Note ideas on a flip chart. Make sure the following are mentioned: participants’ Costs of Borrowing Principal (not Upfront savings/Transactions exactly a cost, but Transportation must be calculated in the final Passport, picture, ID price of the loan) Interest Communication costs Commission Time/ Labor lost Insurance Penalties or fees Collateral (not exactly a cost) Say: When you borrow from a bank, SACCO or MFI, you also have to consider interest and fees or penalties for late payments. However, there are other considerations to make. Banks, SACCOs and MFIs are businesses, and they need to make money to continue to run. So, when a bank has money from deposits like your group – or individual savings accounts it does not just sit in the bank. The bank, – SACCO or MFI gives loans or invests the money, for a profit. This is like the money in your box. However unlike your VSLA the bank or MFI will often charge fees for – – their services. Also, the interest that the bank, SACCO or MFI charges you on your loan is kept in the bank it is not shared out at the end of a cycle. – Because you receive a service, and the opportunity to borrow a greater amount of money, you will have more responsibility. talk more about the costs of borrowing with a bank, SACCO or MFI. Let’s Start by explaining the Borrowing Grid: In this chart, the bag of money represents the LOAN CAPITAL, or the total amount of money that someone borrows.
Note participants’ ideas on a flip chart. Make sure the following are mentioned: Costs of Borrowing Principal (not exactly a cost, but must be calculated in the final price of the loan) Interest Commission Insurance Collateral (not exactly a cost) Upfront savings/Transactions Transportation Passport, picture, ID Communication costs Time/ Labor lost Penalties or fees Say: When you borrow from a bank, SACCO or MFI, you also have to consider interest and fees or penalties for late payments. However, there are other considerations to make. Banks, SACCOs and MFIs are businesses, and they need to make money to continue to run. So, when a bank has money from deposits – like your group or individual savings accounts – it does not just sit in the bank. The bank, SACCO or MFI gives loans or invests the money, for a profit. This is like the money in your box. However – unlike your VSLA – the bank or MFI will often charge fees for their services. Also, the interest that the bank, SACCO or MFI charges you on your loan is kept in the bank – it is not shared out at the end of a cycle. Because you receive a service, and the opportunity to borrow a greater amount of money, you will have more responsibility. Let’s talk more about the costs of borrowing with a bank, SACCO or MFI. Start by explaining the Borrowing Grid: In this chart, the bag of money represents the LOAN CAPITAL, or the total amount of money that someone borrows.
3._access_africa_master_tot_manual.docx