6.3 Innovations in loan appraisal

Juhudi-Kibera has made several innovations:

· Kiwa activities now begin at the same time for all groups of fives.

· Programme staff are actively involved in appraisal by making independent analysis of the character or enterprises of client.

· The introduction of representative committees for each Kiwa to lead and supervise appraisal on behalf of the Kiwa is a major feature of the activities. The programme staff now have to accompany the committee for repeat or joint appraisal of the applicants.

· More time is allocated in education or orientation of members on the significance of objective appraisal of business or client.

· The branch has introduced loan appraisal and vetting habits at all levels of the Kiwa structure through intensive education and orientation.

Action Aid/Kenya intends to involve programme staff in appraisal to deal with its earlier mistakes.

Juhudi-Eldoret now instructs programme staff not to allow their interaction with staff during the lead time influence their focus during appraisal. The programme extols staff and clients to remember the importance of focussing on both character and enterprise during appraisal.

The experience of NCCK-Kakamega is close to that of Juhudi-Eldoret. For instance, programme staff are now actively involved in appraisal through independent visits and assessments of business and clients. They also participate in Kiwa discussions of applications.

Loan appraisal methods used by Juhudi-Nyeri demonstrate state-of-the art thinking. On the fourth week of savings, the Kiwa is asked to select the first lot for loan. The following week, security declaration forms are then issued to the first applicants through the Watano. It should be noted that it is the Watano members who fill in the security declaration forms to make sure that they are fully quaranteed for being guarantors of the loan. In the 7th week of savings, the clients fill in the application forms and hand them over to the loan appraisal committee, while members appraise the applicants, interview them and give their report to the group for approval. Where the Kiwa is in agreement with the committee the loan is then approved by the Kiwa and endorsed by the officials on behalf of the Kiwa. At the committee stage, the credit officer should have all the facts about the applicant so as to enable the officer express an opinion. Where there are no Watanos, the group elects the loan appraisal committee of five to six members.