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3.1 Four Cooperative Networks


The World Bank studied four financial cooperative (FC) networks to determine their role in rural finance: Sistema de Cooperativa de Credito (SICREDI) in southern Brazil; SANASA in Sri Lanka; Reseau des Caisses Populaires du Burkina (RCPB) in Burkina Faso; and Kenya Rural Savings and Credit Cooperative Society Union (KERUSSU) in Kenya. Information is not available on farmer membership, but SANASA and RCPB are the largest private providers of financial services in rural areas in their respective countries. Half a million SICREDI members are estimated to be in rural areas of Brazil,[2] and rural FCs serve over a million clients in Kenya. The four networks employ professional staff, serve rural and urban clients with mixed income levels, and reach different levels of outreach to the poor.

Little detailed information is available about individual cooperatives within these networks. Some are reported to be innovative and generate profits while others are slow moving and unprofitable with poor record keeping that puts member savings and share capital at risk. Clientele diversification has been instrumental in achieving rural outreach without sacrificing profitability. FCs within networks with a high degree of integration, such as SICREDI and RCPB, provide broader services with better operational systems and operate better in environments with prudential regulation and financial supervision. Donor assistance should not undermine incentives for members to save, should not support operating costs expected to be financed through interest and fees, and is best provided through networks that interact with and/or are members of international cooperative organizations.

  • [1] Two 2007 World Bank documents provide the information highlighted here (Nair and Kloeppinger-Todd, 2007, and World Bank, 2007) and case studies are available for the four networks analyzed.
  • [2] Huge federal and development banks in Brazil provide most agricultural loans, and the government plays a large role in setting credit policies and providing resources for lending. Financial cooperatives in 2003 accounted for only 6.2 percent of the total volume of rural lending but in some regions were the only financial institution available. SICREDI is the second largest cooperative network in the country, while a smaller network, CRESOL, with 66,000 members targets very small farmers. Loans are made to individuals and generally require similar guarantees as banks. Resources for lending come from the cooperative and the government, but a key success factor has been political independence in spite of government involvement (Brusky, 2007).
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