lucinda Alonzo via photopin (license)