OREANDA-NEWS. August 19, 2010. Specialists of regional offices of Mikrokreditbank in Nukus and Karshi are participating in the training on group lending methodology during.

The training has been organized in the framework of cooperation between the joint Projects of the United Nations Development Program and the Government of Uzbekistan "Area based development" and "Support to microfinance sector development", in a close partnership with Mikrokreditbank.

With an aim to develop new innovative microfinance products and approaches contributing to the growth of small and private enterprises, as well as to grant an easier access to the sources of financing for the rural poor, Mikrokreditbank developed a strategy on introduction of group lending methodology.

Within this strategy it is planned to develop a new product – group lending, which will be piloted in Kashkadarya, Surkhandarya, Andijan, Ferghana, Namangan regions and the Republic of Karakalpakstan in partnership with UNDP "Area based development" Project and the "Enhancement of living standards" Program (ABD/ELS) financed by the EU.

According to the memorandum, "Area based development" Project and the "Enhancement of living standards" Program designated USD222,893 to Mikrokrditbank for group lending initiative. Thus, ensuring that over 650 entrepreneurs from various regions of Uzbekistan will be able to obtain micro loans for the development of their private business.

Therefore, to guarantee a successful implementation of the initiative and to ensure effective services delivery in the above mentioned regions, it is crucial to facilitate the capacity-building of the specialists of Mikrokreditbank directly involved in the initiative.

The training is a logical continuation of a series of knowledge sharing initiatives on the most pressing issues of microfinance and delivery of microfinance services, including, social performance management, financial reporting, taxation of MFIs, as well as the recently conducted internationally-recognized course "Making microfinance work: Managing for improved performance", initiated by the UNDP "Support to microfinance sector development" Project in a close collaboration with Mikrokreditbank.

Group lending is one of the most widespread microfinance methods in the developing world, and is based on self-help groups, predominantly consisting of women. The group lending mechanism was piloted and widely introduced by Gramin bank. Group lending is an effective tool of micro loan provision to start-up entrepreneurs, microentrepreneurs, and rural poor on a no collateralized basis.

In Uzbekistan, the methodology of group lending was first introduced in 1999 within the framework of a joint project of UNDP and the Association of Business Women of Uzbekistan. In present, group lending methodology is widely practiced by microcredit organizations (MCOs) of Uzbekistan, mostly in rural areas.

It is important to note that the specialists of the "Support to microfinance sector development" Project developed the training module on group lending methodology within the framework of the component focused on the creation of a sustainable network of microfinance institutions and capacity and skill-building of staff of local MCOs and banks, as well as within the initiative to introduce the best international practice into the microfinance activity in Uzbekistan.

One of the major objectives of the course is to harness knowledge and skills of the specialists of Mikrokreditbank directly involved in group lending initiative, thus facilitating the effectiveness of their activity and stimulating their commitment to the social impact of microfinance.

Over the course of the training, the specialists of the Projects, familiarized the listeners with the major approaches to group lending in international practice, in particular, the participants analyzed the Latin-American model, Gramin bank model and village banking model.

The participants have also reviewed the main difference between the group lending approach and individual lending, the types of group lending, the group formation process, as well as the mechanism of self-governance in the groups. In the near future, the given training is planned to be held in Namangan for the staff of Mikrokreditbank from Namangan, Andijan and Ferghana regions.