World Council of Credit Unions worked with rural savings and credit cooperatives (RuSACCOs) to improve food security and livelihoods among farming families with funding from the monetization of 23,000 metric tons of wheat through the U.S. Department of Agriculture’s Food for Progress Department (USDA, 2009-14). In three regions that span half the country, World Council’s Enhancing Food Security and Rural Livelihoods program assisted RuSACCOs with financing agricultural production, investment and mobilizing savings. The program also provided a range of non-financial services, such as small infrastructure investments, to improve farmer access to markets.
World Council’s Enhancing Food Security and Rural Livelihoods program:
- Provided agricultural training to help move subsistence farmers to basic commercial production.
- Expanded agricultural finance products to meet member-farmer demand in 165 RuSACCOs.
Improved community infrastructure to support agricultural production
According to the USDA, 85% of Ethiopians rely on agriculture as their primary source of income. Agricultural activities contribute to 46% of the country’s GNP and account for more than 80% of exports, but Ethiopia suffers from frequent drought, unsustainable agricultural practices and poor infrastructure. Compounded with steadily rising prices for food and farming inputs, the densely populated country struggles to meet demand.
Ethiopia’s government and cooperatives are the main
providers of agricultural inputs to farmers, but budget constraints and low capital levels can affect their delivery. Though RuSACCOs are popular and trusted institutions in rural areas, they cannot meet the demand for credit.
World Council worked with RuSACCOs to connect farmers to finance and markets, facilitate agricultural training, which ultimately increased production and income.
Increasing Food Security
World Council’s program targets farmers who live below the national poverty line and struggle to produce sufficient food for their families. The program operated in the regions of Amhara, Oromia and Tigray, which are considered agriculturally important to the country and have a high concentration of farming households and existing RuSACCOs.
Since there is little cellphone and electricity infrastructure, World Council worked with RuSACCO unions, or regional associations, to provide training and facilitate direct communications with the RuSACCOs. The program has provided agricultural finance and training to 44,685 farmers.
Agricultural extension. Climate change has significantly affected rain-fed agriculture and has led to soil erosion across the country. In a World Council survey, Ethiopian farmers cited irrigation as their top need to improve yields, followed by better livestock feed and higher quality seeds.
Together with government development agents and NGOs that currently work with farmer groups, World Council has provided integrated trainings for farmers to address these
concerns and introduce new agricultural techniques that improve production. Trainings focused on small animal, honey and dairy cow production; the use of large animal labor; cattle fattening; irrigation techniques; and the use of improved seed and fertilizers.
Savings and loans. Since RuSACCOs provide loans based on a multiple of the member’s savings, a high number of farmers in rural Ethiopia have formal savings accounts. Nonetheless, members primarily use savings accounts to access loans, and RuSACCOs struggle with mobilizing low levels of liquidity to provide adequate credit to their members.
World Council has worked with the small institutions to mobilize larger volumes of savings through member education and introduced savings skills and practices among credit union management. Increased member savings ensure the long-term availability of loans to farmers and build member confidence to save more as infrastructure improves.
In addition to providing member loans, RuSACCOs finance existing value chains that produce honey, mung beans and white beans: input suppliers, farmers, processers and buyers. Farmers typically have had to rely on the financial institution’s discretion regarding specific activities or inputs their loans would finance, often limiting the farmers’ ability to direct their own growth. RuSACCOs participating in World Council’s program are developing demand-driven products that give farmers more control over their investments.
Improving Community Infrastructure
Another component of World Council’s program was to support small infrastructure investments that improve farmer access to markets. The majority of funds were used for agricultural infrastructure, including storage facilities, irrigation and water storage. Additional funds supported credit union infrastructure improvements, since most RuSACCOs have borrowed space from other cooperatives or rented houses to conduct business. The program has implemented a total of 87 small projects, impacting 57,884 rural residents.