Transcript Document

Improving Agri Food Financing
Through CREDIT UNIONS
CTA Caribbean Rural Development Briefings,
Caribbean Week of Agriculture (CWA)
Grenada, October 18-19, 2010
Melvin Edwards
Ex-officio
World Council of Credit Unions
[email protected]
www.woccu.org
Credit Unions Worldwide
183 million members
49,000 credit unions
97 countries
Co-operatives – A Distinct Economic Sector
Promoting the sustainable development and
empowering people around the world
to grow through access
to high-quality, affordable financial services.
Improving people’s lives through credit unions
Promoting
International
Credit Union
Principles
• Safety and
Soundness
• Operating
• Governance
• Consumer Protection
Philosophy is Good Business
One Vote per Member
No discrimination
Business operates for
Members’ Benefits only
Elected Volunteer
Leaders
• Affordable rates for
comparable services
• Continuing Education
• “Co-operation among
Co-operatives”
• Redistribute Surpluses
 Dividends pro rata
 Education & Training
 Community & Culture
SECTOR GOALS
Expanding Inclusive Finance services to
consumers and producers in greatest need
Supporting economic development
through the financial empowerment
Representing credit union organizations
and supporting their efforts to serve
members
Caribbean Credit Unions
2.4 Million Members[40% pop]
342 Credit Unions
Assets US $4.1 Billion
Pursuing Modernised Institutions
Product Innovation & Diversity
Consolidation Strategies
Business Expansion
Some Statistical Data
Affiliates
C. Unions
Members
Loans
Assets
Jamaica
47
968,558
$0.42B (64%)
$0.66B
Trinidad
130
575,000
$0.86B (72%)
$1.2 B
Barbados
35
130,000
$0.52B (79%)
$0.66B
OECS
60
266,000
$0.45B (70%)
$0.64B
Belize
13
118, 383
$0.17B (65%)
$0.26B
Total
342
2,366,000
$3.19B (72%)
$4.45B
OTHER
9%
DEBT
7%
PERSONAL
12%
BUSINESS
12%
VEHICLE
12%
EDUCATION
13%
AGRI & FISHING
8%
HOUSING &
LAND
27%
Approaches To Development
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ACCESS for the unbanked and underserved
Strengthening the rural economy
Developing integrated business networks
Supporting communities-at-risk
Encouraging policy, legislative and
regulatory system reform
• Rebuilding during and after disaster or conflict
• Partnering to address priority needs
• “Quality Credit Unions For Everyone”
Drafting Harmonised Sector-Specific
Legislation & Regulations, and Lobbying
• Bahamas, Jamaica, 7 OECS, Trinidad, Bermuda
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PEARLS Prudential Standards & Monitoring
AML, CTF, IFRS Compliance
Stringent Capital and Investment Provisions
Risk-based Lending and Efficient Collections
Tighter Audit & Disclosure Rules
Higher “Fit and Proper” Criteria for Directors
Drafting Harmonised Sector-Specific
Legislation & Regulations, and Lobbying
• Removal of Cap on Dividends
• Development Fund – Mandatory, Pooled
• Community Investment & Youth Involvement
• Mergers, Conversions, Shared Services, Branch
• Low-cost Savings, Loan, Funeral Insurance for
every member. New Consensus Acts passed
Barbados, Bermuda, Antigua, Grenada.
Promoting good
governance and
supporting effective
credit union
legislation through
Model Law for
Credit Unions
Model Regulations
for Credit Unions
distributed
worldwide in four
languages
Credit Unions Know Agri-Food Challenges
• Instability in input prices,
• Inconsistency of supply e.g. losses from
spoilage and post harvest handling,
• High inventories burden on processors
• Alternatives to grow, use working capital
• Attract investors to finance upscaled units
• Stable /enforceable marketing contracts
 Impact purchasing power Collaboration
 Ownership, Management, Governance in FOs
Market Studies Indicate
• Entrepreneurs want higher borrowing limits,
customised facilities, convenient locations
• Credit Unions are the most accessible FIs
• Microcredit is ≤15% of loans portfolio
• Av. Loan Size @ CUs=$1975, NDF $10,000
• Same process for MSME & Consumer loans
• Low incidence of Saving for the business
• Public Service environment is unfriendly to
small and micro entrepreneurs
Market Studies Indicate
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Few mega farms, most are micro
No mega Co-operatives, too many micro
Farmers’ Organisations are weak at all levels
Food Security Policies and Strategies lack
Implementation
• After CL Financial, more FIs keen to create
wealth at home
• Capacity and Confidence GAPs need risk
reduction partnerships
Sustainable Rural Agriculture Financing
Must be profitable for both borrower and lender
Competitive agricultural lending efforts have focused on:
1. Value Chain Financing
2. Capacity Building
3. Improving Delivery Mechanisms
4. Markets Integration
5. Risk-based and Supervised Credit Methods
6. Replication of Successful Ventures.
The Value Chain Comprises
Anyone who helps Farmer:
• cultivate
• grow/harvest crops
• Market the crops
• process them into byproducts
• deliver them to
consumers
5 key requirements
from participants:
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Trust
Credibility
Commitment
Diligence
Competence
Establishing a Successful Value Chain
Credit Union Expansion
includes value chain
financing and helping rural
producers meet their goals.
Financing Facilities in place
• Factoring
• Buffer Funds
• Lines of Credit
• Guaranteed Lending
• Direct Lending
Match Services For Agri-Food MSMEs
• Business Services –Registration
Forms, Business Plans, Applications.
•TA helps farmers understand
markets, improve soil quality, records
& food safety, increase crop yields,
and move from subsistence to small
commercial farming.
•Training in Entrepreneurism,
Business Mgt, Finance.
•Strengthen Organisation capacity.
•Future plans may include crop
insurance to protect loans in years
of bad harvests, etc.
SAVINGS-DRIVEN MICROFINANCE
Members’ Shares, Members’ Deposits,
Institutional Capital primarily.
Technology, Technical Assistance, Training
International and Regional donors: USAID,
USDA, IDB, IFAD, UNDP, CDB, World Bank,
EU, Bill and Melinda Gates Foundation,
Commonwealth Secretariat.
GOVERNMENTS
Financing MSMEs – CU Scenario 2
Micro-lending Foundation established as an
adjunct to a Co-operative Credit Union
• Capitalised by donors, lenders, Government
• No Savings or Payment functions
• Eligible – All micro, small, medium
entrepreneurs
• Women and Rural Clients dominate.
NDF – Montserrat [1987]
Financing MSMEs – CU Scenario 3
Small Business Window within the CU
providing savings, payment, insurance
credit and financial education products
• City of Kingston CU – Jamaica
• Eastern – Trinidad & Tobago
• Public Workers – Barbados
• La Immaculada, Blue Creek – Belize
• Grenville CU (120 vendors) – Grenada
• Roseau & Central (hucksters)- Dominica
Financing MSMEs – CU Scenario 4
• Micro-lending Foundation converted to an
Enterprise Credit Union
• Capitalised by borrower clients and new
entrepreneurs–high average equity, savings
• Women and Rural Clients dominate
• Agri-Food loans demand less than 10%
FNDECCU – SKN [October 2009]
Financing MSMEs – CU Scenario 5
CUSO providing specialised, risk-based
screening and appraisal of applicant
entrepreneurs referred from affiliate CUs
• Optimal use of improved delivery
technology
• Facility owned by Co-operative Sector
• Endorsed by EU RESTORE Project,
[St. Lucia Dec. 2009]
Financing MSMEs – Scenario 6
MICROFINANCE INSTITUTION OWNED by CO-OPs
• Direct Financing for Micro, Small, Medium Enterprises
• Scope–All types of member-owned for-profit MSMEs
• Special Financing - youth, women, rural MSEs
• Business Savings at MFI
• Personal Savings continue at home CU
• Capitalised bu the National League, affiliated CUs,
Farmer/Fish/Service CO-OPS
• Current engagements transferred to MFI
MatchSavings.org is a microfinance
program that gives you the
opportunity to promote savings
before credit as a way to overcome
poverty.
International
Remittances
• Introduce the unbanked
& underserved to
credit unions
• IRNet® has paid out
more than $2.8 billion
in remittances to 8
countries since 2001
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Development Programs
in 7 Countries
Focus on Haiti – Post Earthquake
• 250,000+ lives lost, 1 million homeless,
• Major damage/loss of government structures
• 12 caisses populaires damaged/facing balance
sheet losses
• Employees/family members/enterprises devastated
• US$1.1 million+ raised globally for Haiti Relief
• Focus on repairing/rebuilding credit unions
• Raising CU operating standards while rebuilding
• Aiming at improved delivery technology
KOTELAM Branch BEFORE Earthquake
KOTELAM Branch AFTER Earthquake
Haiti: Post-earthquake Living Conditions
The Future of Haiti?
CUs by World Region
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Africa: 14,404 CUs and 16 million members
Asia: 21,233 CUs and 36 million members
Caribbean: 556 CUs and 3 million members (Haiti incl.)
Europe: 2,418 CUs and 9 million members
Latin America: 1,784 CUs and 15 million members
North America: 8,653 CUs and 102 million members
Oceania: 282 CUs and 4 million members
Source: WOCCU’s 2009 Statistical Report
How YOU Can Get Involved
• 2012 : United Nations Year of Co-operatives
• Participate in WOCCU training opportunities
– World Credit Union Conference, Glasgow July 2011
– 54th Caribbean Convention, Curacao June 2011
• Celebrate International Credit Union Day
(Oct. 21,2010) Theme: Local. Trusted. Serving You.
• Stay informed
– Credit Union World, eCommuniqué,
www.woccu.org, www.facebook.com/woccu
Opening Flag Ceremony
Thank you
Melvin Edwards
Ex-officio
World Council of Credit Unions
[email protected]
www.woccu.org