Peruvian CUs Assess Outreach to the Poor

A weaver in Peru works on a blanket to sell in the market. Photo courtesy of Nicole Bice, WOCCU.

Madison, WI—How can credit unions in Peru better serve their members and expand their outreach to new members? What services does a credit union member in Peru seek from the credit union? Are credit unions reaching the poor? These questions and others guided survey research conducted by World Council of Credit Unions (WOCCU) in eight Peruvian credit unions to determine the extent to which existing products meet the demand for financial services.

As of 2003, 18 percent of Peruvians live on less than US$1 per day, and 37% live on less than US$2 per day. In addition to research on lack of financial services WOCCU, in association with FENACREP (Federación Nacional de Cooperativas de Ahorro y Crédito del Perú), also explored the general perception of credit unions and their impact on poverty alleviation among households and in the community as a whole.

Survey participants answered questions about their participation in the formal banking sector, and in particular, details about household saving and borrowing patterns. The baseline data will guide the launch of new and improved client-responsive savings, credit and remittance products in the eight credit unions.

The 515 people surveyed included 255 credit union members and 260 non-members. Fifty-two percent of respondents were male and 48% were female. The average age of the members surveyed was 44 years old, and the average age of the non- members was 38 years old. Literacy levels were very high among both members and non-members with an average for both of 96%.

A vender sells her grain at the Saturday market in Cuzco, Peru. Photo courtesy of Nicole Bice, WOCCU.

The study revealed that Peruvian credit unions do serve the low and low-middle income segments of the population, but that they need to increase efforts to reach the rural poor. The median total income was 21,730 Soles (US$6,791), with male members reporting incomes 17% higher than female members 11,730 Soles (US$3,666) compared to 10,000 Soles (US $3,125) for female members).

The survey results also provided strong evidence that credit unions play an important role in the provision of financial services to small business owners and salaried employees. Credit union members tend to be in the prime years of productive income generation and earn an average income 37% higher than non-members, who tend to be younger and just entering the productive income-generating phase of life.

Overall, respondents expressed strong opinions and recounted positive experiences with regard to access to credit and use of savings products in their credit unions. The perception of credit unions as safe and sound financial institutions is prevelant. A member of the San Pedro Credit Union in Apurimac reported, "Only the credit union helps us when we have real need." She then added that she'd had a bad experience with other financial institutions

To review the full findings of the survey, visit the World Council website at www.woccu.org/pubs/monograp.php to read the complete research monograph.

World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.

World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 51,000 credit unions in 100 countries serve 196 million people. Learn more about World Council's impact around the world at www.woccu.org.