Aggregate multiple borrowers or production cycles, and use data to more accurately to measure and mitigate risk.
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Aggregate multiple borrowers or production cycles, and use data to more accurately to measure and mitigate risk.
READ MORE →
Provide an alternative to traditional asset and financial profile requirements
READ MORE →
Provide an alternative to traditional asset and financial profile requirements
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Develop methods to overcome them
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Develop methods to overcome them
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Financial institutions are hesitant to engage the agricultural sector due to the perception of high risk. To address this challenge, WOCCU works with local institutions and consumers to strengthen the full ecosystem for agricultural finance. We work with individual small-scale farmers to grow their businesses, as well as with more advanced commercial enterprises looking to grow into export markets. At the institutional level, our programs help risk-averse financial institutions to develop viable products and services for the agricultural sector. At the SME level, we work across the value chain with input and service providers, transporters and others.
Aggregate multiple borrowers or production cycles, and use data to more accurately measure and mitigate risk.
While implementing the USAID-funded Peru Credit Union Market Integration Program (2006-2009), six FENACREP credit unions successfully deployed value chain finance throughout 18 distinct value chains. By the end of the activity, the credit unions disbursed US $1.58 million in loans to 3,668 producers, with only a 2.65% loan delinquency rate. This success in Peru led WOCCU to formalize our value chain methodology with the help of SEEP and USAID.
From 2010-17 in Kenya, the methodology developed in Guatemala was deployed across seven SACCOS and 180 producer groups and other organizations. WOCCU also facilitated a partnership between KUSCCO and WOCCU’s partner in Guatemala, FENACOAC, to share experiences and lessons learned on agricultural financing and rural outreach, including mobile money. As of September 2017, more than 135,055 loans had been made in the amount of $127 million. WOCCU also digitized the financial tools so they can be available on mobile devices to cost-effectively and more efficiently reach smallholder farmers.
Provide an alternative to traditional asset and financial profile requirements.
In Guatemala, through the USAID Cooperative Development Program (CDP): Improving Small Rural Producers’ Income through Integrated Access to Financial Services and Agricultural Markets (2010-2017), WOCCU increased loans by US $52 million. Assets also increased by $60 million and, most dramatically, savings increased by $57 million. The project’s success convinced the national credit union association in Guatemala, the Federación Nacional de Cooperativas de Ahorro y Crédito de Guatemala (FENACOAC), to permanently house a rural finance division at its home office.
WOCCU’s USAID/Haiti HIFIVE Project worked with financial institutions to expand delivery of agricultural finance to prioritized geographic areas and productive value chains. By the end of the program in 2015, 32 financial institutions were offering value chain finance, and agricultural lending increased by 503%, from US $5 million in 2012 to $33 million in 2015.
In our USAID CDP multi-country program in Guatemala and Kenya, WOCCU developed a structured set of tools, policies and procedures to roll out agricultural products enabling financial institutions to improve access to finance for semi-commercial farmers. In Guatemala, WOCCU is working with FENACOAC, seven of their member cooperatives, and 26 producer groups and exporters to roll out to all 25 credit union members in the country. As a result, loans have increased by US $52 million (more than $34 million in agriculture loans to more than 13,000 members); assets increased by $60 million; savings increased by $57 million; and the agricultural loan portfolio increased by 23%, with a baseline of 5% of total loan portfolio, all while maintaining a delinquency rate below 4%.