Credit Delivery System (CDS)

Ubuntu Investment Group shares a similar credit delivery system to that of Grameen Bank; and it has the following features:

There is an exclusive focus on the poorest of the poor.

Exclusivity is ensured by:

1. establishing clearly the eligibility criteria for selection of targeted clientele and adopting practical measures to screen out those who do not meet them
2. in delivering credit, priority has been increasingly assigned to women
3. the delivery system is geared to meet the diverse socio-economic development needs of the poor.

Borrowers are organized into small homogeneous groups.

Such characteristics facilitate group solidarity as well as participatory interaction. Organizing the primary groups of five members and federating them into centres has been the foundation of the micro-finance system. The emphasis from the very outset is to organizationally strengthen the chosen clientele, so that they can acquire the capacity for planning and implementing micro level development decisions. The Centres are functionally linked to the lender (Ubuntu Investment Group), whose directorship has to attend Centre meetings every week.

These include:

1. very small loans given without any collateral
2. loans repayable in weekly installments spread over a year
3. eligibility for a subsequent loan depends upon repayment of first loan
4. individual, self chosen, quick income generating activities which employ the skills that borrowers already posses
5. close supervision of credit by the group as well as the bank staff
6. stress on credit discipline and collective borrower responsibility or peer pressure
7. special safeguards through compulsory and voluntary savings to minimize the risks that the poor confront
8. transparency in all bank transactions most of which take place at centre meetings.

This helps to:

1. raise the social and political consciousness of the newly organized groups
2. focus increasingly on women from the poorest households, whose urge for survival has a far greater bearing on the development of the family
3. encourage their monitoring of social and physical infrastructure projects - housing, sanitation, drinking water, education, family planning, etc.

Design and development of organization and management systems capable of delivering programme resources to targeted clientele.

In the foreseeable future, the system will evolve gradually through a structured learning process that involves trials, errors and continuous adjustments. A major requirement to operationalize the system will be the special training needed for development of a highly motivated staff, so that the decision making and operational authority is gradually decentralized and administrative functions are delegated at the zonal levels downwards.

As the general credit programme gathers momentum and the borrowers become familiar with credit discipline, we plan for other loan programmes to be introduced that meet growing social and economic development needs of the clientele. Besides housing and primary education, such programmes include:

• credit for enhancing sanitation by building sanitary laterines
• credit for securing clean drinking water thru’ installation of tubewells that supply drinking water and irrigation for kitchen gardens.
• credit for seasonal cultivation to buy agricultural inputs
• loan for leasing equipment / machinery, i.e., cell phones purchased by Ubuntu Investment Group members
• finance projects undertaken by the entire family of a seasoned borrower.