2.2 Key Features of the K-REP Minimalist Approach
1. It approaches credit as a business, above commercial rates of
interest are charged and loan repayments are enforced through group pressure.
2. It focusses on provision of credit only.
3. Loans are to individuals but guaranteed by the other group
4. Group members take responsibility for group affairs, banking
loan repayments and savings, ensuring repayment and correct behavior of other
5. Mandatory savings, with the savings funds acting as
6. Groups are structured, trained in the loan processing
procedures and discipline. (We are noticing a tendency towards greater
formalization, more written procedures, business plans, better record keeping,
growing awareness of the legal status of documents.)
7. The target group for the credit schemes is the poorest level
of entrepreneurs those with business assets of less than KShs. 100,000 and
employing less than 5 employers. (They are effective at this level because of
their techniques and promotion and member self-selection.)
8. Programmes are targeted to create sufficient number of groups
to have a portfolio capable of sustaining branch costs. Each branch is targeted
to have a client pool of 1800. Experience has shown that too rapid a recruitment
of clients can lead to poor selection and training and subsequently to high
defaults rates. Hence the programmes are now aware that expansion has to be on
the basis of proper training in group self-selection, responsibility, the
principle of group co-guarantee and discipline of group behavior.
9. The credit schemes are designed to be cost-effective with
good internal organization, including high staff productivity and commitment,
levels of efficiency to enhance self-sustainability. (Experiences have shown the
need for a flexible, professional and decentralized management structure able to
respond to local situations.)
10. Training of clients in basic business management is not the
initial priority of the implementing agencies but it is recognized that the
training in business management and practical skills is necessary for
development of the enterprises they support.
11. The service provided by the credit schemes is in great
demand, and therefore need very limited promotion beyond an initial phase that
merely informs people of their existence and policies.
12. The initial size of loans is very small (KShs. 10,000).
This, in addition to discouraging the participation of wealthier businesses,
minimizes the scheme's risk.
13. Close and regular monitoring and evaluation of credit
programmes' performance and portfolio