Regional Experiences with Microfinance for Poverty Eradication - Credit Union Experience

Leni V. San Roque

Manager for Member Services

ASSOCIATION OF ASIAN CONFEDERATION OF CREDIT UNIONS (ACCU)

Credit Union Map in Asia

R u ssi a

Developed movement Korea, Taiwan,

North Korea South Korea J apan

Mongolia

Singapore

New area: Laos, Cambodia, Vietnam , Mongolia , China Afghanistan Iran , Pakistan Myanmar Pakistan
India Nepal

China

Bhutan Myanmar Bangladesh Lao PDR Thailand

Taiwan

Consolidation Hong Kong ,Thailand , Philippines, Malaysia, PNG

Developing movement Indonesia , Nepal, Bangladesh, Sri Lanka

Sri Lanka

Hong Kong Vietnam

Philippines

Cambodia Brunei Malaysia Singapore I n d o n esi a East Timor Papua New Guinea

Lessons Learnt:
Credit Unions Microfinance Services to the Poor

Microfinance is not something that credit unions started doing in the last 20 years . . .

It has over a century of history

F. W. Raiffeisen in 1818 organized the first credit union in Germany. . . Believing people can help themselves

Today credit unions exist and strive in every region of the world . . .

In Asia credit unions have more challenging role.

s g n i v a s ed edit e n r y c e h n T a h t e r o m

is the home of most of the poor people in the world . . .

How credit unions demonstrated they can provide microfinance services to the poor and lowincome communities in sustainable way?

1 Rooted in local communities

Credit Union is a union of people. people . .with a goal of improving their living standards through access of affordable financial services.

Everybody has the right to belong to a safe and sound credit union

Managed by local people

Can take advantage of social capital in situations where financial capital is scarce.

People work together on the basis of

Self-help and Mutual Help

Savings breaks the poverty circle

More Investment

Low Investment

Group formation and start Savings Low Savings

Low Profit

More Profit Low Income Breaking point of vicious circle of poverty

More Income

F. W. Raiffeisen (1818 - 1888)

Credit Unions must not confine themselves to granting loans. Their main objectives should be to control the use of money, and to improve the moral and physical values of people, and also, their will to act by themselves.

How the credit union help members improve their lives? Assist members achieve their financial goals Self-reliant Assist members develop financial discipline- family budgeting. Save first before spending Provides loan for productive purpose to create self-employment

MUTUAL-HELP: Access to affordable financial services

Money pooled by a credit union is invested back to the community Members who have shown capacity to pay are entitled to get loan. Members savings finance the loan.

4 Friendly delivery mechanisms to

the poor
SHG SHG SHG SHG SHG SHG SHG SHG SHG SHG SHG SHG SHG SHG SHG

G G COOP

SHG

G G G G

Credit Union Level

SHG SHG SHG SHG

Group Level

SHG

SHG Level

Microfinance Methodology
1. Survey of the Area 2. Meeting with Village Head 3. Motivation with target groups 4. Group Formation 5. Learn & Save Sessions (within 3 months)

10. Monitoring & Evaluation 10. 1 Record keeping

9. Weekly Group Meeting

8. Loan Utilization & monitoring Process 9.1 sharing sessions

7. Loan Granting

6. Inaugurati on of the Group

10.2 Incentives, rewarding for good performance

9.2
Savings & loan repayment collection

Empowerment=Graduationas asRegular RegularMember Memberof ofCU CU Empowerment=Graduation

Built in a support for entrepreneurship

IGP

SelfEmployment

Microenterprise

Small Scale Enterprise

Small & Medium Enterprise Medium Enterprise

Entrepreneurship Ladder
Large Enterprise

Promotion of Entrepreneurship

The Missing Link

Savings

Have Less

Access to Credit

? What is the missing

Education (Learn & Save Sessions) link to sustainability of have less and our program?

Business Support Services

6 Credit union is involved in the

financial lives of members, not just as a client but an owner-user

It is focused on the long-term well-being of the members - Financial counseling - Education

How much importance credit unions placed on its sustainability to continually serve the community?

Sustainable Credit Unions

Depositors

Share Savers

Employees

Borrowers

What are we really aiming for?

Key Success Indicators
Financial viability Operational Efficiency Competitive position Member satisfaction Employee satisfaction

Credit Union Image in the Marketplace

r e t Ex n al
Quality

TrustSafe Products & Services Worthy People Institution Monitoring & Evaluation Systems - Integrated System

App e ar anc e

Financial Disciplines Market Information Human Resource & Administrative & Product Devt. Development Control Systems System System

Policies - Comprehensive
Uncompromised Financial Strength & Administrative Controls, Standardize Operations

Market Driven High Quality Profit Oriented for better service

Character Competence Compensation

Below the Ground Core Foundation Principles

Attitude, Visionary, Honesty, Courageous, Integrity, Sacrifice

For more information, please visit www.aaccu.coop