Dynamics of Group Lending Mechanism and the Role of Group Leaders in Developing Countries: Evidence from Nigeria

Group lending mechanism has increasingly become popular among microfinance providers in recent years. This is largely due to its ability to leverage joint liability and increase loan repayments whilst promoting entrepreneurial spirit amongst borrowers. Meanwhile, group-lending mechanism is also very important in promoting women empowerment through cooperative engagements of all group members. However, the effectiveness of the group lending methodology in the delivery of microfinance within a developing country context is largely under researched. Using data from extensive focus groups interviews of women borrowers held in Nigeria among participants from 150 different groups, this paper analyses the dynamics of group lending mechanism 9groupformation, peer mentoring, pressure and support). The paper widens the current narrow literature on group leaders in a microfinance intervention. The findings showed that because group leaders are primarily held liable for loan delinquency of group members, they are highly motivated than other members. The results also suggest that while group leaders were found to perform vital roles, some of these group leaders abused their positions in ways that undermine group cohesion and microfinance sustainability. Lastly, the paper introduces the multiple card phenomenon” in group-based microfinance intervention