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									                           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               info@did.qc.ca             of Canada through the Canadian International Development Agency (CIDA).

								
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