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 (June 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 implemented the first pilot testing at Fortune SACCO, and feedback from credit managers and other staff improved the methodology based on their needs. The new Country Coordinator started June 14. WOCCU signed an MOU with Microsoft in Kenya to explore digital solutions that can be made available to SACCOs.
- TIFI West Africa (Burkina Faso & Senegal): TIFI launched the market study in Burkina Faso with partner Trelassi which will run through August 2021. TIFI made progress was made on the elements of the toolkit to now include mappings of the enabling environment and technical assistance, particularly from business development services (BDS) firms that can provide support to credit unions and MSMEs. In addition, Burkina Faso-based FinTech YOLSE and credit unions met with credit unions to promote the new digital application platform, with positive feedback thus far, with commitment from farmers to leverage the platform during this cassava and maize season.
- TIFI Guatemala: Local partner FENACOAC has completed registration for the CUSO with initial funding capital from 22 of their 25-member credit unions, pledging to invest Q40M (around $5.1 million) into the new business - far outperforming the original goal of Q25M ($3.2 million). WOCCU completed the second phase of the SME market study in Guatemala to define the target market segments for SME lending. TIFI made progress in integrating the lending methodology with the Federation’s core banking system through an API was made, with full integration anticipated soon. TIFI initiated diagnostics and baselines for credit unions participating in the SME lending toolkit pilot this quarter.
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