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Regional Experiences withegional Experiences withMicrofinance for Povertyicrofinance for PovertyEradicationradication

- Credit Union Experienceredit Union ExperienceLeni V. San Roque

Manager for Member Services

ASSOCIATION OF ASIAN CONFEDERATION OF CREDIT UNIONS

(ACCU)

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Thailand

Philippines

I n d o n e s i a

Papua

New Guinea

Lao PDR

Cambodia

Vietnam

Hong Kong

Taiwan

Japan

South Korea

China

Mongolia

Nepal

BangladeshIndia

Bhutan

Malaysia

Singapore

Afghanistan

Pakistan

Myanmar

Sri Lanka

Brunei

R u s s i a

North Korea

East Timor

Developing movementDeveloping movement

Indonesia , Nepal,Indonesia , Nepal,

Bangladesh, Sri LankaBangladesh, Sri Lanka

New area:New area: Laos, Cambodia,Laos, Cambodia,Vietnam , Mongolia , ChinaVietnam , Mongolia , China

Iran , Pakistan MyanmarIran , Pakistan Myanmar

ConsolidationConsolidation

Hong Kong ,Thailand ,Hong Kong ,Thailand ,

Philippines, Malaysia,Philippines, Malaysia,

PNGPNG

DevelopedDeveloped

movementmovementKorea, Taiwan,Korea, Taiwan,

SingaporeSingapore

Credit Union Map in Asia

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Lessons Learnt:Lessons Learnt:

Credit Unions MicrofinanceCredit Unions MicrofinanceServices to the PoorServices to the Poor

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Microfinance is not something that credit unions

started doing in the last 20 years . . .

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It has over a century of historyIt has over a century of history

F. W. Raiffeisen in1818 organized the

first credit union

in Germany. . .Believing people

can helpthemselves

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Today credit unions exist and strive

in every region of the world . . .

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In Asia credit unions have morechallenging role.

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

Theyneedsavings

morethancredit

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How credit unions demonstratedthey can provide microfinance

services to the poor and low-income communities in

sustainable way?

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Rooted in local communities1

Credit Union is a unionCredit Union is a union

of peopleof people. . .with a goal

of improving their

living standards

through access ofaffordable financial

services.

Everybody has the right to

belong to a safe and sound

credit union

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Managed by local people2

Can takeCan take

advantage ofadvantage of

social capital insocial capital in

situations wheresituations where

financial capital isfinancial capital isscarce.scarce.

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People work together on the basis

of

3

SelfSelf--helphelp

andand

Mutual HelpMutual Help

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Low Investment

Low Income

Low

Savings

Low Profit

Breaking

point of

vicious

circle of

poverty

Group

formation

and start

Savings

More Investment

More Income

More

Profit

Savings breaks the poverty circle

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F. W. Raiffeisen(1818 - 1888)

Credit Unions must not confine

themselves to granting loans. Theirmain objectives should be to control the

use of money, and to improve the moraland physical values of people, and also,

their will to act by themselves.

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How the credit union helpmembers 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

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MUTUAL-HELP: Access to affordable

financial services

Money pooled by a

credit union is

invested back to the

community

Members who have

shown capacity topay are entitled to get

loan. Members

savings finance theloan.

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4 Friendly delivery mechanisms to

the poor

COOP

G

G

G

G

G

G

G

SHG

SHG

SHG SHG

SHG

SHG

SHG

SHG

SHG

SHG

SHG

SHG

SHG

SHG

SHG

SHG

SHG

SHGSHG SHG

SHG

Credit Union Level

Group Level

SHG Level

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Microfinance Methodology

1. Surveyof theArea

2. Meetingwith

VillageHead

3.Motivationwith target

groups

4. GroupFormation

5. Learn &Save Sessions

(within 3

months)

6.

Inauguration of theGroup

7. LoanGranting

8. LoanUtilization &

monitoringProcess

9. WeeklyGroup

Meeting

10.Monitoring

&Evaluation

Empowerment=Graduation as Regular Member of CUEmpowerment=Graduation as Regular Member of CU

10.2

Incentives,rewardingfor good

performance

10. 1

Recordkeeping

9.1sharing

sessions

9.2

Savings &

loan

repaymentcollection

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5 Promotion of Entrepreneurship

Built in a

support forentrepreneurship

EntrepreneurshipEntrepreneurship

LadderLadder

S

elf-

Employment

Microenterprise

Small

Scale

Enterprise

Small&

Medium

Enterprise

MediumE

nterprise

LargeE

nterprise

IGP

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The Missing Link

SavingsAccessto Credit

Education

(Learn & SaveSessions)

Have Less

? What is the missing

link to sustainability of

have less and ourprogram?

Business SupportServices

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6 Credit union is involved in the

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

It is focused on the

long-term well-being

of the members

- Financial counseling- Education

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How much importance creditHow much importance creditunions placed on itsunions placed on its

sustainability to continuallysustainability to continually

serve the community?serve the community?

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Employees

Borrowers

Share Savers

Depositors

Sustainable Credit Unions

Wh t ll i i f ?

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What are we really aiming for?

Key Success Indicators

Financial viability

Operational Efficiency

Competit ive position

Member satisfaction

Employee satisfaction

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Credit Union Image in the Marketplace

Monitoring & Evaluation Systems - Integrated System

Financial Disciplines

& AdministrativeControl Systems

Human Resource

DevelopmentSystem

Market Information

& Product Devt.System

CharacterCompetence

Compensation

Market Driven

High Quality

Profit Oriented

for better service

Uncompromised

Financial Strength &

Administrative

Controls, Standardize

Operations

Policies - Comprehensive

Below the Ground Core Foundation PrinciplesAttitude, Visionary, Honesty, Courageous, Integrity, Sacrifice

SafeInstitution

Quality

Products & Services Trust-Worthy People

Exter

nal Appearance

Appearance

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For more information, please visit

www.aaccu.coop