The Shifting Paradigm in Microfinance: The Case of Get Ahead's Stokvel Lending Programme

Publication Date: Mar 1997
Published by: ITDG Publishing
Document Type: Journal Article

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Turn around of South Africa's largest NGO microlending programme.

In 1993, Get Ahead's Stokvel lending programme was in trouble. 50% of the portfolio had to be written off, employee morale reached rock bottom and costs were too high for the portfolio size. By 1996, it had nearly 10 000 active borrowers and an annual loan loss rate of less than 3%. Cost ratios and staff morale had significantly improved
Such results can be attributed to Get Ahead's shift to the new 'financial systems' paradigm in microfinance. Its example provides some interesting lessons for the microfinance community, including:

• Stick to the basics of excellent client service and strict delinquency management;
• Time internal reforms in a broader context;
• Take a business approach to lending;
• Hire committed organisational leaders;
• Provide incentive schemes for loan officers;
• Expand existing offices to full capacity before opening new ones;
• Acknowledge donors can play critical role in pushing microfinance organisations towards change and sustainability.