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 members.

4. Group members take responsibility for group affairs, banking loan repayments and savings, ensuring repayment and correct behavior of other members.

5. Mandatory savings, with the savings funds acting as collateral.

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 quality.