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Microsavings focus of rural microfinance meeting
MEXICO CITY (10/5/09)--More than 500 people from Mexico and six other countries came together last week in Mexico City to learn how credit unions in Mexico are sustainably serving the rural poor, and how other credit unions can do the same. World Council of Credit Unions (WOCCU) and the Proyecto de Asistencia Técnica al Microfinanciamiento Rural (PATMIR) project of the Mexican Ministry of Agriculture, Livestock, Rural Development, Fishing and Food (SAGARPA), co-hosted the two-day event on Rural Microfinance: Strategies for Reaching the Rural Poor. SAGARPA funds WOCCU's development program in Mexico. The typical profile of a person living in poverty is that of an individual who understands and is accustomed to a credit culture, said Luis Jara, project director for WOCCU's Mexico program, during a presentation on Wednesday. Donor-funded development programs, as a result, have focused on providing microcredit to alleviate poverty in rural communities. Recent research on microcredit programs, however, has questioned the effectiveness of this approach. Through the PATMIR project, WOCCU's focus in Mexico is to bring financial services to the poor and help them build assets through savings.
Click to view larger image The general manager and board members of Caja Zongolica CU, located in the mountains of Veracruz state, attend a session on “Creating Opportunities for Rural Areas” by Margarito Saavedra, general manager of Caja Yanga CU at a two-day conference on Rural Microfinance: Strategies for Reaching the Rural Poor, held last week in Mexico City.
Click to view larger image Meeting after a press conference at a rural microfinance conference Tuesday are, from left, Luis Jara, World Council of Credit Unions; Jeffrey Max Jones, sub-secretary of agri-business strengthening, Mexican Ministry of Agriculture, Livestock, Rural Development, Fishing and Food (SAGARPA); Gabriela Zapata, SAGARPA/ Proyecto de Asistencia Técnica al Microfinanciamiento Rural; and Brian Branch, WOCCU executive vice president and chief operating officer (Photos provided by World Council of Credit Unions)
“We always knew that people in rural areas save ... that the poor save in real goods such as animals, bricks, even tires,” said Brian Branch, WOCCU executive vice president and chief operating officer. “Today, we know more about cash flows in rural households, that they depend on diverse sources of income--some agricultural, some not. With PATMIR's leadership, we have learned how to bring financial services to the member without constructing a branch office in every village. Currently, we are learning how to use technology to lower the costs of service delivery.” WOCCU's development program in Mexico helps credit unions expand services to underserved areas through its rural outreach methodology, semilla cooperativa [cooperative seed], which emphasizes savings mobilization. Credit unions train rural field officers to attract new members, extend financial education, approve small loan applications and bring credit, savings and remittance services directly to people living in remote areas up to 19 miles from branch offices. New technologies and tools implemented through the program’s credit unions debunk the myth that the poor are too expensive and risky to serve, WOCCU said. Personal digital assistants, handheld printers, point-of-service devices and plans for installing ATMs in rural areas help reduce the risks and costs of reaching marginalized communities by making transactions more efficient. Credit unions also use a WOCCU-developed route-costing tool to identify viable areas for expansion. The Mexico program is surveying 20,000 people living in rural areas to determine their true financial needs. Preliminary results reveal that 54% of members joined the credit union to access both savings and credit products, compared with 26%, who only wished to access credit. Of the non-members surveyed, 46% were interested in both savings and loans, whereas 20% desired credit. The survey results will help the program create an accurate member profile and assist credit unions with tailoring their products and services. “Savings and credit aren’t new, but we're making headway in determining the best delivery method, mechanisms and packaging to best meet the needs of the poor,” said Gabriela Zapata, director of financial organization strengthening with SAGARPA's PATMIR project. The semilla cooperativa model outshines typical group lending programs because it is savings-based and serves both men and women, she added. Many credit unions have said they do not reach out to the poor because it is too dangerous, expensive and difficult, and that it is not their market, Jara said. He explained that if you inspire confidence and trust in members, the credit union will grow. Nineteen people from five countries also attended the second year of WOCCU's Manager Certification Program, a hands-on regional training program to give credit union managers tools to analyze and forecast the financial condition of their institutions.
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