Motivation and non-financial sanctions among informal groups in Imo State: lessons for successof group lending schemes in Nigeria

Abstract

In Nigeria, informal groups are invaluable in providing financial services to small operators in the agricultural sector. Some of these groups are involved in joint liability lending schemes across the country and existing literature reveal that these schemes have not been successful in achieving satisfactory levels of loan repayments over time. This study investigated how joint liability lending schemes can do better by assessing the operations of informal groups in Imo state, Nigeria; and bringing to focus what sanctions and motivation practices assist the groups to achieve satisfactory levels of loan repayments. The result shows that, sharing group profit at the end of the year, denying loan defaulters their share of the group profit as well as other privileges, and ensuring that beneficiaries obtain new loans each time the beneficiaries repay would be invaluable in enhancing success of group lending schemes in Nigeria.


[Global Jnl Agric Res Vol.1(2) 2002: 129-134]