PEOPLE-CENTERED CREDIT SYSTEMS IN DEVELOPING COUNTRIES: THE NEED FOR REGIONAL NETWORKS Need for Regional Networks for Credit Mobilization The community groups were, however, plagued by organizational deficiencies, with lack of training and management skills in organizing themselves into groups. Without the extensive assistance of NGOs, such action would have been impossible. Besides, the actions were piecemeal and isolated, and due to localized and uncoordinated activities, the quantity of credit mobilized was small, which did not facilitate any large scale investment. Factors that ensure the success of community groups include voluntary membership, democratic control, political, racial and religious neutrality, non-profit motives, fair distribution of resources and cooperative education (UNCHS, 1989: 2). Community-based initiatives in credit mobilization have to be facilitated and encouraged. There is a compelling need, however, for regional networking among community groups for mobilization of credit. Relevant government agencies, commercial banks, NGOs and other voluntary groups, academics and researchers need to be brought together at the regional level as a network to support, strengthen and enhance a community groups' local initiatives. Such a network binds these disparate groups together and generates more efficient and intensive interaction between the actors in the network. The objectives of a regional network for credit could be: To set up a channel for dialogue and exchange of experience and ideas through meetings, newsletters and other audio-visual media. To encourage and enable active participation of NGOs in all stages of the development process. To identify and create conditions where community-based local actions can take place. To train local community leaders and executive committee members in various aspects of credit management, community participation and other developmental activities. To create general awareness among governmental agencies and formal financial institutions regarding the unique characteristics of credit for low- income households. To support research in community actions and networking The relational ties or linkages between the actors in the network (the community groups, NGOs, banks and governmental agencies) will act as a means through which there can be a transfer and flow of resources - whether material (money, equipment) or non-material (information, support, training). They also link up not only the actors themselves, but their actions: policies, programs and projects. This gains importance when the actors and their actions are viewed as interdependent rather than independent, autonomous units (Wasserman, 1994: xiii). There are several organizational and operational justifications why such action needs to be taken not just at the urban level, but at the regional level. These are closely associated with the dynamics of group formation and networking. Administrative reasons Critical to the formation of a community group is strong leadership. A local community leader can influence and guide the collective efforts of the group members. Networks would help in identification and support of such individuals who show leadership qualities by sharing experiences and ideas from other network components. Core support from the network will provide the necessary inspiration for the development and training of leaders. The setting up of the groups' executive committee, drafting of its constitution, rules and regulations are similarly facilitated. When plans of action are drawn, information from other groups and agencies (for example integration into an existing governmental program or project) will help in ensuring its viability and sustainability. Sharing of resources Perhaps the key reason for setting up of a regional network lies in sharing of various resources, where the shortcomings of one actor are offset by the support and action of another. Information is a primary resource that can be shared by the network actors. Exchange of experiences and ideas; management skills; policies, programs and projects of the various actors (and their relative influence on other actions); problems and prospects of various approaches can be shared through the network. In the process of credit mobilization itself, there are vast possibilities for sharing of financial instruments such as mortgages, joint liabilities and guarantees, collective fund resources etc. Loan risks can also be shared between groups which will keep interest rates and administrative costs low. Training of members Considering the wide variety of activities involved in the mobilization of credit, the network can be used for training of members. Such training efforts can range from awareness building to development of skills necessary for credit management. Thus training efforts can take the form of visits to other community groups, sharing of newsletters, meetings, lectures, seminars and workshops, training programs etc. Non- formal modes of training such as drama, theater and songs are other ways in which awareness can be affected. Assisting a settlement in the dynamics of forming a community group can also be done through the network. Interorganizational links The network would facilitate links between the different actors. Intralinks between community groups themselves (for sharing of information, experience, resources), between groups and government agencies (facilitating program and project implementation, monitoring and evaluation), between groups and NGOs (training, information sharing, community group action), and between groups and banks (group liability and group loans) can take place. Roles of Major Actors 1. People's Groups Leadership Joint liabilities ad guarantees Collective savings Support and solidarity between groups Sharing experiences/ideas Collective group activity Information distribution through meetings, field visit etc. 2. NGOs and other Organizations Management skills Workshops and seminars Training in group dynamics Monitoring and evaluation Alternative approached Research activities 3. Banks and Government Agencies Group loans Policy, programmes and project implementation Support and coordination Go to the next section Return to the Table of contents Return to the Virtual Library on Microcredit