The international edition of The New Webster’s Dictionary of the English Language defines community as a body of people living near one another and in social relationship; or a body of people with a faith, profession or way of life that is common to all. So we can talk of the Nigerian community in London or the Lebanese community in Kano. A community could also be a collection of plants and animals sharing a common environment. In that regard, we can also have a community of rats and rodents, fish and algae, ants and any other creatures. The essence of a community is the commonality of something important to all the members. In a less technical andperhaps more business sense, a community is usually a self-organized network of people who share a common agenda, cause, or interest. So we can talk of the Ikeja business community and such. An important feature of every communityis the collaboration and the sharing of ideas, information and other resources, by members.
Every business has its own community and the importance of this groupingin the development of any living thing cannot be overemphasised, especially in a developing sector like microfinance. It is the community that forms the relevant client groups that consume the services of the sector. Without a solid client base, no business can survive. For the microfinance banking (MFB) sector, such a community means more than a collection of clients. It contains the seed of life and death for the operator. A number of operators in this sector have not come to terms with the critical role a properly functioning community plays in the survival of their business, to say nothing about regularly meeting with the members.
For those microfinance banks that have the discipline to follow and are actually following the group lending methodology, effective self-selected and functional grouping is very important. It deserves more than a passing attention. This is why it is important for the operator not only to actively promote the formation of such groups by the clients themselves but also give them appropriate support once formed. This support includes meeting and interacting with the members. Some operators may not like to incur costs in relation to the promotion of groups because to them, there is no benefit. That is wrong. One of the most critical investments every MFB should make is in the promotion of client groupings. It is not just a service to the target business community but a pillar in the foundation of every successful lending programme. And it is not such a complicated undertaking.
Having seen this investment as worthwhile, our next question should be at what stage of the group formation do we make it? The answer is, from the moment the groups have formed. Once a self-selected group has formed, the operator shouldprovide awareness education programmes for the members. It is good to see clients organise themselves in groups but this is not enough. Clearly,it is one sure evidence that the operator’s help is due. Groups may have their own rules and regulations, and even disciplinary procedures but members may never have learned certain quasi corporate conducts, such as attending meetings and speaking in an ordered manner or signing their names on documents. The idea of consistently attending meetings and signing names on attendance registers may look simple but not to all.
To invest in clients’ training is enlightened self-interest. Moreover, this training need not be held in expensive places like hotels or even the offices of the microfinance provider. It is actually better to meet and have the training, at the most convenient places in the clients’ domain – for example, their market square. It is in this forum that members learn the importance of meeting set criteria and conducting themselves in manners matching their new organised status.This is a good investment by the MFB. Every MFB must, in addition to the conditions normally contained in any formal loan documents, have its standard list of criteria for members to meet. These are not loan-specific but general good conduct requirements. This list, which must be reviewed regularly at community meetings is a checklist. It should contain such issues as attendance to meetings, consistency of deposit programme (daily or weekly), proportion of desired loan accumulated by way of savings (operators should do a minimum of 10 per cent), satisfactory history of loan repayment, loan commitment to other lending organisations, business experience and so on.The list can afford to be lengthy because it is practically an internal document. It does not breach the rule of Keeping it Short and Simple (KISS), which I have discussed elsewhere in this column and requires that forms be cut as much as possible to only one page. That rule remains for as long as the client is to do the filling.
Client communities are like ecosystems with many fruits ready for harvesting and community meetings provide fora to make them understand that loans are not free gifts but privileges borne out of their good conduct. This understanding should never be presumed. Even commercial banks, dealing with higher levels of clients, are still struggling to convince somecustomers that loans are not their share of the ”national cake”. This point becomes more germane now as we read how stupendous sums of money are looted daily day from public institutions.
People are beginning to believe that they can never succeed without picking other peoples’ pockets. It would actually be foolhardy to assume that thisbad trade mark of public servantsin Nigeria is patented to them. In the minimum, I think we should expect that even good men may have been damaged psychologically by the malaise; having seen that justice is rare, comes in insufficient quantities and may be procured. The need is therefore urgent for MFBs to promote a culture of interaction with client communities not only to limit delinquency but also to build a solid client base.
Emeka Osuji
