Guatemala, Senegal, Burkina Faso, Kenya
Cooperative Development Program: Technology and Innovation for Financial Inclusion (CDP TIFI)
August 2018 – August 2023
Although financial cooperatives are uniquely positioned to deliver livelihood-enhancing financial services including savings, credit, and insurance, evidence shows that there is significant unmet demand for small and medium enterprise (SME) credit in developing countries. This is in part because financial cooperatives and credit unions do not have the capacity and tools to deliver SME finance. Only six to eight percent of adults in CDP TIFI target countries have access to credit, compared to 11 percent globally and 34 percent in the United States (World Bank Global Findex 2017, https://globalfindex.worldbank.org/). Women, youths, and rural adults have even lower access to credit than average.
The CDP TIFI activity, funded by USAID will increase lending to small and medium enterprises (SMEs) by deploying the World Council SME FinanceToolkit, starting in three countries – Burkina Faso, Guatemala, and Kenya – each with its own key partner: Confédération des Institutions Financières de l’Afrique de l’Ouest (Confederation of Financial Institutions of West Africa, CIF), Federación Nacional de Cooperativas de Ahorro y Crédito (National Federation of Savings and Credit Cooperatives, FENACOAC), and the Kenyan Union of Savings and Credit Cooperatives (KUSCCO). The project expanded operations to Senegal in October 2020 where it is working with Union des Mutuelles du Partenariat pour la Mobilisation de l'Epargne et du Crédit au Senegal (UM-PAMECAS). These partners represent and provide technical support to multi-million-member networks of credit unions.
The World Council SME Finance Toolkit is designed to:
- Reduce lending risk by credit unions to SMEs, who often do not have formal or documented credit histories and who may not be able to provide the same types of documentation and collateral that are required for more traditional loans
- Streamline and simplify the SME lending process, thereby reducing costs of lending to SMEs
- Increase the number and quality of financial products available to SMEs, thereby increasing SME financial inclusion
Quarterly Update (March 2021)
While the COVID-19 pandemic continued to require significant adjustments to our operational plans, both in how we work and what we do in response to the needs, the TIFI project successfully continued with project implementation across all four countries.
- TIFI Kenya: TIFI tested its new SME loan application, appraisal, scoring tool, and underwriting processes using MS Excel with two SACCOs to determine functionality and application within the SACCOs. Following these tests, TIFI have developed a comprehensive pilot strategy that begins with four target SACCOs to be implemented throughout FY21. Our sensitization trainings on a variety of topics related to SME finance reached 173 participants from fifteen SACCOs, achieving a 60%/40% (men/women) gender disaggregation. TIFI also facilitated an ICT audit of nine SACCOs to determine gaps and needs at an aggregate level and will facilitate an additional six to enable the SACCOs to take action to address high priority issues identified during the audit.
- TIFI West Africa (Burkina Faso & Senegal): TIFI is working closely with partners in both countries to review their SME lending tools procedures which led to sharing of UM-PAMECAS’ underwriting methodology with FCPB and a technical presentation of our methodology to partners and pilot credit unions. In Burkina, TIFI is beginning to pilot a market study to guide the improved SME lending strategy and define target SMEs and sectors. A subaward was signed with UM-PAMECAS in Senegal to begin work at the national level and review their current tools and methodologies.
- TIFI Guatemala: TIFI continued with the second market study in Guatemala to define the target market segments for SME lending. TIFI completed the digitization of the lending methodology and have started the process of integrating this system with the Federation’s core banking system through an API. TIFI also completed twelve sensitization workshops with the participation of 24 credit unions and 104 credit union staff. FENACOAC began registration of the CUSO once again and received letters of intent from 22 of their 25-member credit unions, pledging to invest Q40M (around USD 5.1 million) into the new business – far outperforming the original goal of Q25M (USD 3.2 million).
Credit Unions in Burkina Faso
- 76 total credit unions
- 1,409,682 million members (9.90% of the population)
- USD 427 million in assets
Credit Unions in Guatemala
- 25 total credit unions
- 2.1 million members (12.41% of the population)
- USD 2.4 billion in assets
Credit Unions in Kenya
- 8,033 total credit unions
- 8.5 million members (14.98% of the population)
- USD 10 billion in assets
Credit Unions in Senegal
- 98 total credit unions
- 2.98 million members (18.80% of the population)
- USD 705 million in loans