Credit Scheme Overview

Groups

The MTA credit scheme is based on the group lending methodology with opportunity to contain solidarity cells within a group. Loans are granted to individuals who have formed a group and existed as such for some time. This is to reduce the risk and cost associated with providing small loans to low income women who lack traditional collateral, business plans business records and credit history. Each group is formed through self initiation and consists of 10 to 25 women.

Loans

The association has three main types of loan products: Urban loans, Grain banking; and Agro-processing. The Agro-processing is classified into sub-products, such as rice processing, sheabutter extraction, handicrafts, and pito brewing. In determining interest rates, the organisation takes into consideration the effect of inflation, cost of funds and the loan loss rate as well as cost of operation.  

The current loan size range from ¢500,000 to ¢5,000,000 in the case of grain banking while a maximum of ¢4,000,000 is permitted for other business types. However, a maximum of ¢2,000,000 is allowed for first time clients. This policy is based on the gradual growth approach to credit delivery, where first loans are typically smaller ad subsequent loans increase in size. Clients can increase their loan size in subsequent loan cycles by making regular additional monthly savings. This provision is made as a risk prevention measure and to enable management establish the credibility of new clients.