# Annex

## A salary bonus scheme for SFGA promoters

Like most people, inter-group promoters are motivated by rewards for their good work. While non-financial rewards may be sufficient, financial incentives are often also appreciated. These incentives often take the form of a salary bonus tied to measurable improvements in the performance of the SFGAs that are assisted by the IGP. Bonus systems can be calculated in a variety of ways. The key factors to consider are:

• bonuses should be paid only for quantitatively verifiable improvements in SFGA performance, verified by management
• the same incentive system should be applied to all promoters.

But how do we measure improvements in SFGA performance? Since the basic objective of an IGP is to promote self-reliant and sustainable SFGAs, two good indicators are:

• high levels of pooled savings or cash balances (held locally or in a nearby bank)
• high levels of successfully loan repayments

## Adding a bonus for savings performance

This could be based on a measurement of the increase in the balance of SFGA savings observed at the end of the current year compared to the saving balance of previous year and verified by project management. For example:

## Adding a loan repayment performance bonus

This could be based, for instance, on the end-of-year member delinquency rate on SFGA loans to member groups (i.e. the value of all member loans past due, divided by the total of all loans to member groups outstanding at the end of the year). For example:

## Calculation of monthly salary

Suppose an SFGA shows a US\$300 increase in savings or surplus funds and its member groups repay all their loans on time, meaning that member group delinquency is zero. Further suppose that it is decided that each bonus point will be worth \$1.

According to the above formula, the performance-adjusted salary of the IGP would be calculated as follows:

• Base salary = US\$ 100 per month
• Savings bonus = 8 points = \$8
• Loan repay bonus = 5 points = \$5
• Total salary payment = \$113

## Other bonus systems

An alternative method might be to ask SFGA members to evaluate the performance of their SFGA and the IGP in several agreed-upon areas. For each area, they assign point scores, e.g.:

• 0 = worse than last year
• 1 = the same as last year
• 2 = better than last year
• 3 = much better than last year

Then the IGP's bonus is calculated based on the total number of points his or her SFGA assigns.