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WOCCU Development firms see value in CU difference
BELIZE CITY, Belize (11/18/08)--When World Council of Credit Unions (WOCCU) Chairman Melvin Edwards talks about agricultural lending, he draws a distinct connection to the additional value credit unions bring to the process.
World Council of Credit Unions Chairman Melvin Edwards discusses agricultural lending in Belize at the Technical Centre for Agricultural and Rural Cooperation ACP-EU, an agency for improving stakeholder information among rural development efforts in several countries. (Photo provided by the World Council of Credit Unions)
More people are taking notice and asking questions about the strength through sustainability that credit unions bring to any development equation, Edwards said. During a presentation earlier this month to the Technical Centre for Agricultural and Rural Cooperation ACP-EU, Edwards described WOCCU's approach to value chain financing in Peru and several other countries. The Centre is a Netherlands-based agency for improving the flow of stakeholder information among rural development efforts in Africa, the Caribbean and the Pacific. Those attending the Belize workshops learned about the sustainability credit unions offer participants--something critical to effecting long-term change, but often unavailable through other development agencies, WOCCU said. “WOCCU agricultural lending efforts have stressed value-chain financing, capacity building and improving delivery mechanisms,” said Edwards, who represents the Caribbean Confederation of Credit Unions on WOCCU's board of directors. “Not all questions of success and accessibility have been answered, but WOCCU's sustainable approach helps credit unions worldwide deliver financial services to people in rural markets who need them most.” Value-chain financing provides funding for participants in the field-to-market process to streamline the process between the time a crop is planted, harvested, reaches the market and is sold to the final end-user, and earnings from the sale are returned to the producers after the credit union loans are satisfied. Introduced in credit unions by WOCCU in Peru, the process is being adapted to serve the needs of small producers in Kenya and other countries. “By becoming credit union members as part of the value-chain process, small producers solidify business relationships and gain market access, not only for the duration of the value-chain cycle, but for the foreseeable future,” Edwards told Belize participants. “WOCCU's methodology enables credit unions to identify at which point in the value chain--from production to commercialization--financing brings producers the best value and represents a good investment for the institution.” Critical components of successful value-chain financing include adapting it to the local environment and engaging the key actors at the appropriate times. For example, in both Peru and Kenya, small producers, farmers' groups and product buyers are brought together at the start, cutting out the need for middlemen and returning to producers more profits from crop sales. “No matter how formal the structure, credit union involvement in agricultural development and lending at all levels provides greater sustainability for those involved in the process,” Edwards said. “More and more small producers in developing nations worldwide are seeing greater benefits from the credit union difference.”
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