Improving Rural Financial Inclusion through Financial Cooperatives

Event: Key takeaways on the project closing

Financial cooperatives are a growing force for financial inclusion in Eastern and Southern Africa.  They often operate in remote areas where other financial institutions are unable or unwilling to serve. However, they face challenges of not innovating, effectively developing demand-driven products and services, accessing relevant training programs to increase their staff and directors’ capacity, attracting qualified staff and management, and advocating on their behalf.   

Improving Rural Financial Inclusion through Financial Cooperatives (IRFITCO) project which was started in March 2017 to enhance financial inclusion of rural poor by strengthening financial cooperatives networks had its final closing workshop on September 20, 2021. The project was implemented in Ethiopia, Malawi, and Tanzania. 

As we celebrate International Credit Union Day on Oct 21, 2021, under the theme Building Financial Health for Better Tomorrow, we spoke to three implementing partners on the project’s challenges, and the way forward. We asked about ground realities and possibilities for these financial cooperatives to succeed after the closure of the project.   

Below are the key takeaways: –  

Challenges faced during the implementation of the project 

Constance Shioso, ACCOSA: In Tanzania the main challenge faced was lack of trust in the Apex body by their members who are the Savings and Credit Cooperatives Organizations (SACCO). Mismanagement of members’ funds by the previous management and board of the APEX(SCCULT) led to a near-collapse of the Apex. But with the help of the then registrar of cooperative and a few friendly associate member SACCOs of ACCOSCA, the team managed to convince the SACCOs. The other challenge faced was the low capacity of SACCO members and regulators in the country. They require more capacity-building programs and exposure.  

Isabelle Kidney, ILCUF: We were extremely fortunate in Ethiopia as we were working with highly committed and professional partners, staff, and consultants. There was excellent receptiveness and good alignment with key stakeholders from the start, and the donor was very supportive throughout.  Some of the key challenges included: (1) scale of Ethiopia is so large that to build awareness and consensus across the country was time and resource-consuming; (2) the project would have benefitted from a dedicated person (perhaps half their time) to focus on the knowledge management (technical notes, training materials, toolkits) and to bring these resource to an ‘off the shelf’ level; (3) the programme brought a number of important matters ‘over the line’ but continued to roll out and sustainable service delivery requires support in the short term and with COVID-19, resources available are limited; (4) trailing of digital financial services through SACCOs encountered difficulties in the context of COVID-19. 

Leroy Banda, MUSCCO:  Due to COVID-19, during the implementation of the project, the capacity building initiatives as the numbers per session had to be reduced and provision of PPEs were a must which meant that the cost per session went up so did the number of sessions.  

Key success or impacts of the project?  

Constance Shioso, ACCOSA: The key impacts were 1) Revival of the Apex and its products e.g., CFF product. 2) Sensitisation of regulators on the existing SACCO regulation and supervision. and 3) Development of a new governance structure for the APEX that covers the whole country in terms of representation.  

Isabelle Kidney, ILCUF: The key successes of the program included the establishment of regional apex bodies for SACCOs in Addis Ababa and Amhara, the introduction of prudential supervision for SACCOs, and the production of a wide range of training and technical materials. The Amhara regional federation raised over CAN$600,000 for capital and its internal central financing facility which is a beneficial, locally generated loan fund for farmers and other marginalized people. 

Leroy Banda, MUSCCO: The overall key impact of the projects was the formation of apexes in Tanzania and Ethiopia, strengthening of Malawi apex, created a conducive regulatory environment. Increase production of training materials and technical notes and later creation of a central depository for training manuals domiciled at ACCOSCA. The project also focused on digital financial solutions and youth and women engagement. 

Challenges and Way- forward for SACCO’s after the close of the project  

Constance Shioso, ACCOSA: The success of the SACCO sector in any country relies mainly on the stability of its Apex since this is the body that plays the role of advocacy, education and training, consultancy and it unites the SACCOs to help them speak in one voice. The project helped revive the Apex but by the time of project closure, the Apex was yet to become financially stable for it to fully support the many SACCOS in the country. 

The Apex requires support in the following areas: 

-Management information system 

-Capacity building programs for Apex, SACCOs and regulators   

-Product development. 

-Financial support in setting up regional offices for them to be felt in the whole country. 

 Isabelle Kidney, ILCUF: A challenge for the larger SACCOs will be adapting for compliance with the new directive; for the Federal Cooperative Agency, it will be developing the strategy, capacity and structures for rolling out the prudential supervision (although they are addressing these issues); and for federations, it will be to develop member-driven services on a large scale to benefit their entire respective regions. In terms of the way forward, the knowledge resources produced can be a technical library for SACCOs in Africa, the expertise provided can continue in an intensive mentorship fashion with partners to sustain the results, and the modernization of the Ethiopian SACCO movement can be promoted at policy, organizational and financial services levels.     

Leroy Banda, MUSCCO: The major challenges for SACCOs after project closeout will be  

The way forward based on the envisaged challenges stated above is a consideration for upscaling project interventions resources permitting to ensure that gains made should not be lost. 



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