Micro-Credit Scheme

• The blueprint is however, the anchor for discharging DMCP responsibilities to Community-Based Programmes
• Some of the critical indices we have endeavoured to build into the programme are

• • Harmonization of all major Micro-credit programmes in the state
  • Focus on economically weak persons
  • The Fund has been set aside as a specialized programme
  • The Programme is a public/private partnership between the Government of Delta State and Participating Financial Institutions (PFIs), i.e. Micro Finance Banks

• • The choice for Micro Finance Banks as PFIs is because they are really community based banks
  • DMCP clients participate in the design, implementation and monitoring of the programme (the programme participants are called clients not beneficiaries)
  • The programme is not a social welfare or government hand-out
  • It is not a political settlement, neither is it a safety net
  • Government does not disburse money or give equipment directly to clients
  • The Delta State Micro-credit is currently disbursed through 28 Micro Finance Banks based in the state.

• • The PFIs assist the Programme Office in
    • identifying the Cluster Groups (with a membership of not less than 10 persons and not more than 25)
    • perfecting the Cluster Groups
    • capacity building and mentoring
    • disbursement of funds
    • monitoring and evaluation
    • recovery and writing of the monthly reports on each Cluster Group
  • The loan is interest free
  • The State Government pays 8% administrative charges to PFIs
  • The outreach of the Programme is the entire state
  • The Programme cuts across gender
  • It is run without bureaucracy
  • It has been structured to be non-political and unattractive to the rich because programmes that are attractive to the rich will inevitably make the rich  crowd out the poor with their social connections
  • Communities participate in all aspects of the project cycle and have the responsibility of identifying and prioritising their own projects
• The DMCP is therefore a pragmatic approach that  focuses on the interests of the mass of the people with a genuine consideration for their needs

• The elites (corporate, political and traditional leaders) would rather have had the Government hand over the fund to them to disburse and dispense at their pleasure.
• The initial belief that the poor do not repay loans but statistics now show the contrary at DMCP
• Apathy and cynicism at the early stage of the programme on the part of the people and prospective clients because of past failures in the execution of similar programmes
• Getting the people to understand that Government money is their money and that the Government in power is holding it in trust for them.Getting the people to understand the need to guard and manage the fund diligently along with Government.
• There was also the belief that the programme is a political settlement for the elites to disburse, but with DMCP, Government handed over the fund disbursement to PFIs
• As far as they were concerned, the programme was just another in the series of government gimmicks
• In order to reverse this apathy, the staff of the programme Office had to embark on a massive sensitisation and capacity building exercise with a missionary zeal
• Happily, DMCP  has now been embraced across the three senatorial districts

• • Empowering of the grass roots population
  • Creating new wealth at that level
  • Reducing unemployment in the productive age bracket

Conditionalities for loans

• • The loans are micro
  • No collateral but group guarantee
  • Three months moratorium
  • Repayment in weekly or monthly installments, repayable in 52 weeks
  • Successful or even early repayment ensures eligibility for bigger loans
  • Quick income generating activities. Each cluster group is expected to maintain and sustain credit discipline through:
    • Peer Pressure and
    • Group solidarity

Loan Repayment

• • Each group is expected to maintain and sustain credit discipline through peer pressure and group solidarity
  • Money recovered at the end of the month is ploughed back immediately into the Programme to ensure continuity
  • Group repayment of loans, this is because the Group is the collateral; if one person defaults, the whole group is held liable
  • However, in the case of an act of force majeure like death, the PFI and the Programme Office rallies round the Group
  • This is because ultimately, the main objective of the Programme is to grow the economy of Delta communities

Loan Portfolio meets diverse development needs:

• • Joint enterprises
  • Small-scale industries
  • Cottage industries