The Role for Solidarity Group Lending in Microenterprise Financing

This article is available on pages 65-67 of this compilation document.

Outlines the credit delivery features of solidarity group programmes, comparing with those of rotating savings association and credits associations:

• Solidarity groups are peer group lending schemes. Members receive loans and then make regular weekly or monthly payments, with all group members providing a mutual guarantee of loan repayment. This method differs from rotating savings and credit associations in which group members make regular deposits and then take turns in receiving the total amount of the deposits.

Identifies that solidarity groups have three principal goals:

• Providing services to the poor;
• Attaining financial self-sufficiency;
• Reaching a large numbers of clients.

Solidarity programmes that are successful have a strong commitment to management efficiency and strive to be responsive to their market.

[Adapted from author]