Kenya, Guatemala, Burkina Faso
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 credit. 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 Lending Toolkit, 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). These partners represent and provide technical support to multi-million-member networks of credit unions.
The World Council SME Lending 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 2020)
As the SME Finance Toolkit development toolkit continues to be refined, the TIFI project continued to coordinate the development of the various aspects of the toolkit across our three countries of implementation and began conversations to expand to a fourth country; Senegal.
In Guatemala, the TIFI project received the results of three studies that were commissioned to investigate the market and requirements of creating a new credit union service organization (CUSO) through which credit unions can meet the lending needs of SMEs in Guatemala. The results of these studies were presented to the committee of credit union managers and received approval to proceed. Equipped with a newly developed SME lending methodology developed by the project, the CUSO will be the main vehicle for administering and managing loans to formal Guatemalan SMEs and for the first time, credit unions will be able to engage formal SMEs and ask about their lending needs, knowing they will be able to meet their financing needs (and more) through the newly established CUSO.
In Kenya, The TIFI project conducted a market study with 410 SMEs, multiple government institutions and government representatives across seven counties. The findings and learnings of this study are being compiled into a report that will inform product development and identify market opportunities for SACCO lending. Additionally, the TIFI project commissioned a digital assessment of the National Association (NA) and our main partner in Kenya, KUSCCO. Coupled with research on the supply side of technology solutions in Kenya, the TIFI project intends to understand pain points of KUSCCO and individual SACCOs and identify potential integration of digital tools that can enhance their operations and ease some of the time-intensive pain points that were identified through the digital assessment.
In West Africa, the TIFI project continued to work with our main regional partner, Confédération des Institutions Financières de l’Afrique de l’Ouest (CIF) as we work towards the vision of creating a digital credit union of the future. The project continued to identify opportunities for partnership with technology providers, business development service providers and improving SME lending strategies. Beyond strengthening our relationship with CIF, the TIFI project also continued discussions with the Burkina Faso NA, Réseau des Caisses Populaires du Burkina (RCPB), as we seek to strengthen our operations in Burkina Faso and work through their network of Caisses Populaires (Credit Unions). Over the past quarter, the TIFI project began initial landscaping of the Senegalese market and established a partnership with the local national association, Pamecas, while working to achieve USAID Mission concurrency to begin operations in that country.
Credit Unions in Burkina Faso
- 68 total credit unions
- 1.9 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 2.0 billion in assets
Credit Unions in Kenya
- 7,301 total credit unions
- 7.7 million members (14.98% of the population)
- USD 8.3 billion in assets