We understand that the character of a borrower is a key factor in whether they will meet his/her loan obligation. To this end, we spend considerable time in educating the borrower as a means of positively influencing their character.
Our loan process starts with education and creating self-financial awareness to the low income borrowers. This is followed by a clear explanation of the terms and conditions of the loan, in a language that is conversant to the borrower, and information on how the ability of the borrower to diligently abide by these terms helps them to improve their credit history performance, and to ultimately connect them to the formal financial system.
Additionally, this education helps us to build a loyal relationship with our customers and understand their needs better. The credit we facilitate is built on responsible financing - transparency and trust to the investors by giving them sufficient information about the borrowers’ risk profiles and use of funds.
We have closely followed guidelines by FSD Kenya on how to ensure high levels of consumer protection in what we do.
Importantly, time is taken to explain to the borrowers what the Credit Reference Bureau (CRB) is, and to introduce them to the concept and consequences of “blacklisting”.
In summary, we ensure that the borrowers understand the terms of the loan agreement before proceeding to the loan application process. This includes understanding:
- the foreseeability of harm or consequences including blacklisting if they fail to repay the loan on time;
- the use of the loan in line with moral and ethical principles
- the extent of the burden and consequences if the other members in their group or community do not pay back on time.
- the cost, availability and risks involved.
2. Borrower profiling:
Importantly, our goal is to be sustainable in the long term, and we know that this will only be possible by ensuring that the majority of our borrowers have the capacity to pay back the micro loans they are given.
Our profiling helps us to understand the borrowers better and as such, we take guardianship seriously, and are careful not to overextend the amount of credit to an individual until the borrower has proven that they have the ability to generate the necessary payments and thus not fall into a debt trap.
This is governed by our duty of care that involves the signing of a le