I know from our open space meeting in Gulu there are concerns regarding microloans. Concern a missed payment would mean time in jail. Concern about corruption in the handling of the money. Those seemed to be the two primary concerns.

Also, during the Better Microfinance open space session that most of the 135 people attended, many people shared the many kinds of microfinance and microloans that are avaliable. From merry-go-round to lending circles and many, many other variations.

I'm curious as to what others think about things that work, things that do not, and other creative ideas.

Wawoo :) From the eperience I have learnt from loans that is Kiva and omidyar loan, I conclude that we shall not and not repeat the past mistakes. To loose a road is to learn a road, There were misperceptionws among the borrowers and took every thing for granted. We shall have seroius measures on any loan that will come.

Members still need loan but it may not just be any body wanting loan but members with serious plan and ability to repay under what cercumistances. I think if members sit in groups of four to five so that the whole group held responsible for the schedules loan repayment days. For the last three weeks I have visted varoius microfinances and seen the different ways of handling loan.

Something that fascinates me is to know on any specific case mentioned what the ownership structure is. For example, truly organised microcredit -the system that helped 100 million families start to end poverty through the network of http://microcreditsummit.org - as opposed to microfinance is owned by the community as a social business; microcredit never uses lawyers let alone policeman -so I assume that the gulu case is an MF one.

It is true that MC usually starts up very much more slowly than MF as it sees as its responsibility peer to peer training of when is the right time for you to take a loan to be your entreprenbeurial most. However like all things that are truly cultivated, once a real microcredit branch is rooted it scales better and faster and more sustainably than any other suggested solution I have been able to search in 24 years of looking for community-up approaches to ending poverty http://www.normanmacrae.com/netf uture.html

Mark said, missed payment would mean time in jail. Concern about corruption in the handling of the money. Those seemed to be the two primary concerns. Trully these are the most stambling block in the microcredit system but these can be avoided.

And the only way to avoid those are by having proffesion who will do nothing but handle microloan, missed payment, can be over comed through training loan officers who will make sure that the policies made are met as there will be no any other task but working in the fields to ensure repayment.

And this will have nothing to do with the so called members but certain community.

peter: seriously what comes first as far as I can see is who owns the specific microcredit operation a borrower participates with; if the ownership of a microcredit organisation has the purpose of empowering the people it lends to, it will of course ensure its loan officers and branch managers are well trained; there will be no corruption and no abuse of members especially those in default of their loans

when you talk to the first lady ever to work for microcredit she explains that from the very first day Grameen's culture had detailed rules that ensured no corruption here; in Bagladesh a lot of corruption "accidentally" starts through gift-giving - so bank members are not even alowed to accept a glass of milk from the members they make a loan to and make their weekly rounds colecting from in bangladesh's very hot and humid summers

its my opinion that the biggest block to progress in africa begins and ends with transparency (its erosion); communities need to ask who is this organsiation owned by (and for what purpose) before they become customers or other stakeholders of it; its absolutely critical to do this before taking a loan from any organisation

Absolutely true, any borrower has to know which organisation is giving them loan and for what benefit to them, These are done through surveys by the loan officers. corruption is a very bad game that I hate like nothing eles, There kinds of corruptions which are hard to rease and does not begin with officails but those in need of services, they begin by offering gift giving.

So corruption will begin there, but all these is due to some officials who lack principals and insufficient supervision to ensure that targets are made on schedule. If survey is done to get 50% of the poorest for the next loan then that should be so.

I think we need a round africa consumer guide to transparent banks - ie let the people give the banks the credit ratings not the other way round

what we need is to agree a space where we do this - and we kick out hecklers -

one such space could be http://www.ned.com/group/econo-p olitics/news/16/

I have spent many years now mapping transparency professional networks as well as communities in need of tarnsparency - eg my first web http://www.valuetrue.com was set up for such a purpose and while it looks old cos in those days eg blogs hardly existed - there's tons of information I know how to access there (similarly nedster and friend peter gurgess has tons of infrmation at another transparency banking web http://tr-ac-net.org )

but which needs to be brought to space where many people want to catalogue- so either ned is up for developing such time-elongated catalogues even if they look different from the chit-chat threads , or its not

Peter, do you think people would take loans in groups of 5 if they knew they had to make good on each others loans if someone failed to make a payment?

How would such a group recommend dealing with a missed payment?

Dealing with missed payment, the group would recommend confisfication of any thing worth the day he/she missed as they would have it in promissary notes. But if they understand each other in the group, they will always pay for that person and sort it out without any problem.

I am wondering if we have started this at the right coordinate of the system

the aim of bangladeshi microcredit is only ever to offer a loan so as to empower a person's ability to serve the community and develop income generating activity- so first the people who run the bank are looking at the skill/supply match of what the applicant is taking the loan for which in tioght communities is fairly easy to evaluste

secondly the group of five are intended as peer mentiors that help each other develop busines acumen: I am not sure that in real microcredit any of the five have been asked to make up the monetary shortfall of one under-succeeding member; I am sure that the face of such a group in the culture is to go help her sell her product or make it or fix whatever is causing her to get behind

remember a properly designed microcredit system has well over 97% repayment rates; it is the peer to peer support and the selection of giving a loan only when a person is business ready that helps with this; equally the only penalty of true microcredit is that if you dont repay your loan you wont get another one and you will have let your team down; in the deep community cultures that microcredit was born in this is far more punishment than jail or repossesing stuff

in fact both jail or repossessing stuff are illegal in real microcredit because there was no law of contract saying that the loan was guaratteed to the bank

another aspect of this is that in real microcredit the branch is owned by the community and indeed the members who make deposits as well as loans; there isnt any external aperatus of punmishment from above that seems to entre into this questioning if you do not understand this communal model; in effect if someone defaults within the community it is the fault of everyone in that community