How We Work
Five Talents targets those at the bottom of the economic ladder. We use the grassroots network of the worldwide Anglican church to help identify projects and local partners. We insist on strict reporting and make on-site visits to ensure good use of loan and training funds.
The Group is the Key
Local banks cannot afford to lend small sums of money to many entrepreneurs who have little or no collateral. The risks are too high.
But Group-lending is a proven methodology of micro-enterprise development. Groups are normally formed of 5-10 people who self-select each other. Each member of the group co-guarantees the loans of the others. This peer pressure ensures high repayment rates, averaging 85-100%. The group method also reduces the costs of loan administration, monitoring and follow-up.
Principles governing programmes
- Strong local leadership and governance, outside the church structure
- Value-based principles focusing on poor
- Financially sound
- Vision for individual and community transformation (holistic)
- Heart of a Pastor, Mind of a Banker
Programme Models
All Five Talents' programmes have a strong emphasis on business training and encouraging people to save. Each programme is adapted to the local needs and context, and two basic models are in operation:
- Credit-led microfinance: This is where the loan-fund is provided from external capital from Five Talents (e.g. Uganda, Tanzania and Peru).
- Savings-led microfinance: This is where the loan fund is made up of the accumulated savings of the group members themselves (e.g. Kenya, Thika; India, Chennai). To learn more about savings led programmes click here.
In both cases members apply for a loan and are jointly responsible for repayment to the local microfinance partner.
We seek social as well as financial performance. See our approach to Social Performance Management here.
How do we put this into practice?
In most cases we follow the 10-step procedure below:
- Identify a Partner - Five Talents identifies, trains and funds a partner to run a micro-loans programme. This is normally with the help of the local Anglican church in the country concerned.
- Group Formation - Groups of entrepreneurs are invited for training. Groups are between 5-10 people. They can be all women, all men, or a mixture.
- Training - The groups are trained by the local Five Talents staff in basic business skills: planning, marketing, book-keeping.
- Savings - Groups open a bank account and start regular saving, to reach 30% of their requested loan amount. This is a sign of commitment and part-security for the loan.
- Business Planning - Clients draw up their individual business plans, and apply for a group loan.
- Loan - Loans are deposited on the Group account, once all conditions have been met. In the first round, loans are a maximum of £40 per person.
- Investment - Each entrepreneur uses his/her share of the loan to invest in his/her business. For example, buying a piece of equipment, machinery, or stock.
- Monitoring - Five Talents local staff visit the clients for encouragement and supervision.
- Repayment - Loans are repaid over 6 months with interest. The interest pays the local staff and office running costs. The Group is jointly responsible for repayments. Late payments can be met from the prior-savings.
- Recycling - The loan, when paid back, is then loaned out to other groups. Groups can re-apply for subsequent (and bigger) loans as their businesses expand. Some groups are on their 8th or 9th loan cycle. Eventually the business has grown to provide sufficient collateral to qualify for individual loans from commercial banks.
We have produced a 9 minute video showing Five Talents at work in Uganda - business training, client interviews, some case studies and an overview of how Five Talents works with the active poor.
Find out more by reading our FAQs and visiting our individual programme pages.