How groups function has long been the subject of studies by psychiatrists, psychologists, social scientists and even political analysts. These studies have identified many factors which can be attributed to the success of strong functioning groups.
Here are three most common factors of quality group that can also be adopted in microfinance:
- A Clearly Defined Purpose of which each member understand and owns.
- A Distinct Period and Process of Formation in which tensions, pressures and differences are sorted between and among the members and form which leadership is derived and developed.
- An Understood Set of Rules and Acceptable Behaviors that form cultural values, laws and standards, and also, that develops attitudes within the group. These rules and behaviors are often unspoken and unwritten but surely exist for the good of the group.
We will bring these common factors under the perspective of microfinance. While the trend is going towards individual lending approach, group still plays great roles in ensuring credit discipline among and between clients/members of a microfinance program.
The Group’s Clearly Defined Purpose involves peer group responsibility, sometimes this is called ‘peer pressure’, and is the greatest tool for imposing credit discipline. The group’s members adhere to the purpose to maintain their access to credit. As we seek no collateral guarantee on our clients, peer group responsibility must be understood and accepted by all members.
The group’s purpose must be welded through a process in a period of time. The Process of Quality Group Formation becomes of prime importance for the strict implementation of credit discipline and the continuance of the microfinance program. The current drive for outreach and fast track viability has forced many MFIs to shortcut steps of Group Formation and this shortcut, undoubtedly, led to some of the failures of MFIs. The process is commonly called COMPREHENSIVE GROUP TRAINING.
The process takes time. In microfinance program, groups are formed for individuals to come together to gain access to credit. In other words, it is not necessarily a naturally forming groups. We place conditions on the groups to ensure the quality we desire. In fact, failure to impose these conditions means failure of the formation process. These conditions are the Understood Sets of Rules and Acceptable Behaviors which will be adhered to and implemented during the course of the programs.
Group Formation is a process and will mature in due time. It is dynamic and some aspects change from time to time and will vary inconsonance to cultures. But, understanding the common factors in forming groups as well as its importance could lead you to a successful microfinance program.
In your experiences, have you identified some common factors that led to Quality Group Formation?
Can you identify your MFI’s set of rules and acceptable behaviors which must be adhered to by your groups’ members?
Are you Field Officers doing the right thing and processes while they are doing group formation?
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photo credit: Bangladeshi village celebrating as they display their first solar panel via photopin (license)