Afraca News English.pdf by suchufp



                              No. 61, March 2008


Newsletter of the African Rural and                       ear readers!                                  important. It

Agricultural Credit Association                                                                         would         be

                                                          Greetings from the AFRACA
                                                                                                        useful to read


AFRACA Secretariat Address                                                                              on         how

                                                 As you are aware the AFRACA Secretariat is
P O Box 41378 00100,                                                                                    technology is

                                                 based in Nairobi, Kenya, we would like to

Nairobi, Kenya                                   assure you that all the Secretariat staff and          making it easy

Tel: (254) –20 – 271 7911/271 5991                                                                      to     transfer

Fax: (254) –20 – 271 0082                        their families are well. However, AFRACA

                                                 member institutions in Kenya as well as                money to the

                                                 none members each suffered some degree                 remotest parts Mbita Mary NANDAZI


                                                                                                        of      Kenya.

                                                 of loss during the trying time. In this regard                                  Secretary General

                                                 we wish to thank all the institutions and              Also          an

                                                                                                        experience of Land Bank of Philippines in

The Newsletter is originated, compiled and       individuals both in Kenya and abroad who

                                                 came to the assistance of the rural poor who           partnership with a private company shows
edited by:

                                                 were seriously affected.                               how farmers and agricultural based

Ms. Mbita Mary NANDAZI -Secretary General
                                                                                                        entrepreneurs would benefit if internet based

Mrs. Dorothy Nduku K. Kipsang –                  The activities for the year are gaining

                                                 momentum with WACRAT II workshop                       information on prices of various commodities

Programme Coordinator
                                                                                                        could be made available and accessible.
                                                 having been held at the end of March in
                                                                                                    ○   The issue of global warming and climate
                                                 Banjul, Microfinance forum coming up on            ○

Designed and Printed by Information

                                                                                                        change has come closer to all of us now than

                                                 18th-20th June and the last of the sub
Management Consultants Ltd. 4444903/874

                                                 regional workshops, the East African sub               ever before. Rural financial institutions are facing

                                                 regional will be held in Addis Ababa in July           both greater threats and opportunities due to

The Newsletter is published on a quarterly       2008. It would be useful to confirm your               climate change and its impact on primary sector

basis.      The Editor welcomes articles,        institution’s participation early. The detailed        economic activities. Natural disasters have

comments and contributions from members                                                                 notoriously increased in the world throughout

                                                 programme of activities for the remaining
and readers for publication. They can be sent

                                                 part of the year is shared in this issue. Please       the last decades with direct economic effects.

by e-mail to the Secretariat for publication.
                                                 note these activities and start planning your          Natural catastrophes may be such that the

The Editor reserves the right to edit articles

for brevity and reasons of space.                participation in them.                                 financial soundness of banks, insurance and

                                                 On TCDC, we have received a number of                  reinsurance companies could become

                                                                                                        vulnerable. However, due to the current

AFRACA’s Executive Committee Members             requests for the TCDC programme this year

                                                 across Africa. There are however a few                 competitive market pressures these institutions

Chairman         BACB Burkina                                                                           are reluctant to include such trends in the
                                                 remaining chances for a few more

                 Mr. Leonce KONE
                 Mr. L eonce K ONE

                                                 institutions to participate. Send in your areas        pricing of their services. In addition, the net

Vice             Dar es Salaam                   of interest to the secretariat immediately. In         effects of climate change on agricultural

Chairperson      Community Bank

                                                 the same breadth we wish to thank all those            production levels are unknown. Read on how
                 Mr. Edmund MKW A W A

                 Mr.         MKW                 institutions who have continued to host                the Mexican government aims to mitigate

West Africa I    CNCA Senegal                    members of staff from other institutions

                                                                                                        climate change effects and how institutions and

Sub-Region       Mr.        DAFFE
                 Mr. Arfang D AFFE               as they have acquired knowledge which has              individuals need to seriously start reflecting and

                                                 been invaluable.                                       doing something towards conserving our

West Africa II   Bank of The Gambia

Sub-Region       Mr.        A.O.
                 Mr. Basiru A.O. NJAI            The second world Congress which was held               environment.

                                                 in Bangkok, Thailand last October and                  The 16th AFRACA General Assembly and

Central Africa   Central Bank of DR

                                                 hosted by APRACA in conjunction with                   Technical workshop on, “Innovations in
Sub-Region       Congo

                 Mr. Jean-Marie EMUNGU
                 Mr.                             AFRACA and other RACAs provided a                      addressing Rural finance challenges”, will

                                                 learning platform. This AFRACA issue                   be held in Dar es Salaam from 24th – 28th
East Africa      Association of

                                                 shares some of the ideas which came up as              November 2008. Book this date!

Sub-Region       Microfinance Institutions in    a way of presentations and papers during

                 Uganda (AMFIU)                                                                         Many thanks for continued support through

                 Mr.       BAGUMA
                 Mr. David BA GUMA
                                                 the forum. The issues range from technology            paper contributions and many other financial

                                                 use to climate change and rural finance.

                                                                                                        support. If you have an article which you
Southern Africa Reserve Bank of Zimbabwe

                                                 In the world today the use of technology               would like to share widely please send it

Sub-Region      Mr. N.
                Mr. N. NCUBE                     for expanded outreach has become very


Secretary        Ms. Mbita Mary NANDAZI
General                                                                              Number 61, March 2008                                                        1

    Asia - Africa Dialogue
    T       he Asia-Pacific Rural and Agricultural Credit Association
            (APRACA) hosted the first ever Asia-Africa (A-A) dialogue
                                                                          APRACA member institutions and projects: New approaches,
                                                                          Best Practices and Lessons”.
    in Bangkok, Thailand on 30th October 2007. This forum was             The report focuses on emerging rural finance development strategy,
    for disseminating innovations and best practices in both continents   challenges in rural finance in major APRACA represented countries
    as well as discussing common efforts and ideas, commitments           and presents a conceptual framework in the analysis of rural finance
    and lay ground work for in-depth and sustainable plan of action.      innovations and best practices. Areas covered are institutional
    The A-A dialogue which was facilitated by Dr. Richard Meyer           innovations, new products and methodologies in rural finance,
    (former professor of Ohio State University and a Consultant)          microfinance and Agricultural finance that emerged in the ‘90s.
    was attended by CEOs and senior officers from member                  In major countries of Asia, 80-90 percent of the poor live in the
    institutions of AFRACA, APRACA and NENARACA.                          rural areas (IFAD 2007). In reducing poverty, access to financial
    At the end of this meeting the RACAs agreed to work together          services as this affects productivity, asset formation, income and
    to enhance information and knowledge exchange in rural finance.       food security among the rural poor is a crucial issue being discussed
    In this regard, discussions are underway on implementation plans      by donors and governments of developing countries of Asia. They
    of the recommendations. In the mean time, AFRACA will take            are also in the next phase of poverty reduction with people living on
    advantage of this opportunity to send interested members of           US$ 2 per day while we in Africa are still on spending of US$ 1 per
    staff from various interested member institutions to learn about      day scenarios.
    the rural finance activities, specifically microfinance in Asia.      Financial Innovation has been defined as something new that
    This is because Asia has lessons for others to learn from as the      reduces cost, reduces risks or provides a new product,
    microfinance industry there has evolved tremendously and is           instrument or service that better satisfies the participant’s
    well developed.                                                       demand (Frame and White 2002). Innovations thus can take the
    During the A-A dialogue, various presentations were made and          form of new products, new services e.g. internet banking, New
    we share some ideas from a paper, “Review of Rural Finance            “production” processes e.g. credit scoring or new organizational
    Innovations in Asia – Pacific Region with focus on                    forms. Under this view the innovation is driven by the desire of
                                                                          strategic financial institutions to remain competitive.
                                                                          Before the emergence of the financial systems approach in the ‘90s
                                                                          the old directed credit approach saw borrowers as beneficiaries
                Asia - Africa Dialogue                                    selected by targeting while the new financial systems approach
                                                                          borrowers and depositors are seen as clients choosing products. The
                Successful Bank Financed Technology                       financial systems approach focuses on:
                Empowering Project at Grass Roots
                Level                                                     •    Creating conducive Policy environment for healthy financial
                                                                               system to include policies on interest rates, policies against loan
                M-PESA Money Transfer Technology                               targeting, promoting political independence and autonomy of
                Microfinanza Rating                                            financial institutions.

                Implications of Climate and                               •    Building financial infrastructure to include information, legal
                Environmental Changes for Rural                                and regulatory systems that directly affect financial transactions
                Financial Institutions                                         and transportation and other infrastructure that directly affect
                                                                               cost and risks of finance.
                Bridging the Digital Divide
                                                                          •    Institutional development - building up capacities of institutions
                Announcements                                                  that target the disadvantaged sector like women and the rural

2                           Number 61, March 2008

Some common elements of successful microfinance: -                     reform has seen it develop the largest outreach of small
                                                                       farmers by any Agricultural bank, 93% of total farmers in
     Microfinance institutions know their market,
                                                                       Thailand while maintaining institutional viability.
     Lending outlets are located near clients,
                                                                       The important elements of reform include:
     Application process is easy and loans are disbursed quickly,
                                                                       •     Government’s respect, though not complete, for its
                                                                             operational autonomy
     Interest rates are market oriented to cover financial and
                                                                       •     Corporate culture emphasizing cost effectiveness,
     operational costs.
                                                                             productivity and efficiency
Innovative approaches and practices
                                                                       •     Lending schemes attuned to Thai culture
Agricultural development Banks are major players of rural              •     Improvement in loan portfolio creating depositor
finance in Asian countries. The following are some examples of               confidence
Banks which have innovated and stayed in service of the poor.
                                                                       •     Shift in financial
1.     Bank Rakyat Indonesia (BRI of Indonesia)                              resource base to
       BRI has succeeded in attaining financial sustainability while         rural savings
       providing credit and saving services to the rural low income          mobilization
       families that previously had no access to formal financial      By 2001 BAAC had
       services. It had also attained unprecedented level of           5.2 million direct and
       profitability. The most fundamental policy change in the        indirect borrowers of
       BRI village banking program was the “shift from                 which 2.7 million
       disbursing credit to motivating loan recovery and               farmers are active.
       mobilizing savings”.                                            The bank expanded to
       Its loan portfolio increased from US$ 162 million in 1985       1,476 branches and
       to US$ 1,178 million in 1995. Deposits growth was also          outlets with 12,960
                                                                                                 Her highness princess Maha Chakri
       exponential during the same time.                               members of staff.          Sirindhon in the exhibition areas
                                                                       BAAC had 9.57 million       when she opened the 2nd World
2.     Bank of Agriculture and Agricultural Cooperatives               savings accounts with      Congress in Bangkok in October
       (BAAC) of Thailand                                              an average of US$                         2007
       The BAAC hosted the 2nd World congress in Bangkok,              270 per account. With the shift to deposit mobilization, 10
       Thailand. In his welcome remarks the President of BAAC,         million rural depositors were reached by 2003. Productivity
       Mr. Thiraphong Tangthirasunan (Left) highlighted the            among credit staff also saw progressive improvement in
       theme of the Congress as “The Contribution of                   that by 2003 one credit officer was responsible for 500 –
       Agricultural and Rural Economies to Sustainable                 550 loan clients.
       and Equitable Development”. He also shared a wish               Among the lending approach of BAAC, the most extensively
                           that the Sufficiency Economy                used one was the joint liability group lending. Under this
                           philosophy (initiated by His Majesty        scheme BAAC extends non collateralized loans through
                           the King Bhumibol Adulyadej) is             groups of farmers who guarantee each other. A typical
                           applicable and used at an international     group has 12-15 members. Loan size is set at about 60% of
                           level.                                      projected revenue of sale of the crop.
                           During the past four decades BAAC           The two cases above inform us of real success in outreach
                           underwent transformation from               and financial sustainability. Yaron et al 1998 cites the following
                           specialized agricultural lending            key factors in attaining efficiency:
                           institution to a diversified rural
                                                                       a.      High degree of autonomy from government in
                           development bank. The result of this
                                                                               formulating operating policies

                                                                              Number 61, March 2008                                         3

    b.   Policies that provide for staff accountability,           5.      Vietnam Bank for Agriculture and Rural
         investment in human capital and reward and incentive              development
         system related to sound financial performance and                 This bank has an approach to physically reach out
         sustainability.                                                   to its clients through the use of “Mobile banking
    c.   Innovative low cost delivery and mobile banking                   offices”. This approach was initiated in 1998 and
         systems                                                           is modeled after similar programmes in other Asian
    d.   Innovative and flexible loan terms adapted to local               Countries. It started with 159 vehicles equipped
         social, economic and cultural circumstances                       for all terrains enabling its bank staff to reach
                                                                           remote areas. After 5 years they reached 315,000
    e.   Close monitoring of loan performance resulting in
                                                                           households representing 6% of the bank’s total
         high on time collection rates.
                                                                           clients. This led to substantial increase in loan
    f.   Development of domestic saving amongst rural farm
                                                                           portfolio and deposits.
                                                                   The success requires that the normal best practices in
    g.   Positive and high interest rates that ensure adequate
                                                                   microfinance were followed: offering appropriate loan
         spread to cover costs
                                                                   products, linking lending and savings, use of joint liability
    h.   Control of administrative expenses and effective use      and solidarity groups.
         of economies of scale
                                                                   The bank applied cost recovery interest rates. Repayments
    i.   Advance management information systems that
                                                                   are good and each vehicle is reported to have on average
         facilitate effective planning, control and timely
                                                                   generated US$ 1,000 monthly in profits. Each mobile bank
         monitoring of loan repayments
                                                                   disbursed an average of 1,921 loans, collected an average
    j.   Concentration in rural markets with high population       1,387 payments and transported cash on 75 occasions to
         densities                                                 16 points monthly. The programme mobilized 1,983 small
    3.   Land Bank of the Philippines                              saving accounts each month.
         The Land Bank does not enjoy any government
         subsidy on its operations nor in sourcing of funds. It
         operates as a universal commercial Bank
         and has to compete with the rest of the
         private banking sector in mobilizing
         deposits from the general public. The
         Bank opted to concentrate on the
         “Wholesale lending approach” in reaching
         out to clients by using partnership with
         other institutional forms this has proved
         very successful.
    4.   Agricultural Bank of Nepal
         The Agricultural Bank of Nepal has
         focused on Small Farmer Cooperative
         Limited which provides a unique
         institutional transformation from joint
         liability groups of small farmers in ‘80s
         to Small farmer Cooperatives comprising                  Chairmen of (from left) of ALIDE, M. Kone of
                                                                  AFRACA, NENARACA and M. Carron of CICA
         over 90,000 households.

4                    Number 61, March 2008

Successful Bank Financed Technology
Empowering Project at Grass Roots Level
                                                  By Zachariah Chianda Cooperative Bank of Kenya

T    he significance of financial services to economic and
     social development of any nation is now understood
                                                                 Cooperative Bank of Kenya
                                                                 The Co-operative Bank of Kenya Limited was formed by
 to go well beyond credit. Secure high quality savings rank
                                                                 co-operators through the Cooperative Societies in 1965 with
 amongst the most needed financial services by poor
                                                                 the founding philosophy, “to deliver financial services to the
 households. There is a common need by all households,           co-operative movement in general for maximum benefit of
 irrespective of economic classification, to manage their        the societies’ members”.
 finances to reduce vulnerability due to fluctuations in cash
 flows and also the need to accumulate savings for               The emphasis has been to continually focus on benefits to members by
 investment, social function consumption and other               availing more banking services and products that can improve their financial
 productive opportunities.                                       welfare.
                                                                 The Cooperative Bank is owned 100% by the co-operative
 Evidence from a diverse range of institutions in Kenya
                                                                 movement in Kenya and it is the only Co-operative Bank of
 and internationally shows clearly that financial services can
                                                                 its kind in Africa. In order to serve unique clients- SACCOS,
 be provided to low income markets and small scale
                                                                 the Bank has a fully dedicated Co-operatives Banking Division
 enterprises on a profitable basis. The key challenge
                                                                 to serve the movement and a well staffed SACCO Training
 therefore is to find new and innovative ways of                 Unit.
 broadening access to financial services to include these
 markets.                                                        In addition, the bank has a dedicated subsidiary- Co-operative
                                                                 Consultancy Services Kenya limited to give advisory services
 Accessibility to affordable financial services will therefore   to over 650,000 clients of the movement.
 be determined by among other things:
                                                                 A few facts about the Co-operative Movement in Kenya
         Number of financial institutions operating in the
                                                                 •     With over 10,000 registered co-operatives, Kenya has
         country, their total number of outlets and
                                                                       the most developed co-operative movement in Africa.
         distribution (outreach) countrywide.
                                                                 •     There are 5,000 savings & credit co-operatives (SACCOs)
         Range of products/services available and how
                                                                       who have mobilised over Kes.150 Billion (USD 2.14
         well they cut across the various economic sectors             Billion) in savings representing about 25% of total
         and market segments.                                          Domestic Savings in Kenya.
         Cost of doing business -which shall therefore           •     With over 6.3 Million registered members, the sector
         determine cost of banking service.                            directly or indirectly touches the livelihood of over 25.2
         Use of appropriate technology to come up with                 Million Kenyans, about 72% of the population.
         innovative products and delivery channels               •     163 out of 5,000 SACCOs are operating front office
         Suitable regulatory frame work to ensure stable               activity (FOSA) which offers basic ‘banking services’ to
         and efficient financial system                                it members.

                                                                        Number 61, March 2008                                                   5

    •    The 163 FOSA‘s serve over 2.3 million members or            In this initiative Co-op bank offered whole sale banking
         about 34% of all customers served by various financial      services plus technical advisory services to both the District
         institutions country wide.                                  Co-operative Unions and the affiliate agricultural marketing
                                                                     co-operative societies. The District Co-operative Unions
    •    Any member of a SACCO with FOSA can have a                  on the other hand offered retail banking services to the society
         COOP debit card issued by the Cooperative Bank for          general membership through newly established Union
         use with the Cooperative Bank ATMs.                         Banking Sections (UBSs).

                                                                                              During this campaign about 20
                                                                                              Union Banking Sections were
                                                                                              established in different parts of the
                                                                                              country to cater for society members
                                                                                              involved in coffee, pyrethrum, dairy,
                                                                                              cotton and cashew nuts farming.

                                                                                              During the same period there was the
                                                                                              birth and coming of age of the
                                                                                              employee based Savings and Credit
                                                                                              Co-operative Society Model
                                                                                              (SACCO) mainly in the urban areas.
                                                                                              In Kenya today there are about 5,000
                                                                                              urban SACCOs with a savings
                                                                                              mobilization of over Kes 150 billion
                                                                                              (US$ 2,238,805,970).
                     Mr. Zachariah Chianda making the presentation                            In 1980’s & 90s, several District Co-
                                                                     operative Unions experienced financial strains partly due to
    “One of the key ingredients to the development of                downturn in the economy (local and global) affecting
    a strong and sustainable economy of any nation is                agricultural prices, poor weather patterns and management
    the accessibility of affordable financial services to            problems among other factors.
    a vast majority of the population”.
                                                                     A few Union Banking Sections (UBSs) ceased operations
    Mutual Partnership with the Co-operative Movement                leading to loss of members’ funds and low confidence among
    –Key Milestones                                                  the members. Arising from that negative developments Co-
                                                                     op Bank in partnership with the Government and other
    The partnership with Co-operative Movement dates back to
                                                                     development partners undertook intervention measures whose
    the early 70’s and has the following key milestones:
                                                                     aim was to protect members funds in the UBS’s, ensure
    In the 1970’S & 1980’s the Cooperative Bank partnered with       continuity of service and expand this service to other
    the Government and other Development Partners to bring           agricultural sub sectors in rural Kenya.
    together primary agricultural marketing co-operative societies   A Rural Banking Unit was then set up in the Co-op Bank to
    to form District Co- operative Unions (DCUs) with a              spearhead:
    mandate to offer transport, book keeping, management,
    merchandise, savings, credit and payment services to affiliate   1.   Transformation of UBSs into fully autonomous
    societies and their respective members.                               member- owned Rural Savings and Credit Co-operative
                                                                          Societies (Rural SACCOs).

6                         Number 61, March 2008

2.   Carry out regular inspection (this function ceased     Urban SACCOS to establish Front Office Service Activity
     after 1997 legislative changes)                        (FOSA) for use by their members as salary pay points and
3.   Carry out training and capacity building in rural      as suitable avenue for savings and short term advances.
     SACCOs                                                 To date the Cooperative Bank has 163 FOSAs countrywide
4.   Promote growth of Rural SACCOs country wide            (both urban & rural) has mobilized over Kes.150 billion in
                                                            savings and serving over 2.3 million members.
In the 1990’s and based on the Cooperative experience
with regard to Union Banking sections, the successful       Of these 45 are agro based while 60 % of the employee
urban based/employee based SACCOs the Bank                  based Urban SACCOs either have their headquarters in
working with other stake holders came up with               rural towns or have opened rural branches to reach out to
SACCOs model to cater for farmers who receive               their members.
regular incomes from the sale of their agricultural
commodities. This initiative saw the launch of many         Over 90% of the FOSAs are computerized to a fair degree
rural SACCOs based on the following agricultural            though there is scope for improvement.
activities tea, sugarcane, rice and dairy among others.     To keep up with the current development in the sector
The Co-operative Bank has supported these Rural             (Competition and need to reach more clients), SACCOs
SACCOs by:                                                  in partnership with Co-operative Bank have therefore
                                                            embraced new strategies among them:
1.      Conducting feasibilities studies to start front
        office services (FOSA)                              1. Opening the common bond so as to attract
2.      Supervising Implementation of the FOSA                 membership from other employers, economic
        project (project management)                           sectors and geographical zones.

3.      Staff and member Training on banking and            2. Targeting the un-banked especially youth and
        related services                                       women through self help groups.

4.      Advisory services on corporate planning,            3. Modern technology - SACCOs have vigorously
        computerization, product development etc.              been computerizing their services to remain
Launch of Urban Fosas

During the 1990’s, the large multinational commercial       4. New products/services - SACCOS have
banks withdrew their services from rural areas of Kenya          developed new products in an endeavor to offer a
allegedly due to the poor performance of the economy             one-stop- shop experience to their members.
and the resultant operating losses. Commercial banks        5. Franchise banking arrangements with Co-op Bank
also drastically increased the account opening and             wherein SACCOs have been able to offer the
minimum operating balances as well as monthly account          following Co-op Bank services over their counters
maintenance fee/charge. The result of all this was that a      by use of appropriate technology:
majority of Kenyans were literally kicked out of the
formal banking system.                                      i.     Bankers cheque

At this point in time Co-operative Bank decided to                 Sacco members are able to purchase Co-op Bank
upgrade its Rural Banking Unit to also cater for Urban             bankers cheque over the Fosa counters to pay school
SACCOs. The bank embarked on a campaign to assist

                                                                  Number 61, March 2008                                  7

           fees instead of going to commercial banks. The        accounts with their FOSAs to have access to their money
           bank shares commission with the SACCO.                and other banking services through Co-operative Bank
                                                                 ATMs countrywide.
    ii.    Money Gram-International money transfer
           service                                               The benefits of this system are enormous; the over 6.3
                                                                 million members of the movement will now be able to
           Sacco Members are able to send or receive
                                                                 carry out numerous transactions even though they do
           money worldwide within 10 minutes. The bank
                                                                 not have a bank account.
           shares commission with SACCOs for this service.
           Co-op bank is responsible for system installation,    SACCO members who previously had to carry cash
           training and marketing.                               whenever they traveled away from the locations of their
                                                                 FOSAs do not have to do so anymore.
    iii.   Jumbo link- electronic funds transfer
                                                                 SACCO link card is a debit card which is VISA based
           SACCOs use the Coop Bank electronic funds
                                                                 which means SACCO members will enjoy the
           transfer service to disburse loans to members
                                                                 convenience of using the card to buy goods and services
           who bank elsewhere especially in remote stations.
                                                                 at all shopping outlets that accept visa cards not just in
           This has boosted efficiency and customer service
                                                                 Kenya but world wide.
           for SACCOs.
                                                                 The SACCO link service is a land mark achievement not
    iv.    Co-opnet
                                                                 only for the co-operative movement but also for the
           This is an office banking service enabling            entire economy in that it has become one of the important
           SACCOs to access their accounts at the bank via       tools for expanding access to financial services to majority
           internet for purposes of balance enquiry,             of Kenyans who are currently out of the mainstream
           statement printing, inter account funds, cheque       banking system.
           book ordering and utility payments
    v.     Sacco link
                                                                 The Bank’s efforts have been focused towards an
           The Bank has invested in a multi million project      Integrated Co-operative Financial System that empowers
           – The Co-opswitch project - which has                 the Co-operative Movement at the Grass Roots Level
           facilitated the issue of the - Sacco Link Debit       through key interventions among them appropriate
           Card – to individual members of the SACCOs            technology, innovative value adding services, business
           (Fosa customers) across the country.                  models and outreach strategies to offer state of the art
                                                                 services to the Cooperators.
           The SACCO link service is a state-of-the-art IT-
           based service that will take Saccos to a complete
           new level in terms of sophistication and quality
           of service rendered to their members.

    SACCO link is uniquely designed to enable FOSAs
    get real time, online banking connectivity to Co-operative
    Bank. This will enable members of Saccos who have

8                    Number 61, March 2008

                                   Money Transfer Technology

M        -PESA is an electronic money value [e-money] backed    Cashing M-PESA value
         by real money in a conventional bank account. This
                                                                To cash the M-PESA you go to an outlet, choose
service was designed to provide Financial Services for the
                                                                “Withdraw cash” in your phone menu & enter the amount,
many Kenyans without access to conventional banking. It
                                                                agent short code and your pin. The agent will then give
is a Business based upon high volumes of low value
transactions and operates through registered cash               you the cash upon receiving a confirmation of withdrawal
outlets.                                                        via SMS.

M-PESA service can be used by both the                          Moving M-PESA in the system
banked and un-banked as it requires a                           Agent outlets will have M-PESA e-money in their store
simple SIM card for transactions and                            floats which clients buy it for Cash.
assures greater availability. Users of M-
PESA can buy e-money for cash, send                             Benefits of M-PESA
it to others by SMS instruction, buy                            To consumers M-PESA is convenient, quick service,
airtime as well as sell e-money in exchange                     affordable, and a pay as you go model.
for cash.
                                                                To businesses on the other hand, M-PESA is useful as you
Buying M-PESA value
                                                                have access to potential customers, it is a cost effective
One easily walks in a branded outlet                            means of revenue collection / funds disbursement. It
and the assistant uses his/her phone                            offers additional income & ‘feet through the door’ for
to send e-money to your M-PESA account (your phone).            Agents, it complements other services and it is safe and
                          You will receive an SMS               easily available.
                           confirmation and give him/her
                                                                This technology has proved useful for both individuals
                             cash in return.
                                                                and institutions and could be replicated as a way of
                                 Sending M-PESA value           enhancing access to financial services by clients.
                                    Once you have bought
                                                                      For any enquiries, information or clarification about
                                    M-PESA value, you can
                                   send whatever amount                           M-PESA please contact:
                                   you want from your                    Head of M-PESA: Pauline Vaughan -
                                   phone as long as you have       
                                  the phone number of the
                                                                      M-PESA BD Manager JOSECK Mudiri -
                                  recipient and you have a
                                 pin number which you
                                 receive on registration with

                                                                      Number 61, March 2008                                   9

     From Rating to a Process Towards
     Transparency: Better Serving the African Market
      M icroFinanza Rating is an independentmissionrating agency
        specialized in microfinance. Our
                                                     consists in              √       Rating                      Number of ratings/assessments -
     facilitating the flow of investments towards the microfinance sector,    √       Pre-Rating                      MicroFinanza Rating
     fostering transparency while supporting and contributing to the          services (institutional
     consolidation of microfinance institutions.                              diagnostic and mini-        100

     MicroFinanza Rating is one of the most active and experienced            rating)                      80
     specialized rating agencies, with more than 220 ratings and              √      Services for
     assessments conducted in 37 countries worldwide. We operate in           investors      and           20
     Africa through our office in Nairobi, Kenya, one of our 5 offices        information/                  0

     worldwide.                                                               transparency                       2005       2006       2007       2008

     Traditionally, our core product is the Microfinance Rating, an           services
     institutional and financial analysis focusing on operations,             √       Social rating
     performance and risk profile of the MFIs (including cooperative          √       Credit Rating
     structures and banks).
                                                                              Serving the above-mentioned purpose, MicroFinanza Rating
     A large and increasing number of investors and donors use our            launched a Social Rating product, developing an innovative and
     reports, and among our clients are MFIs belonging to the large           flexible methodology, which can be customized according to
     international networks. Nevertheless, in order to leverage the           specific priorities. Feedback from our clients shows that social
     demand for rating services from potential users, sensitization actions   rating is very useful as an internal management tool and as a
     are still important, not only within the community of specialized        reporting tool for external stakeholders.
     investors, but also among donors, technical partners and regulators.
                                                                              Finally, based on the experience developed so far on the rating
     In the direction of a wider scope of the microfinance rating goes
                                                                              market, we need to keep in mind that the rating itself must not
     the introduction of rating as a legal requirement for regulated
                                                                              be limited to the output only, isolated and finished. Microfinanza
     MFIs (in some Latin American countries). This goes together with
                                                                              Rating considers that the rating constitutes a process: a path
     the need to adapt the rating product to the regulatory framework.
                                                                              towards transparency and quality of services on offer. The rating
     MicroFinanza Rating is the first specialized rating agency to be
                                                                              as a product seems to address mainly investors, while as a process
     licensed by a national regulatory authority to carry out mandatory
                                                                              it also concerns public and private stakeholders (MFIs, donors,
     credit ratings for regulated financial institutions in Ecuador.
                                                                              networks, regulators, etc.).
     This is just an exemplification of our approach, claiming the need
     to render the microfinance evaluation industry more diversified          The expected achievements of this progressive approach to
     and capable of recognizing the variety of experiences present on         transparency include: 1. stimulating innovation in rating services;
     the market. Therefore, MicroFinanza Rating considers that the            2. expanding the market of MFIs initiating a rating process, where
     development of a mature, long-lasting evaluation industry of             the rating itself is just the last step in a longer transparency path;
     microfinance requires the supply of products meeting the needs           3. harmonising the entry/exit strategies of donors and social and
     of diverse stakeholders:                                                 commercial investors.

     MF Rating HO                                                                                                 MF Rating Africa
     20149 Milan – Italy                                                                     Prima Apts., Gichugu Road, Kileleshwa
     Tel: +39-02-3656.5019 Fax: +39-02-3656.5018                                                                    Nairobi, Kenya                                                     Tel: +254-20-300.6423 Mob: +254-73743.9297

10                             Number 61, March 2008

     Implications of Climate and Environmental
     Changes for Rural Financial Institutions*/
     Fideicomisos Instituidos en Relación con la Agricultura (FIRA)1 Banco de México (Banxico)2

         Introduction                                                            surface rocks, and water, within which life occurs. Producing energy
     R  ural financial institutions are facing greater threats and
        opportunities due to climate change (CC) and its impact on
                                                                                 to power our economies has increasingly modified the environment
                                                                                 to such an extent that further changes may affect world economies
primary sector economic activities. The changing composition of                  by destabilising them.
greenhouse gases (GHG) in the atmosphere is raising the                          Climate Change is a new and complex threat to long term economic
temperature of the earth’s surface; this phenomenon is modifying                 interests in the finance and insurance industry. The frequency and
weather patterns and is known as global warming (GW). Climate                    intensity of weather shifts may increase with CC and this will affect
shifts do not necessarily have universal global effects. They can                most sectors of the economy. The main sectors of the economy
generate counter-intuitive scenarios because even if the earth as a              which may directly suffer from impacts of CC include agriculture,
whole continues to warm up gradually, large regions may experience               forestry, fishery, food and beverage distribution, infrastructure,
a disruptive shift into colder climates. Moreover, the greenhouse                transportation, health and the financial sector. The combined effect
effect has a potential negative impact on the world’s sea level and              of severe climate changes and the underlying socioeconomic trends
climate. In consequence, natural disasters have notoriously increased            such as population growth and unplanned organisation have the
in the world throughout the last decades.                                        potential to undermine the value of businesses assets, diminish
The uncertainty of future incomes complicates both short-term                    investment viability and stress insurers, reinsurers and banks to the
production decisions and long-term planning (e.g., expansion of                  point of impairing profitability and even insolvency. Financial
production or capital investments in machinery and equipment) in                 institutions will be increasingly compelled to respond and they will
the primary sector economic activities. Since the probability of                 need to estimate the full extent of consolidated financial liabilities
default is relatively high, lending institutions are less willing to provide     throughout all sectors of the economy and in all regions of the
loans to farmers. In synthesis, CC is increasing the frequency and               world to fully inform their investment banking, assets management,
severity of extreme catastrophic events with an unknown net effect               equity research and portfolio risk management activities. In the
in primary sector economic activities.                                           banking industry, the risk which is most likely the cause of banks’
                                                                                 failure is the effect of significant credit losses which in turn may
Impacts on Primary Sector Activities                                             cause liquidity crises. The risk of default from CC would mainly
Since 1980, Mexico has had at least one major natural disaster per               come from uninsured costumers. As yet, insurance is not readily
year. In addition, consistent with international statistics, Mexico has          available for some risks such as floods in agriculture in some
also undergone an increasing number of documented catastrophes                   countries. Nevertheless, the main insurance institution for the
over the last years. The most common natural disasters in primary                agricultural sector in Mexico offers the following services:
sector activities are: floods, desertification, droughts, hurricanes,            reinsurance services for excess of loss, damage appraisal for natural
soil erosion, fires, land slides, pests, volcanic activity, changes in           disasters, reinsurance schemes, and damage appraisal and insurance
water temperature, and El Niño-like phenomena.                                   for zones affected by natural disasters.
Economic Effects                                                                 The Government Environmental Policy
The atmosphere is a global environmental asset and this is a layer               The Mexican government is interested in carrying out CC mitigation
mainly composed of nitrogen, oxygen, carbon dioxide and argon.                   and adaptation strategies. The Climate Change Intersecretariat
Although their exact measurements are difficult to estimate, any                 Commission (CCIC) represented by a number of Secretaries of
change in the composition of GHG in the atmosphere will alter                    the Mexican government was created in order to coordinate the
the biosphere which is the part of the earth, including air, land,               design and implementation of national policies for the prevention

  FIRA may have developed or may develop in the future, other reports that are inconsistent and reach different conclusions from the information
presented in this report. Those reports reflect the different assumptions, views and analystical methods of the analysts who prepared them and FIRA is
under no obligation to ensure that such other reports are brought to the attention of any recipient of this report
  Trust Funds for Rural Development
  Bank of Mexico

                                                                                         Number 61, March 2008                                           11

and mitigation of GHG emissions, to respond to the CC effects and, in             material damages and the new financial capacity. This technical
general to promote the actions, programmes and strategies established             advice is normally used to regain production capacity, lessen financial
in the United Nations Convention for Climate Change (FCUNCC) and                  risks and improve profitability. In both cases the refund may not
other agreements derived from it such as the Kyoto Protocol.                      exceed an annual amount of 1,458 US Dollars per economic
FIRA will increasingly participate in financing and providing technical
support to Clean Development Mechanism (CDM) projects. Nowadays,                  New Opportunities for Rural Financial Institutions
there are 9 kinds of CDM projects in Mexico. These are related to: i)             Climate Change is considered to be the main global environmental
manure of waste in pigs’ farms, ii) manure of waste in cattle stables, iii)       challenge of this century and the international community has
utilisation of methane in sanitary fillings, iv) production of Aeolian            increased its commitment to reduce GHG. The Kyoto Protocol
energy, v) production of hydroelectric energy, vi) incineration HFC-23,           shows the commitment of industrialized countries in relation to
vii) N2O mitigation in the chemical industry, vii) cogeneration and               the reduction of GHG emissions. As a result, the World Carbon
energetic efficiency, and ix) transport. At the moment 156 projects have          Market (WCM) was created to offer sustainable development
been registered involving 8,243 thousands of tons per year reductions             opportunities for the participant countries. Mexico has a great
of CO2.                                                                           potential to reduce GHG through the implementation of CDM
                                                                                  projects. Nevertheless, not many CDM projects have been
FIRA’s Contingency program for Natural catastrophes
                                                                                  developed by Mexican entrepreneurs because of the absence of
As a bank of rural development FIRA is fully committed to the federal             massive promotion of the opportunities offered by the WCM and
government strategy. FIRA looks for feasible projects in order to allocate        the lack of public and private institutional support. In contrast,
its resources and promotes research and development by the transfer               foreign enterprises have been more successful in developing CDM
of Technological Subsidies and the use of its Centres of Technological            projects, particularly in the animal husbandry sector.
Development (CDTs).                                                               Insurance companies should be equipped to analyse the new risks
There are two main programs that FIRA applies to address natural                  of CC, and to help customers manage these risks. Such institutions
catastrophes which are: the Program of Liabilities Restructuring and              should closely monitor direct impacts of CC, or impacts of
the Permanent Program of Support for Regions Affected by Natural                  regulations aimed at mitigating CC. It is in the best interest of
Disasters. Firstly, the Program of Liabilities Restructuring is to help           financial institutions to increase the awareness of the consequences
accredited farmers who face a delay in production or undergo total                of CC within the general public. This could be done either directly
loss. A specific agreement is issued between the financial institution and        through usual media means, via their network of distribution agents
its debtor in order to modify the terms and conditions of the initial             and outlets, or via institutional investors, so that their clients
debt. In addition, in the case of difficulties to pay actual and written-off      understand measures or decisions made in relation to the
accounts a new liability can be consolidated. Secondly, the Investment            consequences of CC. Several leading insurance and fund
and Capitalization Fund operates in combination with the Federal                  management companies have already begun to adapt to these
Government’s fiscal resources when the General Attorney Office                    changing business conditions. These companies are developing a
acknowledges the existence of a generalised natural disaster affecting            range of risk management programs and innovative new solutions
an entire region.                                                                 that not only promote GHG emissions reduction but also provide
                                                                                  new business opportunities. A key element in providing effective
Financial resources from FIRA are immediately provided to assist                  solutions to extreme weather will be closer collaboration between
accredited producers whose means of production have totally been                  the public and private sectors.
damaged. Through:- a).deferred payments and confers new payment
                                                                                  The provision of insurance and risk management services is likely
schedules to individuals or organised entrepreneurs in order to avoid
                                                                                  to improve the viability of CDM and joint implementation (JI)
loan defaults and accumulation of written-off accounts. b). financial
                                                                                  projects and make them more attractive and secure. Although
resources are allocated to reactivate local economies in the affected
                                                                                  weather risk management is not a new strategy, the market for
regions; in particular, the financial mechanisms applied are: changeable
                                                                                  weather derivatives contracts represents a viable risk management
preferential rates, fixed preferential rates, warranty services, loans for
                                                                                  option for hedging non-catastrophic climate-related risks and may
working capital and loans for fixed assets1. In addition, the technological       allow traditional insurance tools to be extended into new territory.
advice provided by FIRA aims to prevent investment projects from the
risk of loan default. FIRA reimburses 100 percent of the amount                       In conclusion, CC has the potential to cause major disruptions to
invested in services related to assessment and consultancy to determine               the primary economic sector and may affect financial organisations;
                                                                                      therefore future challenges will require proactive coordinated work
                                                                                      in order to establish preventative mechanisms and detection of
   The limited financial resources for these loans are administered under the Program opportunities to favour environment-friendly projects.
 of Credit by Administration (PROCREA) with specific rules determined by FIRA

12                             Number 61, March 2008

     Grass Root Financial Empower ment -
     Grass Root           Empowerment
     An Indian Experience
                                        by Ms. Lalitha Mahadevan, General Manager, NABARD, Mumbai, India

1.   A Backdrop                                                          Urban India has been rapidly growing for the last 10 years and its
                                                                         growth has been accelerated especially during the last 5 years, the
     I   ndia hosts over 20% of the World’s poor. Poverty is more
         than serious in rural India, where most of the families are
                                                                         same cannot be said for rural India. There is urgent need to bridge
                                                                         the gap between urban and rural India, which can come about only
dependent on agriculture for their livelihood. In fact, the rural        through explicit and effective initiatives to empower rural India for
India consists of 700 million people living in 6,38,000 villages. The    socio-economic development, strengthening of rural infrastructure,
villages are characterized by low incomes. About 85% of the              technology facilitation and knowledge transfer. The Information and
households have an income less than $ 75 per month. Rural India          Communication Technology (ICT) has the greatest potential of being
also faces manifold problems such as denudation and degradation          leveraged for transforming rural areas to be on par with urban areas.
of natural resources due to over-exploitation of unsound
technologies, etc., coupled with poor infrastructure to facilitate       2.   Empowerment of rural poor – Group Approach
transfer of appropriate technologies and forward and backward            One of the most important tools being experimented in India to
linkages. Other problems faced by rural India include inter alia,        empower grass root level people is the SHG (Self-Help Group)
food security, lack of access to safe drinking water, power, absence     movement initiated by NABARD about a decade ago. The SHG-
of roads, loss of bio-diversity, environmental pollution, etc. Women     Bank Linkage Programme has emerged as the largest Micro Credit
are the most affected and bear the brunt of poverty. Presently           and Micro Finance Programme in the world with more than 2.9
about 35% of the rural families in India are headed by women and         million groups linked to banks since inception, covering 40.95 million
they also earn less than US $ 500 per annum. The worst impact of         families across the country, over the same period. The bank loan
poverty is an increase in the drudgery of work done by women and         assistance provided to the groups amounted to Rs.1,80,407 million.
the misery of children, as rural women have the basic responsibility     The programme has brought to fore the fact that the financial
of fetching food grains, wood, fuel, fodder and water. Women and         empowerment especially of poor women enhances their dignity and
girl children are last in the family to receive attention for health     self-esteem, both within and outside the family. The SHG-Bank
care, education and other facilities and even food.                      Linkage programme, which comprises mostly women groups, also
Major problems in rural India can thus be summarized as food             facilitates financial intermediation for institutional and other agencies,
insecurity, low productivity, shortage of basic amenities, poor health   besides acting as a channel for implementation of many of the
care facilities as well as other social problems such as gender          Government sponsored programmes. It has also paved way for
disparities, social taboos, exploitation, dependency syndrome,           formation of grass root level people’s organizations such as Water-
migration to urban areas in search of employment, poor governance,       user’s Groups, Village Ayojan Samities, SHG Federations, etc., who
etc.                                                                     act as Second-tier financial intermediaries.

According to a NSSO survey, about 51% of the rural population            Another important development, which has been witnessed within
do not have access to institutional finance leading are to Financial     the programme is the formation of activity-based groups, who in
Exclusion. About 26% of the farming community also does not              turn, facilitate linkages with banks for financial support for specific
have access to institutional credit. Further, the growth in the          economic activities.
agricultural sector in India has skewed down to less than 2% over        Self-Help Group/Bank Linkage Programme helps formation of ethnic
the last decade, falling behind even the population growth. The          groups like Tribal Women Groups so as to mainstream them for
Government of India (GOI), therefore, has initiated several              institutional finance. In the North-Eastern region of the country
measures to ensure capital formation in the agriculture sector to        again formation of ethnic groups for mainstreaming through
ensure a growth rate of at least 4% so as to achieve an overall          institutional finance is found to be an easy option and a quickest
GDP of 10% in the country.                                               solution for Financial Inclusion. The group approach for lending
                                                                         helps in reducing transaction cost for both banks as well as for the

                                                                                 Number 61, March 2008                                          13

     target group. The group approach promotes saving habits amongst       generation, etc. assume significance in this context. While some
     rural poor, since their savings act as collateral for bank lending.   experiments are taking place in sectors such as education,
     The group approach also expedites mainstreaming of the poor           training, health, etc., much still remains to be done to link up
     especially women through institutional finance leading to Financial   ICT, especially in the agriculture sector. ICT-e-Choupal and
     Inclusion.                                                            EID Parry have used ICT for providing support to farmers
     Banks in India have started looking at the group approach as the      and carrying out their procurement for several years. Similarly,
     best means for outreach and business opportunity. Bank branches       n-Logue Communications and e-Sagoo project of IIT,
     themselves have started forming groups so as not only to lend to      Hyderabad, have used video conferencing and photographs to
     them, but also to use them as Business Facilitator/Business           provide advisory services to farmers. These are again, isolated
     Correspondents. The matured groups have also been supported           efforts and ICT based rural agriculture support centers needs
     to set up of micro enterprises, which are the stepping-stones for     to be set up in each village, so as to provide holistic support to
     future. Small and Medium Enterprises (SMEs). Banks have               each farm in each village. Linking farmers and farm groups
     also recognized the fact that the group approach for lending          to commodity exchanges, finance and insurance companies, is
     leads to not only larger coverage and outreach, but also group        yet another area, where ICT initiatives can play a major role.
     entrepreneurship, group enterprises and group empowerment.            For agricultural risk management measures, which include inter
     The group approach has an advantage in enforcement and                alia, risk cover against climate change, crop loss and price
     acquisition of collective bargaining power for production,            risks. ICT initiatives can play a crucial role in mitigating the
     technology transfer and marketing. For implementation of cluster      risks involved to a great extent, through establishment of IT
     type of projects, also the group approach helps a lot. Group          enabled Weather Monitoring stations to provide weather related
     approach evolves into community approach which in itself is a         data accurately and also facilitate participation of farmers in
     prelude to efforts for a financial empowerment of grass root          the Commodity Futures Trading (both spot and futures).
     level people’s communities.
                                                                           4.   Financial empowerment – Role of Banks
     3.   Role of ICT for empowerment
                                                                           Institutional agencies including banks should come forward to
     There have been a number of companies, which are setting up           support not only mere production and investment activities,
     bases in villages over the last several years. Internet kiosks run    but also other emerging areas particularly the IT enabled services
     by a village entrepreneur is the precursor to set up a full-fledged   and technologies so as to reduce the divide between urban and
     business center in a village, which could connect urban and rural
                                                                           rural areas and to increase their income levels by focusing on
     India. While it could be a Trade Center, taking rural goods to
                                                                           low-tech manufacturing jobs. China has created about 150
     urban market and vice-a-versa. The most important outcome
                                                                           million jobs in the low-tech manufacturing sector over the last
     could be setting up of Rural Production or Business Centers in
                                                                           11 years. Institutional agencies should put in place appropriate
     the form of Agribusiness Malls, supplying goods and services
                                                                           plan for execution at the grass root level which ensures Financial
     not just in nearby urban markets, but all over the world. Lower
                                                                           Inclusion and Empowerment at the grass root community level.
     manpower cost will shift production centers to these areas and
     will be creating wealth there, thereby enhancing rural incomes.       5.   Conclusion
     While similar local level experiments are being tried by ITC e-       Financial empowerment at the grass root level assumes
     Choupal and ITC e-Choupalsagar in 4 states in India, using            significance for regular income generation and decision-making
     information and communication technologies, a significant             by the poor. However, mere financial empowerment alone
     amount of experimentation and hard work is required to convert        may not bring about the desired results. From this experience
     the opportunities into scalable realities. For empowering rural       additional input such as entrepreneurship, skills training,
     poor, ICT can play a pivotal role and can be leveraged to promote     knowledge connectivity, health care, family approach, holistic
     Education and Training, Health services, Agriculture/agro-            and integrated approach, synergy and convergence amongst
     industries, Small scale rural industries/Micro-enterprises,           different agencies, use of IT enabled services, etc., need to be
     Common Community oriented efforts such as water harvesting            dovetailed to make it a success. Timely and uninterrupted
     and local governance, etc.                                            credit, credit plus approach, family approach, cluster approach,
     Financing of all IT-enabled services, rural transport, courier        provision of basket of interventions, preparation of micro
     services, buying-selling, trading, decentralized/centralized energy   plans for each family etc.

14                           Number 61, March 2008

Bridging the Digital Divide
                                                                                B2BPRICENOW.COM WEBSITE DESCRIPTION AND
The Land Bank Of The Philippine’s Strategic E-Commerce For
Farmers Program
                                                                                B2b means business to business where a single business unit can transact
  I      n this age where almost everything can be done through the internet,
         from information exchange to electronic commerce, one has to
                                                                                with another business unit; price is the most important market information
                                                                                which should be provided to/by all parties – both buyers and sellers; now is
         take advantage of the opportunities it presents.                       the ability to provide the latest, up-to-date price information via the internet
In the Philippines, a number of Philippine enterprises have utilized the        and cell phone; and .com is the capability to do transact business on-line.
internet particularly since the use of e-commerce reduces the cost of           B2B covers the three economic industries namely: Agriculture and Food
doing business. With the e-Commerce Law in place, more Filipinos are            Products, Industrial and Consumer Manufacturers. It has the following
expected to participate in this emerging economy.                               features:
In line with this a private company has developed an e-market place called           Product Postings where members can post their product of interest (B2B) which covers; agriculture and food products,                    whether as a seller or a buyer; canvass prices; and negotiate on-line.
consumer and industrial manufactures., Inc. (the                     Customized Market Information - Members can download product
Company) has approached the Land Bank of the Philippines (Land Bank)                  suppliers, buyers, price data, etc.
and offered the e-market place for free for the use of Land Bank’s mandated          Mobile application - The website may be accessed through the mobile
clients. So in year 2001, Land Bank entered into a formal agreement with              phone so a member need not go to an internet café every time., Inc. to launch the Strategic e-Commerce for Farmers                 e-bulletin of trade associations - The website provides service for
Program.                                                                              advertising needs and development of web pages of interested
PROGRAM DESCRIPTION                                                                   companies or organizations.
The Strategic e-Commerce for Farmers Program (the Program) is an                OPERATING FRAMEWORK AND STRATEGIES
internet-based program that provides timely and relevant market                 Information Dissemination/Education and Capability-Building
information as well as promotes direct market linkages among farmer and
                                                                                Roadshows and trainings jointly conducted by Land Bank and
fisherfolk cooperatives and institutional buyers. It is primarily anchored on, Inc. to inform and educate farmers on the availability
the website.                                                    and use of the website as well as enroll the cooperatives free of charge.
The Program hopes to address various marketing concerns besetting farmers       Following their enrolment, products are posted to the website.
in the Philippines. For one, agricultural marketing in the country is           Product postings updated by the cooperatives to reflect their marketable
characterized by a multi-layered system which in certain cases puts the         surpluses.
producers – the small farmers and fisherfolk, and the consumers at a
                                                                                Program Connectivity and Support Services
disadvantage. In the same line, farmers’ lack of access to these market
information lead them to produce what they are traditionally growing without    The establishment of B2B centers were promoted to provide continuous
due consideration for market needs. This production-oriented style of           access to the b2b website. A b2bcenter is a business center providing
farming puts them at an even greater disadvantage. Not only do farmers          services that cater for the business needs of the community. Primarily,
find a hard time looking for buyers come harvest time, but also farmers         b2bcenters provide access points to website that will result
are content with the buying price of the middleman as they do not have          in efficient marketing activities. It also offers other services such as internet/
source of price information.                                                    computer rental, money remittance, photocopying, courier, e-load and cell
                                                                                phone sale, among others, to sustain its operation.
The Program has a two-pronged approach to cooperative development
                                                                                a). Electronic payment system installation
on the use of ICT and e-commerce; Content and Connectivity. The Content
Phase is the creation of an e-marketplace, which is the         In order to complete the whole cycle of business transaction, a secure trade
website where one can post, canvass, buy and sell products on-line, free of     transaction system within the website was developed for an online payment
charge. While the Connectivity Phase basically involves the establishment       system.
of b2bcenters to serve as access points to the b2b website and at the same      LandBank has invested P3.7M in,
time, an income generating project for b2b Company.                             Inc. through the Bank’s Accelerating Change in the
The programm was started to provide clients access to relevant market           Countryside through Equity Sharing Strategy Program
information/technology; Promote market-oriented production and improve          (ACCESS) mainly for the installation of the payment
                                                                                system and for the expansion of                     An artist’s
competitiveness of LANDBANK-assisted cooperatives (BACs) and                                                                                      illustration of
farmer/fisherfolk beneficiaries, Present market options to cooperatives         b). Provision of credit assistance for technology                  B2B Center
and SMEs for optimum quality and price/return on goods produced and             loans
purchased, Promote direct market linkages among buyers and sellers; and         The Bank shall provide financial assistance for the acquisition of computers
expand LANDBANK reach to priority clients.                                      and other ICT paraphernalia.

                                                                                         Number 61, March 2008                                                15

                                                       April to December 2008
April 2008                                                                          Women exposure visit – 4th – 15th Aug. 2008 in Uganda
       50th Executive Committee Meeting                                             2nd Central Banks Forum 27th – 29 August 2008, in Zambia
       Preparing the AA dialogue papers                                             RACAs meeting
       Commission a study on : Effects of climate change on Agricultural            Membership drive in Uganda and Zambia
       production and food security and role of financial Institutions
                                                                             September 2008
       for Sub Saharan Africa
                                                                                    Preparation of AFRACA News 63
       5th AFRACA MFI Forum on 23 -25 April 2008 postponed
                                                                                    Preparation of 16th General Assembly
May 2008                                                                     October 2008
       RACAs meeting                                                                Preparation of 16th AFRACA General Assembly
       TCDC 12th – 23rd May 2008                                                    Review and planning of AFRACA’s activities for 2009
June 2008                                                                    November 2008
       TCDC 2nd – 13th June 2008                                                    General Assembly 24th to 28th November 2008
       Joint workshops with AFMIN and other networks                                      √    15th TAG meeting – 23rd Nov.
       Preparation of AFRACA News. No. 62                                                 √    51st Executive Committee Meeting -24th Nov.
       5th AFRACA MFI Forum on 18th – 20th June at a venue to be confirmed                √    Technical Workshop – 25th & 26th Nov
                                                                                          √    16th General Assembly – 27th Nov
July 2008
                                                                                          √    Field visit – 28th Nov.
       EACRAT Sub regional workshop 22nd – 24th July 2008
                                                                                    Membership Drive in Tanzania
       Membership Drive Ethiopia
                                                                             December 2008
August 2008                                                                         Preparation of AFRACA News 64
       TCDC 11th – 22nd August 2008                                                 Membership drive in Kenya
       Preparation of 16th AFRACA General Assembly to be held in November           Annual Christmas Break 22nd December 2008 to 3rd January
       2008 in Tanzania

1. Technical Corporation among Developing Countries                          3. East Africa Sub Regional Workshop

 T he TCDC schedule for 2008 is almost finalized. By this notice
   we request all those institutions which would be interested in
                                                                             The East Africa Sub Regional workshop is scheduled to
                                                                             take place in Addis Ababa, Ethiopia on 22nd to 24th July
a TCDC programme to send in their requests indicating their areas            2008.
of interest as well as the period.
                                                                             4. 16th AFRACA General Assembly
2. 5th AFRACA Microfinance Forum: Optimizing financial
                                                                             The Executive committee of AFRACA has resolved that
services delivery to rural areas
                                                                             the 16th AFRACA General Assembly will be held on 24th-
Due to unforeseen circumstances, which are beyond our control;               28th November 2008 in Tanzania. As is the tradition, a two
the 5th Microfinance forum which was scheduled to take place                 day technical workshop will precede this important event.
from 23rd-25th April 2008 in Benin has been postponed.                       The two events will be co-hosted with Dar es Salaam
                                                                             Community Bank and all AFRACA member institutions in
The new tentative dates for this Forum are now 18-20th June 2008
at a avenue to be communicated later.

16                          Number 61, March 2008

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