Mapping the Pathways to Financial Capability: A Conceptual Framework for Continuous Client Engagement in Microenterprise Lending

Abstract

Chronic mismanagement of working capital by microentrepreneurs confines not only the sustainability of loan's repayment but also the growth of microenterprises, thereby calling for a better approach of coordinating and supporting to clients in micro enterprise lending. This paper presents a holistic conceptual framework that systematically delineates the channels through which ongoing client engagement – in the form of modular financial literacy training, business advisory support, and interactive lender-client communication – drives financial capability development and fosters better credit management among borrowers of microenterprises. Based on financial literacy, relationship banking, and entrepreneurial resilience theories, the framework describes how to blend normal education programs, peer-led support groups, and customized supports that meet a range of learning levels, especially for street food selling. The model also categorizes strategic intervention points along the lending cycle and proposes loops to incorporate behavioural data into service design. The implementation-focused insights gleaned through this mapping are intended to assist lending organisations to mitigate credit abuse, foreclosure or rollover, and microenterprise viability by establishing and delivering ongoing relational-based training and advisory elements. Policy makers can obtain useful information in the mobilization context vis-à-vis the political economy aspects of savings. This framework provides a strategic design for the forthcoming empirical testing, and for practitioners to advance their practice in supporting responsible credit use and enterprise resilience.