Finance & Communities Volume 01 September 2005 Technical support and investment for the community finance sector THIRTY-FIVE YEARS OF PARTNERSHIP > p.02 PAMÉCAS NETWORK 10th ANNIVERSARY: A BUTTERFLY EMERGES FROM ITS COCOON… > p.10 EDITORIAL THIRTY-FIVE YEARS OF PARTNERSHIP t DID we will celebrate our 35th anniver- A > "Money serving people... never the other sary this autumn. Over these thirty-five way around." This slogan from the years of cooperation and friendship we Desjardins Group shows how important have grown and progressed with our partners, Desjardins considers its members. DID confirming the relevance and importance of our has also taken this principle to heart, put- underlying values. ting the individual at the centre of its efforts while striving constantly to create In 1970 the Desjardins Group decided to pro- better access to services that truly meet mote cooperative values and share its know-how the needs of each individual. by creating DID. From the outset several key prin- ciples marked our projects and continue to guide > DID firmly believes that strong and enduring us. These principles were inherited from the partnerships are important. Partnerships pro- Desjardins Group and are based on the spirit of vide the lessons and development that can solidarity that inspired its founder, Alphonse truly improve the living conditions of the poor. Desjardins. These principles state that: These 35 years have enabled DID to grow > Access to financial services is a necessity, and learn. The international seminar in May not a privilege. Innovative strategies are on the accessibility of financial services required to ensure that we reach the entire proved just how far DID and its partners have population, including isolated communities progressed over the years. Today, our part- and the poorest. ners are redesigning their structures to make them more efficient and are adapting servi- > We must encourage the creation of demo- ces to better serve their members. These cur- cratic and locally-owned financial institu- rent concerns reflect an institutional maturity tions relying on local savings and skills. based on experience that is wide-ranging and This will enable these institutions to offer continuing to expand as it is put to use on long-term access to financial services four continents, in many languages and envi- while demonstrating the desire and ability ronments. We can look forward to the next of communities to meet their own needs. 35 years with confidence... Anne Gaboury President and Chief Executive Officer 02 Finance & Communities | September 2005 OUTSTANDING INDIVIDUALS Nkinda Lukali Mayenga > Nkinda Lukali Mayenga is the director of ope- Jean-François Mopaka is director of opera- Jean-François Mopaka also coordinated the rations and support for financial cooperatives tions for the Union of OTIV savings and credit official launch of the Union in 2004. Because with Dunduliza in Tanzania. He was one of DID's cooperatives in Madagascar’s province of the Union is now legally constituted, all Union main collaborators in setting up the new financial Toamasina. An economist by training, he has financial affiliates must comply with the coun- cooperative model tested in Tanzania where it devoted his time and energy to the Union since try's regulatory framework designed to protect proved its effectiveness. Dunduliza has the man- 1994, when its financial cooperatives were first member savings. This procedure also increased date to deploy this model and continue develop- being set up. There are now 26 cooperatives the strength and cohesion of the network. ment of a federated network of financial coope- and four service outlets totalling nearly 30,000 "Nothing equals the power of cooperation ratives in the country. In three years time, the members with combined assets of 4 billion based on solid foundations and mutual aid," he organization will be called on to take over com- ariarys (CAN $2.5 million). states authoritatively, having successfully con- plete management of the network being set up. vinced five financial cooperatives which had left His efforts helped keep the network on track the network in one sub-region of the territory to Nkinda Lukali Mayenga helped the first financial during the 2002 political crisis in Madagascar. rejoin it. cooperatives, established in the capital Dar es Later, he was a determining figure in turning the Salam, win the confidence of the community. network around. From December 31, 2003 to With many years as an inspector-auditor with This confidence was shown by a strong increase June 30, 2005 the network portfolio at risk Madagascan financial cooperatives, Jean- in membership which rose from 166 to 2,849 in (90 days) dropped from 46% to 20%. This François Mopaka has always had the members' under two years. Over this period, savings in Dar trend is being maintained with energetic reco- interests at heart. "It was for the benefit of the es Salam grew 1,062% and credit 937%. very activities and a thorough review of the members that the OTIV network and Déve- Thanks to the awareness activities he organized, credit management process. loppement international Desjardins set up the women have gained a privileged position within financial cooperatives and later worked to turn the network and by 2004 accounted for 50% of them around," he explained. the clients and board members. His commitment to operational transparency and accuracy also enabled the network to post excel- " N OT H I N G E Q UA LS T H E P OW E R lent results in credit risk management, with a 90- OF COOPERATION BASED ON SOLID day portfolio at risk on December 30, 2004 of FOUNDATIONS AND MUTUAL AID." only 1.1%. "Managing a microfinance institution Jean-François Mopaka requires thorough preparation to deal with all the challenges involved. Good governance has to be introduced along with well-established financial and administrative standards, clear policies and procedures and an efficient recovery procedure," explains this manager. SACCOs (savings and credit cooperatives) affiliated with the network today serve nearly 25,000 and have combined assets of CAN $1.2 million. Jean-François Mopaka > September 2005 | Finance & Communities 03 NOTEWORTHY INNOVATIONS RWANDA: ON THE Addressing the challenge ROAD TO BETTER of data security on the web INFORMATION SHARING While the usefulness of a credit bureau cannot be "Setting up this centre to serve the microfinance The need for risk management, control and regu- overestimated, the challenges facing it, especially sector brought improved quality of information on lation soon becomes apparent in any country issues of confidentiality and data security, should the loans made and limited the growing pheno- where community finance develops. Rwanda, with not be underestimated. Using the Internet is a menon of overindebtedness among Rwandans," nearly 400 microfinance institutions spread out major additional challenge since Internet access points out Angélique Kantengwa, director of the over the country, is an example. The lack of infor- today is still often linked to security risks. The main NBR's banking supervision department. "Due to mation on borrower creditworthiness had major challenge facing the team assembled for the the NBR’s aggressive policy against bad risk consequences, especially in terms of borrower project was to provide access to borrower data via borrowers some individuals tried to use the overindebtedness. the Internet in a safe and secure manner. microfinance sector to avoid repaying bank debts, but the centre helped prevent such attempts. The National Bank of Rwanda (NBR), with finan- The project team developed a data encryption Over the long term, we intend to amalgamate the cial support from the FIRST* program, decided to solution to solve the problem. Data sent over the bank information centre with the MFI centre to take on this challenge in 2004. It sought out sup- web cannot be read except by authorized users. develop a true rating system for borrowers that port from Développement international Desjardins A control procedure is also used to show which can be used by the whole financial and business to set up an information centre to provide microfi- users access a file. If files are accessed exces- sector in Rwanda." nance institutions (MFIs) with information on sively or improperly, the person in charge at the credit risk and bad loans. Although there are centre is alerted and can take appropriate action. already credit bureaus operating in neighbouring Soon an authorization dongle will be added for countries, such as South Africa, this is the first one additional security. This technology puts the to be set up in Rwanda. Rwandan information centre far ahead of all similar credit bureaus in this part of Africa. The centre offers MFIs access to a great deal of information on the creditworthiness and credit his- tory of their clients. Lenders can use it to reduce risk and increase profitability. Borrowers can make use of their good credit history to increase their borrowing. It is a tangible incentive for borrowers. "The bureau is helpful in our loan recovery strate- gy, especially with major borrowers who are behind in their payments. Just mentioning that they could be listed as a bad credit risk and refused loans at other accredited financial institu- tions makes them understand the importance of behaving in a responsible manner. In this way, the centre also contributes to protecting member savings," notes Claude Gabiro, manager of the Kigali branch of the Agaseke financial centre for entrepreneurs in Nyarugenge. With better credit management, Rwandan finan- cial institutions will be able to increase access to credit and reduce costs. This is a major advantage for clients. The centre also helps improve the financial status of borrowers by preventing them from becoming overindebted. *FIRST is a consortium of donor agencies aimed at financial sector capacity building in developing countries. 04 Finance & Communities | September 2005 PARTNER UPDATES Lecira Juarez > Madagascan networks Filipino visitor to Lithuania The tour took place from July 11 to 15 and inclu- extend their reach sees many parallels ded visits to the Central Credit Union, the Association and several of its affiliated coopera- Phase One of the microfinance program in Last October, DID took advantage of Cooperation tives. At each visit, Lecira Juarez was able to meet Madagascar, now reaching completion, is already Week to acknowledge the very special commit- decision-makers in the various organizations and producing excellent results. Set up by the ment of eight community finance advocates who discuss with them the main challenges they had Madagascan government with financial support are featured successively in each issue of Finance encountered and the solutions they had found. from the World Bank and International Fund for and Communities. One of them, Lecira Juarez, These shared experiences enabled her to draw Agricultural Development (IFAD), this program who is director general of the Panabo multi- positive conclusions concerning the growth of her enabled creation of 75 mutuals and forty service purpose cooperative in the Philippines and was own institution. outlets within five unions in the five regions of the first woman to head NATCCO, the national Madagascar. Together, these institutions provide network of cooperatives, was chosen to take part In this regard, ALKU was a particularly valuable service to 112,000 members and have assets in a tour of the Lithuanian Association of Credit and relevant reference since it is a highly struc- worth over CAN $121 million. The first phase is Unions (ALKU) and the Lithuanian tured and integrated network, whose operations being extended to the end of the current year Central Credit Union. She are standardized and whose member organiza- through renewal of three contracts under which received a warm welcome tions must respect a well-defined regulatory the five DID advisors already at work in Mada- from another top com- framework. This is of special interest, since the gascar will consolidate the five OTIV financial munity finance advocate, NATCCO network in the Philippines is currently cooperative networks. These efforts will mark the Ramunas Stankevicius, working to reconfigure its structure in order to end of Phase One of the program. who headed ALKU before better standardize practices and ensure greater being named director of cohesion. In addition, a new law governing savings the Central Credit Union. and credit cooperatives is about to be introduced in the Philippines which will require that the coope- ratives make certain adjustments in order to con- form to the new legal framework. Both the Lithuanian and Philippine networks also have a central credit union, providing a further subject of Ramunas Stankevicius > discussion where the partners were able to share their respective experiences and concerns. This activity enabled two DID partners, each of them highly skilled and committed to their institu- tion, to increase their expertise and broaden their vision of community finance. "This study tour was truly a valuable and enriching experience for me. It allowed me to gain an understanding of the model that will continue to inspire me in my advocacy for an integrated, strongly cohesive financial coope- rative movement in the Philippines," explained Lecira Juarez at the end of her stay. September 2005 | Finance & Communities 05 NEW CHALLENGES Verónica Daley Hernández Pizaño (left) with a member > SERFIR: governance next target DID has obtained the renewal of two major con- to reach financial profitability and maintain growth tracts in Mexico, both aimed at consolidating the in membership with a goal of 25,000 members in financial institutions set up with DID support in Chiapas and Tabasco, and 15,000 in Huasteca by 2003. Operating under the acronym SERFIR, June 2007. these institutions have experienced extremely fast growth over the last two years: These contracts are part of the efforts undertaken in recent years by SAGARPA, the Mexican Ministry > in the states of Chiapas and Tabasco, of Agriculture, designed to extend access to finan- membership has now reached 13,000 cial services into marginalized areas of Mexico. The and there are 16 branches SERFIR formula appears quite successful. Since being set up in 2003, SERFIR institutions in > in the Huasteca region, which includes the Chiapas and Huasteca have attracted some states of Veracruz, Hidalgo and San Luis 19,000 members, many of whom come from com- Potosí, 6,000 members are now receiving munities of indigenous peoples in rural and remote services through 11 branch offices. areas. SERFIR also places special attention on The two contracts recently awarded to DID are meeting the needs of women and has specific aimed at strengthening governance so that the products for them, such as Credimujer. Women directors become fully autonomous by the end of make up about 50% of SERFIR membership. the support project. "The proper training and tools "The creation of SERFIR has empowered the peo- should be provided to these important SERFIR ple of Huasteca by giving them access to top qua- staff members to help them fulfill their responsibi- lity financial services," concludes Verónica Daley lities. It is likely that this assistance, when added to Hernández Pizaño. "Credit is now playing a major SERFIR's many existing strengths such as role in the economic development of the region." detailed bylaws, proper control systems, trans- parency and honesty, will lead to consolidation of this financial institution in a very short time", explains Verónica Daley Hernández Pizaño, direc- tor general of SERFIR-Huasteca. In addition, the ambition of the network of financial cooperatives is 06 Finance & Communities | September 2005 HIGHLIGHTING MICROFINANCE DID and its Partners on the International Scene DID’s seminar featured In Tanzania DID partners speak of their experience in Québec media On June 8 and 9, a regional seminar was organized in Tanzania by the World Bank on the topic of The one hundred participants at DID's international strengthening financial cooperatives. A dozen English-speaking countries were represented. The event, seminar in Quebec City last May were not the only which placed special emphasis on regulations and supervision, featured DID representatives and ones who learned more about how DID and its Gonzalo Tapia Velasco from the BANSEFI development bank in Mexico. This DID partner emphasized partner networks are handling innovation and chal- the groundbreaking work accomplished in Mexico with support from Desjardins for the supervision and lenge. Seminar activities and DID partner projects training of local experts. also attracted media interest in Québec. There were several news reports and items on radio pro- grams and in various publications on this major event organized as part of the International Year of Microcredit. Along with stimulating discussion among partici- pants on the issue of financial service accessibility, the seminar also gave broad exposure to the uncontested role that microfinance plays in the fight against poverty. Participants at the World Bank Seminar > The Women Advance Trust (WAT) SACCO, a DID supported cooperative, was visited by Robert Greenhill, the new president of the Canadian International Development Agency (CIDA). He was extremely interested by WAT president Tabitha Siwale's presentation of the cooperative's achieve- ments, the progress made since collaboration began with DID and the process of integration into the Dunduliza federated network. During the same period, Lord David Triesman, the British Parliamentary Under-Secretary of State with responsibility for Africa, carried out a mission to monitor the initial results of the Commission for Africa in preparation for the G8 Summit held July 4-8 in Scotland. The Dunduliza WAT financial cooperative had the honour of receiving Lord Triesman, along with an important delegation. Tabitha Siwale again emphasized the role of DID’s partnership in the growth of her cooperative during the last few years, and mentioned the financial support that DID received from Britain's aid program (DFID) over the past year to start up the Dunduliza network in Tanzania. Québec Premier during his visit in Haiti > Haitian financial cooperative receives special visit On June 5, SOCOLAVIM, the Haitian network’s second largest financial cooperative with CAN $3.5 million in assets, received a visit from Québec Premier Jean Charest at its Saint-Marc location 150 km outside Port-au-Prince. Quebec’s Premier was accompanied by Canada’s Ambassador to Haiti and several Québec Ministers. The Prime Minister of Haiti, Gérard Latortue, was present for this historic first official visit by a Québec Premier, which attracted extensive media coverage. The president of the financial cooperative welcomed visitors with a warm speech emphasizing the collaboration which has created a bond between this institution and DID over the last ten years. A woman entrepreneur who does business with a local financial cooperative also spoke, pointing out the impor- tance of financial cooperatives for the poor. Premier Charest congratulated SOCOLAVIM on the impressive results it has attained in just 10 years. Today, this financial cooperative serves 15,642 members and has nearly CAN $2 million in savings deposits, in addition to CAN $1.5 million in its loan portfolio. Premier Charest also spoke of the importance of Desjardins financial cooperatives for economic development in Québec and the success that this finan- cial institution inspires among people in Haiti. He was enthusiastic about the fact that the Desjardins Group had decided to use DID to promulgate the success of this Québec institution to further the wellbeing of the poor. September 2005 | Finance & Communities 07 PAMÉCAS NETWORK 10th ANNIVERSARY: A BUTTERFLY EMERGES FROM ITS COCOON… Khady F. Diop *PAMÉCAS is the French language acronym for Partenariat pour la mobilisation de l’épargne > et du crédit au Sénégal (Partnership for the mobilization of savings and credit in Senegal). ver ten years ago an ambitious dream in O Senegal to democratize financial services and improve the quality of life for Senegal’s population began to take shape. The team of what would later become PAMÉCAS* placed its hope squarely on the women and men of Senegal, convinced they could join together for greater empowerment under the cooperative banner to transform their living conditions. And the dream became reality… In 1995 the PAMÉCAS network emerged from its development cocoon with support from Développement interna- Today, after 10 years in operation, the PAMÉCAS The next step tional Desjardins (DID) and the Canadian butterfly has travelled far. PAMÉCAS now has International Development Agency (CIDA). At the 200,000 members, deposits of CAN $21 million "Today we are beginning the most interesting risk of seeming overly ambitious, the network's and a loan portfolio worth CAN $20 million. These phase in our development, during which the net- founders set a five-year goal of at least 12,000 figures are all the more impressive in light of the work will begin distributing a portion of its profits members, savings deposits of 400 million CFA fact that loans in Africa average only $700. back to the community in an even more structured francs (CAN $950,000) and loans of 500 million manner," emphasizes Khady F. Diop, chairman of CFA francs (CAN $1.8 million). After only four This phenomenal success however is not the pro- the PAMÉCAS board of directors. years, they had already exceeded their goals: duct of chance, but of an all-encompassing vision for community finance. "We have an approach that Celebrations marking the first decade for PAMÉCAS had 40,000 members, CAN $7.1 million PAMÉCAS were an opportunity to officially launch in savings deposits and CAN $3.5 million in loans! is closer to the poor, who do not have access to banks," explains Ndèye Guithé Gueye, a manage- the PAMÉCAS foundation. Financed through an And that was only the start. annual contribution of 10 to 20% of profits ment advisor in the network. "We encourage com- munity participation, especially by women, who earned in the base financial cooperatives, the begin with small loans and end up expanding into foundation targets three sectors considered prio- international trade!" she added. rities for the wellbeing of the community: health, education and cooperation. The innovative character of the Senegalese net- work also stands out. From the beginning "We are making our dream come true, the dream PAMÉCAS has worked to diversify its savings and of sharing wealth with all our fellow citizens, and credit products and services, offering AFSSEF especially with the 200,000 members, employees credit for women, blocked savings (term deposits), and directors who believed in our network," con- and business loans through its financial centre for cluded Khady F. Diop. entrepreneurs (CFE), etc. Most financial coopera- And now? How do they see the next 10 years tives are computerized and the network is currently for the network? "In ten years, we hope that testing smart cards and installing automated PAMÉCAS will be a leader in microfinance in teller machines. West Africa. We want this network to become the most effective system of networked coope- ratives in this sub-region of Africa. In short, in ten years, we want PAMECAS to be considered part of our local heritage in Senegal, as is Desjardins in Québec," states Mamadou Touré, PAMÉCAS director general. Mamadou Touré > Printed on Recycled Fibre www.did.qc.ca Développement international Desjardins Canadian International Agence canadienne de 150, avenue des Commandeurs, Lévis (Québec) Canada G6V 6P8 Development Agency développement international This publication was made possible with the financial support of the Government (418) 835-2400 (418) 833-0742 email@example.com of Canada through the Canadian International Development Agency (CIDA).