Irish League of Credit Unions Foundation
EU ACP Microfinance
West African Credit Unions Programme Against Poverty (WACUPP)
Mid-Term Review
Dean Mahon
June 2014
ii
Acronyms ACCOSCA African Confederation of Cooperative Savings and Credit
Associations ACP Africa, the Caribbean and the Pacific CBL Central Bank of Liberia CCA Canadian Cooperative Association CDA Cooperative Development Agency (Liberia) CSA Credit and Savings Association CU Credit Union CUA Credit Union Association (Ghana) CUTRAC Credit Union Training Center (Ghana) EU European Union GAMFINET Gambia Microfinance Network GH₵ Ghanaian cedi GMF Graduation Microfinance IGA Income Generating Activity ILCUF Irish League of Credit Unions Foundation KM Knowledge Management LCUNA Liberia Credit Union National Association MF Microfinance MFI Microfinance Institution MIS Management Information Systems MTR Mid-Term Review NACCUA National Cooperative Credit Union Association (Sierra Leone) NACCUG National Association of Cooperative Credit Unions of the
Gambia NGO Non-Governmental Organisation OSS Operational Self-Sufficiency PI Poverty Index SBFIC Savings Bank Foundation for International Cooperation
(Germany) SEND Social Enterprise Development Foundation SPM Social Performance Management UCC University of Cape Coast UNCDF United Nations Capital Development Fund VC Value Chain VCF Value Chain Financing VSLA Village Savings and Loan Association WACUPP West Africa Credit Unions against Poverty Programme WOCCU World Council of Credit Unions
iii
Table of Contents Acronyms i
I. Executive Summary 1
A. Principal Findings
B. Conclusions
C. Lessons Learned
II. Introduction 3
A. Purpose
B. By whom and how the document will be used
C. Review criteria
D. Principle questions
E. Methodology used
III. Project Background 5
IV. Comparative country movement key areas 6
A. Minimum share value
B. Representational structure
C. Legislation
D. Regulation/Supervision
E. Taxation
F. Recommendations
V. Country Movements 7
A. The Gambia
B. Ghana
C. Liberia
D. Sierra Leone
VI. Project themes 17
A. Graduation microfinance
B. Value chain
C. Social performance management
D. Knowledge management
VII. Project Implementation Review 23
A. Effectiveness
B. Efficiency
C. Relevance
D. Sustainability
VIII. Alternative Approaches and Strategies 30
IX. Recommendations 30
1
I. Executive Summary
A. Principal Findings
WACUPP has provided clear evidence that cross-country cooperation is
beneficial to all of the involved credit union movements. While the four
countries involved in this project are each at different levels of development
they have been able to exchange information and provide one another with
training and technical assistance.
A key aspect of the project has also been that it is being implemented by the
Irish League of Credit Unions Foundation. This organisation knows how a
credit union system can be developed and what pitfalls must be avoided. It
has also been able to provide technical assistance to the most advanced
movement (in Ghana) involved in the project. This would not have been
possible if the implementing organization were an international consulting
firm or foundation.
The establishment of a regional hub at the Credit Union Training Center in
Ghana has a great deal of potential for the region. The Center is financially
viable and will only require inputs related to regional development to continue
and expand its role, especially in the area of promoting lateral knowledge
management
B. Conclusions
WACUPP is a very ambitious project, utilizing modest resources to effect
positive change in 4 countries. Yet, it is successful. This has been due to the
efficient use of resources by all parties, as well as the dedication of the
partners and associates. Further, project management has worked to ensure a
high degree of ownership in the programme by the participants, especially at
the national level.
As regards WACUPP’s Performance Indicators and Results Areas, each of
these will be achieved by the end of the project and most already have been
met.
The success of this project demonstrates the possibilities of assistance with a
longer commitment. Fledging credit union movements in countries such as
Liberia and Sierra Leone could be developed, existing movements in the
Gambia and Ghana could be strengthened, and a regional effort could be
undertaken to develop a legal and regulatory framework which enables a safe
and sound credit union environment. In addition, the project approach and
2
methodologies could be extended, not only with the four current target
countries, but also with other countries in the region.
C. Lessons Learned
Credit union system development takes time. It requires more than a project
of 3 or even 5 years. Rather, it is best categorized as requiring generational
development. The end result is a sustainable system which can and will
provide a wide range of financial services to an increasing number of the
otherwise unserved.
Regular information exchanges, such as the current Steering Committee
Meetings, are critical to ensuring that successes are replicated and common
challenges are addressed.
Innovations, such as the current pilots of graduation microfinance (GMF) and
social performance management (SPM) should be extended. If successful,
they should then be integrated into credit union systems as most practical, as
long as they contribute to the movement’s mission and cost/benefit analysis
shows that the effort is worthwhile.
The project’s baseline needed to be adjusted after inception. A project such as
this, with no previous external intervention or established baseline, should
specify that some targets are provisional and will be verified within three
months of the project’s start.
3
II. Introduction
A. Purpose
The Mid Term Review (MTR) was conducted as a requirement of WACUPP
(the West Africa Credit Unions against Poverty Programme). Its purpose was
to help direct the management team and the steering committee to improve
programme implementation in the second period of the programme. The
Midterm Review looked at existing monitoring data gathered since the
beginning of the programme plus additional data gathered as necessary in order
to assess progress and provide indications of outcomes and impact,
to adjust
and feed into planning for the second half of the programme. As this is
relatively early in the programme cycle, impact is difficult to ascertain, so
member satisfaction and other indications of success or otherwise from the
members’ perspective with programme services have been used as proxy
indications. The MTR assesses the progress of WACUPP against the proposal
as submitted by the Irish League of Credit Unions foundation (ILCUF) to EU
(European Union) ACP (Africa, Caribbean and the Pacific) Microfinance.
B. By whom and how the document will be used?
The primary intended audience for this report consists of the stakeholders: the credit union movements in the Gambia, Sierra Leone, Liberia, and Ghana, the Irish League of Credit Unions Foundation, the organizational partners and the EU ACP Microfinance office. It will be used to identify approaches which have been successful, those which have encountered constraints, and lessons learned. These lessons learned will be applied to further the development of inclusive finance through credit unions in West Africa.
C. Review criteria
The review was centered on whether WACUPP will achieve the performance
results by the project’s completion. The project’s thematic areas – GMF, SPM,
knowledge management, and value chain – were examined. Recommendations
are made on actions to be taken to improve the involved credit union
movements and to ensure full implementation of the programme as per the
proposal.
D. Principle questions
The review examined the impact of the project on its primary beneficiaries. Overall, it looked at:
- How to achieve, by end of period, the project objectives described in the proposal
4
- How to identify areas of importance in the credit union movements in the WACUPP region that may be built on within the programme (even if not
explicit in the proposal)
- How to adapt strategy where it is clear objectives are not being achieved
- How to apply project resources best if budgetary constraints are an issue
The Mid Term Review addresses the following:
1. Effectiveness
a. What has been progress against planned activities?
b. What, if any, indications of change have occurred in relation to
objectives?
c. To what extent have the objectives been met?
2. Efficiency
Has the programme demonstrated a good use of resources?
3. Relevance
a. Are the activities being carried out and related approaches
likely to lead to desired changes? If not, what are the
constraints?
b. Are the objectives still valid?
c. What, if anything, needs to be done differently?
4. Sustainability
What are the likely long lasting effects and how sustainable are the
changes?
E. Methodology used
The review entailed several approaches. First, all project reports were studied. Then, the reviewer attended a Project Steering Committee meeting. He subsequently met individually with each of the national stakeholders, the ILCUF West Africa Regional Advisor, a number of credit unions in Liberia and Ghana, representatives of Social Enterprise Development Foundation(SEND)
1 – Ghana, staff of the Credit Union Training Center
(CUTraC) in Ghana and the Credit Union Association of Ghana (CUA) of Ghana. He also reviewed financial statements and statistics for the past 5 years from the apex organisations in the Gambia and Ghana.
2 (The
movements in Sierra Leone and Liberia are too new to have indicative financial statements.)
1 A project partner 2 The MTR’s Trip Report can be reviewed in Appendix 2.
5
III. Project Background
The project is funded for a period of only 29 months, from August 2012 through
December 2014. It was, however, originally designed for a period of 36 months.
The purpose of the project is to contribute to poverty reduction by means of
expanding financial inclusion through credit unions. The project is based in the
Gambia, Sierra Leone, Liberia, and Ghana. The project’s Regional Capacity
Building and Knowledge Management Hub is at CUTraC in Kasoa, Ghana. The
achievement of financial inclusion is being achieved through asset building and
income growth for individual members. Growth in membership – from 447,386
to 557,0003 (+25%) – is the primary means by which financial inclusion is
achieved.
The project’s result areas are:
A. Regional capacity building services provide for the development of
sound, community owned credit unions on a cost recovery basis.
B. Economic autonomy of underserved populations increased by
expanding access to both financial and complementary services.
C. Graduation of very poor participants from extreme poverty.
D. Evidence based lessons, approaches, and best practices disseminated
through effective distribution channels.
The methodologies used are:
provision of technical assistance and training on credit union management
expansion of graduation microfinance (GMF)
introduction of social performance management (SPM)
knowledge management
The project also calls for measurable results in the following areas:
- Percentage increase in credit union membership;
- Percentage of poor people among new members;
- Number of credit union apex bodies reaching operational self-sufficiency;
- Percentage of women among new members;
- Number of credit unions launching value chain or graduation microfinance projects;
- Number of credit union apex organisations using social performance indicators and poverty index; and
- Number of new policies introduced by the apex bodies into credit union
movements
3 The baseline and projection had to be adjusted following the start of the project. The initial data was collected during the concept stage. Between then and the start of the programme Ghana showed a decrease of 59,161 due to the closing of dormant accounts and the revision of inaccuracies in some areas. Liberia’s statistics were revised to 0, since there were no accurate statistics and no dues were paid to the apex body. The Gambia and Sierra Leone showed increases due to organic growth.
6
The project began with a workshop in July 20124
which identified the technical
assistance and training needs of each of the four credit union movements. Each country
prioritized the needs which could be met by the limited budget and time frame of the
programme. Most of these have been addressed through March of 2014 and the
remainder should be by project end. However, addressing them, will not, per se, mean
that all issues will be resolved. Rather, further interventions in these areas following the
current project will be necessary.
IV. Comparative country movement key areas
The following are comparisons of the four country credit union movements in
several key areas:
A. Minimum share value in the credit union:
Ghana - $20 (€14.46)
Liberia - $10 (€ 7.23)
Sierra Leone - $ 8 (€ 5.79)
The Gambia - $ 3 (€ 2.17)
B. Representational structure
Country Number of
Credit Unions
Number of
Chapters
Origin of Board members
The
Gambia
69 6 1 from each Chapter + 5
elected by the members and 1
co-opted legal adviser.
Liberia 300?5 4 2 from each Chapter + 1 at
large
Ghana 402 11 1 from each Chapter
Sierra
Leone
17 0 Directly from Credit Unions
C. Legislation
Country Current Legislation Plans
Gambia 1963 Coop Law
Revised Coop Act
1990 Edition
Draft NBFI law
Ghana 1968 Law Draft CU law with Central Bank
Liberia 1936 Coop Law, Draft regulation under the Central
4 This was three weeks before ILCUF signed the contract with EU ACP. No expenditure relating to this event was charged to the actual programme 5 At time of MTR Liberian CUs were not paying full annual dues, but c 300 CUs were claiming CU status. Since June 2014 LCUNA has formalised this situation and 40 CUs have paid dues and are now full members
7
1999 Central Bank Act
Bank
Sierra Leone 1973 law Draft cooperative law
D. Regulation/Supervision
Country Regulator/Supervisor
The Gambia Department of Cooperatives and the Central Bank
Ghana Department of Cooperatives and the Central Bank
Liberia Cooperative Development Agency and the
Central Bank
Sierra Leone Department of Cooperatives
E. Taxation
None of the four countries pay tax on either credit union surplus (profit), on
interest on members’ savings or on dividend on members’ shares.
F. Recommendations:
IV.F.1 There is a clear need in each of the four countries to bring the legal and
regulatory framework up to date. This would also incorporate clarification
regarding supervision, including who is responsible and how is it funded.
IV.F.2 Given the legal and regulatory needs, as well as other evidence of the
need for better knowledge on the part of national policy makers, each of the
four movements needs to develop and implement a policy advocacy strategy.
IV.F.3 In each country there is a strong supervisory role played by the
Department of Cooperatives (or its equivalent). The focus of these agencies is
on the implementation of cooperative principles and it is rare that staff has the
financial oversight capability needed to properly supervise the credit unions.
Therefore, such departments should only be concerned with registrations
(validating cooperative nature) and not with licensing or supervising financial
operations. These latter functions should be the responsibility of a Central
Bank or, eventually, an authority delegated by government for this purpose.
V. Country movements
A. The Gambia
The credit union movement in the Gambia was initiated in 1991 with the
assistance of the Irish League of Credit Unions, upon a request from the pan-
African Confederation the African Confederation of Cooperative Savings and
Credit Associations (ACCOSCA). The first 6 credit unions were registered that
8
year. Growth and financial viability has been steady and, twenty years later, it is
in many ways a success story.
The national apex organization is the National Association of Cooperative Credit
Unions of the Gambia (NACCUG). Today it groups 72 credit unions with over
52,000 members in 6 chapters. It began a Central Finance Facility (CFF)6 in
1996. Its level of operational self-sufficiency in 2013 was an impressive 100% for
the third year in a row.
The current focus of NACCUG is on: capacity building, the introduction of social
performance management, regulations, and the expansion of financial services
and financial education to rural areas. In the area of regulation it has brought
together the two regulatory agencies - the Central Bank and the Cooperative
Department - and 15 supervisory ratios have been agreed upon. .
ILCUF continues to provide technical and financial assistance and, with the
financial support of Irish Aid, information technology is being provided to 11
credit unions, the regional structure and its offices. With ILCUF, Irish Aid and
Irish and Gambian CU support, NACCUG has recently led the introduction of
modern CU software to 11 major CUs. NACCUG holds the license for this
software and is introducing it to rural CUs through a regional office infrastructure.
In addition to the steering committee meetings, the introduction of SPM (Social
Performance Management) and audit training, the project has also financed the
bringing together the two regulatory arms of Credit Unions (CBG and
Cooperatives) to a common platform to discuss governance and Prudential issues
which resulted to the formulation of prudential return to be sent to the CBG
through the National Apex quarterly. The project has also facilitated the
introduction of SBFIC (the Savings Bank Foundation for International
Cooperation – Germany)7 , which will provide pedagogical and financial training
in the near future.
In recent years membership growth in the Gambian credit union movement has
been steady, reflecting the measured growth of the movement.
Membership
2009 35,492 annual increase
2010 40,546 14.24%
2011 44,847 10.61%
2012 47,632 6.21%
2013 52,094 9.37%
6 A CFF is a “credit union for credit unions”. It is an entity which is either a service or a subsidiary of a national apex organization, which accepts deposits from member credit unions and lends these funds to members. 7 A project associate.
9
The Gambia has no poverty index and therefore NACCUG uses a hybrid of Sierra
Leone and Senegal indexes.
Observations:
NACCUG management appreciates that WACUPP has provided capacity
building to the four national apex organizations. In addition, the technical
exchanges between the apexes have been very helpful.
Recommendations:
V.A.1 The project could have more impact if there was a pool of trainers for each
country. In this way, the apexes could deliver training for its credit unions.
V.A.2 The Gambia should play a larger role in mentoring the credit union
movement in Sierra Leone. Their situations are similar and specific exchanges,
e.g. with the Teachers Credit Unions would be very appropriate.
B. Ghana
The first credit union in Africa was formed in 1955 in Jirapa, in what is now the
Upper West Region of Ghana. In 1967 the first two chapters were formed in the
north and the south. A conference in Tamale in 1968 resulted in the creation of
the Ghana National Union and Thrift Association, the predecessor of the Credit
Union Association – CUA. CUA’s initial duties were: promotion, education,
organization and support of the credit union movement. The movement declined
in the 1980s but was revitalized in the 1990s with major support from Canadian
Cooperative Association (CCA)8
There are currently 585 credit unions and study groups9 within 11 chapters
affiliated to CUA. CUA’s services are quite extensive. They are: training, risk
management (loan protection and life savings insurance), deposit guarantee,
health, youth savings, central finance, and supervision. Not all member credit
unions benefit from each of these services as this is determined by their level of
development.
CUA has three main units: Operations, Human Resources and Finance.
Operations includes: audit, field services, MIS (management information
systems), training, youth savings, and health. Human Resources consists of
human resources and administration, and Finance is comprised of: the central
finance facility, risk management, and accounts.
8 A project associate 9 A pre-credit union which only accepts savings, does not grant loans, and is not registered. The term of existence of these study groups is usually 12 – 18 months.
10
Training is delivered through CUTraC, mainly in its purpose built residential
training center about 35 kilometers west of Accra. This was opened in May 2011
by the then Vice-President of Ghana10
. In addition to providing training to the
Ghanaian credit unions, it was created to be the Center of Excellence for the
region. Course offering have been in such areas as: Member Care, Loan Officer,
Board of Directors, and Credit Union Operations. The Manager of the Liberian
Credit Union National Association (LCUNA) and representatives from the Sierra
Leone credit union movement has already attended accounting and basic credit
union operations courses. The current staff is 29. CUTraC is supported technically
by SBFIC, which has helped it to develop its business plan and course materials.
SBFIC began work in Ghana in 2012 and is an associate in the WACUPP project.
WACUPP has enabled CUTRaC and SBFIC to interact with the Gambia, Sierra
Leone and Liberia for the first time. This has resulted in the first international
participation on CUTraC courses and has enabled SBFIC to factor in these
countries when considering its assistance to the region. The resident SBFIC
representative in Ghana would like to see even closer collaboration with
WACUPP
The risk management programme started in 1986. The number of credit unions
participation as at December 2013 was 265. The program runs two important
services; thus the Loan Protection Plan (LPP) and the Life Savings Plan (LSP).
These plans provide policy cover against death total and permanent disability.
Cover limit for the LPP is up to GH₵ 50,000.00 (€14,463); however any amount
in excess of CUA’s retention is ceded to Quality Life Assurance the reinsurers.
Members pay the premium to insure the loan they contract from the Credit Union
whilst the Credit Union pays the premium on the life savings on behalf of the
members as a service.
The loan protection premium rate is 0.1% per month on every GH₵ 1,000.00. The
life savings premium rate is two tiered; savings portfolio less or equal to GH₵
100,000.00 attract premium rate of GH₵ 0.00085, whilst amount in excess of
GH₵ 100,000.00 attract GH₵ 0.00065.
The major challenge faced by the department is that the Life Savings Plan is not
selling as well as the Loan Protection.
The health education programme was started in 1992, at the initiative of the
Canadian Cooperative Association (CCA). At the time, credit unions in East
Africa were severely affected by HIV. At first the programme focused solely on
HIV/AIDS with coordinators in each chapter. It has now expanded to include
cancer, hypertension and diabetes. The major difficulty is that the health
10 Current president, John Dramani Mahama
11
education office does not always receive information early from regional offices
and the credit unions in order to attend their Annual General Meetings (AGM).
The Central Finance Facility (CFF) serves 500 credit unions11
. At the moment
45 have loans outstanding and the accounts of 72 Credit Unions are classified as
dormant due to liquidity issues. These 72 illiquid CUs comprise a serious
situation which CUA should address as a priority, canvassing donor support if
necessary. Participating credit unions pay in 5% of their assets after an audit.
These funds earn interest and the credit unions are then eligible for loan. The CFF
has a loan loss reserve.
The CFF also operates CUALink, a money transfer facility, through
AFRICXPRESS.
CUA’s Youth Savings programme began in 1999. Its objective is to draw
children and youth into credit unions. At the time of its initiation the average age
of a credit union member was 45. With the assistance of CCA, clubs were set up
in 10 high schools, each with an annual membership meeting, effectively as a
prototype of a credit union. The 2010 CUA Biennial decided that all credit
unions should have a youth savings club. These clubs are now providing training
to youth, in such forms as quiz competitions.
Youth are defined as those between the ages of 18 and 35. While the law
stipulates that one reaches the age of legal capacity at 18, persons can save at
credit unions before then. While the primary targets are youth, they are also seen
as change agents who can explain credit union membership and its benefits to
their parents. An objective for the future is to have a youth board observer or
board member in each credit union. The current challenges are in mobilization
and coordination, especially with the training department.
CUA established a stabilization fund about thirteen (13) years ago. This has been replaced with a Deposit Guarantee Scheme fund since December 2013. Currently 80 Credit Unions are participating in the scheme, mostly those classified with grades A, B and C. The Credit Unions contributions to the scheme depend on their classification grades. Audits are compulsory for all Credit Unions to be undertaken by CUA and DOC Auditors. The Audit is currently the basis for the classification. The lower the grade obtained by a Credit Union, the higher the premium it must pay by way of contribution to the Deposit Guarantee Scheme fund. Grade A - 0.20% of total savings annually Grade B - 0.25% Grade C - 0.30% Grade D - 0.35%
11 Each has paid in shares
12
Grade E - 0.40% The Credit Union should not be in arrears of its contributions to the stabilization fund. In case of distress, members would be paid their full savings but to the Credit Unions, the coverage of payment is graded. The maximum insurable amounts for now are as follows: Grade A = 50% of savings Grade B = 40% Grade C = 30% Grade D = 20% Grade E = 10%
CUA’s Supervision Service monitors credit union performance vis-à-vis targets.
It is in the field 50% of the time. The biggest challenge for the field services
department is that each credit union is to submit a monthly report. CUA and the
Department of Cooperatives are currently working on a decree for supervision.
Credit unions can only be closed in collaboration with the Central Bank
CUA undertakes audits with the Department of Cooperatives, although there are
cases where CUA undertakes this alone. CUA audit staff are in each region:10 in
Accra, 3 – Tamale, 2 – Central, 2 – Western, 5 – Ashanti, 2 – Eastern, 2 – Volta, 1
– Upper East, 1 – Upper West, 2 – Northern. The fiscal year is from July through
June and all audits are on-site. The greatest challenges are human resources and
record keeping. Some credit unions are only open on Sunday and have no office
or staff. This all contributes to delays. In some cases these delays can be for as
long as 9 months.
CUA has created its own CU software, called CUSoft, which it sells to CUs at
very reasonable rates. It has been determined by CUA that asset size should be
the criteria for introducing software. The criteria are in three categories with the
least category being credit unions with asset size less than GH₵ 200,000 (US$
70,300). CUA can obtain information in 4 to 5 days. 90 – 100 credit unions send
information via on-line. In the other cases CUA staff must go to the credit unions
and get the information. Staff that can assist with installation and maintenance of
the software are available in two chapters.
Major challenges are personnel who need to be trained on the system and
inadequate IT logistics for software support and maintenance. Marketing of the
software needs to be intensified. In addition, credit unions that are not on-line
make the information flow quite slow.
About 20 credit unions use other software. Some, especially new ones, are using
Easy Book, which is an Excel based system
Recommendations
13
V.B.1 The Stabilization Fund is being replaced by the Deposit Guarantee Scheme.
The understanding at CUA is that these two programs provide the same
protection. However, the former is for the credit unions, while the latter is for the
members. Both programs exist in such movements as those in: Ireland, the USA,
and the Canadian Provinces of British Columbia, Nova Scotia, and New
Brunswick. Therefore, the Stabilization Fund should not be terminated.
V.B.2 Credit union supervisions can be 9 months late. Each credit union is
supervised on-site. Supervisions can be brought up to date by triaging credit
unions. Credit unions can be listed by asset size and a cut-off point should be
determined at which it would be certain that those credit unions could be
supervised on-site in a timely manner. The remainder would be supervised off-
site, only requiring an on-site visit if any irregularities are found.
V.B.3 Consideration should be given to having the credit union pay for both loan
protection and life savings insurance. The cost will, of course, be reflected in the
interest spread. But such an approach would have two benefits: highlight the fact
that this is a service from the movement to individual members and impress upon
the credit unions that it is generating income for them. Naturally, an information
program will be necessary.
V.B.4 The fact that so few credit unions are on-line is disturbing. CUA has tried
as many options as seem possible to expand the number, including the provision
of portable modems. Efforts should continue in this regard. One other possibility
could be the establishment of service centers – which were, in fact, previously
used in some West African countries. Service centers are common points which
are financed by a group (perhaps 10) of credit unions. The services provided
depend upon the needs expressed by the credit unions. Sometimes it could an
itinerant bookkeeper and sometimes it could be a data collection point.
C. Liberia
The credit union movement in Liberia was started in 1966 and LCUNA was
established in 1969. By 1989 there were 68 member credit unions with 20,000 m-
individual members and €7.2 million in savings. The wars devastated the
country, including credit unions. There is now a revival under the reinvigorated
apex organisation – Liberia Credit Union National Association (LCUNA)12
.
Data is difficult to identify, as LCUNA’s systems are in a state of development.
Prior to the project it was reported that there were 6,000 credit union members in
Liberia. This is difficult to verify and the number of credit unions is estimated to
be about 300 according to CBL, but there is no reliable data. One major problem
is that there is also no agreement on what is and is not a real credit union. For
instance, there are many savings clubs which may or may not identify themselves
12 This is the same organization which existed prior to the wars
14
as such and there is a growing number of VSLAs (Village Savings and Loan
Associations)13
.
The Central Bank of Liberia (CBL) has been providing support to credit unions
(and other microfinance organisations) in the form of loans. Other support is
provided by the World Council of Credit Unions (WOCCU), with funding from
the United Nations Capital Development Fund (UNCDF). This project is funding
the creation of four regional credit unions and providing some logistical support
to the offices of LCUNA. The WOCCU Microlead programme aims to have
40,000 members in 4 regional CUs by the end of 2017.
WOCCU has given assistance to LCUNA with training, transport resources and
refurbishment of its headquarters. WACUPP has assisted with training, technical
assistance and international exposure. However, unlike the other 3 partner
countries LCUNA does not have a long term international partner to support it on
a comprehensive development programme.
Several credit unions14
were visited during the MTR. The following were
observations:
- Credit unions do not produce annual audited accounts
- An accounting system to produce monthly an annual accounts is needed
- Some credit unions are multi-functional. In addition to financial services,
they undertake trading activities. These are all in the same building.
- There is some confusion between WACUPP and the WOCCU project. This may be due to the fact that both projects collaborate in order to
deliver training to Liberian CU personnel. Assistance is needed with
strategic plans, accounts, computerization and governance
- The training provided through the project is much appreciated.
The leadership of LCUNA provided the following insight of the project from their
perspective:
- The opportunity to exchange information and experiences through WACUPP is very critical
- Previously there had been no standards for credit unions. Now these are
being developed.
- There is a concern that WOCCU’s approach may be inconsistent with LCUNA development strategy in some areas. For instance, WOCCU is
asking small CUs to exhort their members to join the 4 regional CUs.
WOCCU is also asking CUs to deposit their surplus savings in the
regional CUs. This could affect the establishment of a Central Finance
13 These are difficult to track in terms of development, or even possible graduation. They close their accounts at the end of each fiscal year and return all funds to members. 14 Airport Workers, Financial and Capacity Development, and In God We Trust
15
Facility at LCUNA which would provide income for services to the entire
movement.
- The duration of WACUPP is too short.
- In depth analysis and policy development must be undertaken especially in
such areas as: central finance, youth savings, and governance.
- The relationship with the other countries involved with WACUPP must be
maintained.
- In addition to the threats posed by the CBL loans and the WOCCU project, dues payments from credit unions is a critical issue. Currently
very little dues are being collected by LCUNA from CUs
- Training support is need. They have the basic concept, but no resources and training of trainers is essential.
- WACUPP has been a success and both ILCUF and the EU should be
commended.
Recommendations
- V.C.1 LCUNA must strictly apply its requirement of member credit unions
to pay dues. Those which do not should not be allowed to vote at the next
Annual General Meeting.
- V.C.2 LCUNA should work with the CBL and CDA (the Cooperative Development Agency) in determining a strict definition of a credit union.
This should be based on international best practices.
- V.C.3 WOCCU should be encouraged to work more closely with LCUNA. In addition, all efforts should be made to ensure that the regional credit
unions do not undertake any of the current or future functions of the
national apex.
- V.C.4 Annual credit union audits must be carried out.
- V.C.5 No credit union should be multi-functional. There is too much of a
risk of mixing cost centers and there have been no examples of successful
multi-functional credit unions round the world.
- V.C.6 Assistance should be provided with strategic plans, accounts, computerization (in select credit unions), and governance.
- V.C.7 Training, such as that provided by the project, should be continued.
- V.C.8 Experience and information exchanges with other credit union movements in the region must be continued.
- V.C.9 The CBL program of providing loans directly to credit unions
should be terminated. It is not the role of government to play this role and
it is a conflict of interest for a regulatory body like the CBL to lend to the
entities which it regulates.
D. Sierra Leone
Sierra Leone had a thriving credit union movement through the ‘70s and
‘80s which was devastated by the civil war. Since 2010, efforts have been
16
made by CCA and ILCUF to revive the movement. This project utilizes
the technical assistance of credit union experts from Ghana. The focus is
on: training to strengthen the capacity of functioning credit unions; expanding membership; and modernizing services, management and governance practices.
ILCUF and CCA have been implementing a small programme to rebuild
the CU movement since 2010. Initially there were 6 pilot credit unions,
now there are 17. The apex organisation National Association of
Cooperative Credit Unions of Sierra Leone (NACCU SL) was created in
November 2013. There are 5 board members and 3 supervisory
committee members.
The credit union affiliation fee is $45 and dues are $22 per credit union.
The CCA/ILCUF project will be in place for 2 more years.
NACCU has no staff, but the CCA/ILCUF project is staffed by an
expatriate and two Sierra Leoneans and it supports the apex. The
CCA/ILCUF project is providing exposure, base documentation,
monitoring and training, while WACUPP supports training and promotes
graduation microfinance (GMF). NACCU attributes new membership
within some CUs to GMF.
NACCU will take steps to utilize social performance management (SPM)
beginning in July. The SPM survey will take place before the end of the
year.
WACUPP is recognized by the leadership of NACCU as building the
capacity of credit unions in Sierra Leone, providing the opportunity to
attend meetings with other national organisations, facilitating familiarity
with other national movements in Africa, and training trainers.
Recommendations:
V.D.1 Information exchanges with other credit union movements in the
region are critical and must be continued.
V.D.2 Given the state of renewal of the movement the basics of grass roots
promotion and developing NACCU as a service organisation must be
continued.
V.D.3 Capacity building for the staff and board are a high priority.
V.D.4 Since new CU membership is attributed to GMF, this activity
should be extended.
17
VI. Project themes
The project began with four innovations to be researched and promoted in order
to achieve the project’s objectives and reach the performance indicators. These
are: graduation microfinance, value chain, social performance management, and
knowledge management.
A. Graduation microfinance
Graduation microfinance is an approach which was developed by SEND in 1998
by CEO Mr. Siapha Kamara (a Liberian). SEND registered in Ghana as an
integrated NGO promoting: food security, reproductive health, gender, human
rights & peace building, and enterprise development. Support was provided by
CCA. Initially SEND tried to introduce a financial component of integrated
intervention by NGOs, but this didn’t work and then they turned to credit unions.
The first impression of the reviewer was that the MFG approach was inconsistent
with traditional credit union development. In the traditional development model
in many countries15
study groups are first established. New members first save
for a period of 12 to 18 months prior to borrowing. These have existed in Ghana
for decades and were initiated in the Kailahun District of Sierra Leone16
. The
GMF approach requires external loan funds, a method which is contrary to that
which has been proven successful. Also, SEND promotes GMF by stating that
the price of a share is too high, thus justifying the need for External Loanable
Funds. However, an easier solution would be to simply lower the par value of a
share. Nevertheless, a more extensive review of the application of the system
was justified.
The purpose of GMF is to provide financial services to female entrepreneurs for
income generating activities (IGA). Savings is a prerequisite, but this is in terms
of frequency and not amount. Groups of 5 to 7 persons are created and 30 of
these groups then form a Credit and Savings Association (CSA). The CSAs
generally charge a fee of 1% per loan cycle (4 months). Each CSA decides how
much a member should save in order to begin borrowing. The CSA buys a share
in the local credit union. Thus, it is key to this approach that the credit union
must be in existence first.
GMF, with SEND support, is in two countries supported by this project: Sierra
Leone and Ghana. Credit unions offering GMF were proven to be successful,
especially in terms of increasing female membership, in the north of Ghana prior
to the project. Based on this, EU funding has made it possible for the programme
to expand and have a positive impact on more individual members. Since the
15 Some of these are: in Anglophone West Africa, in the Caribbean, Albania, and Ireland 16 In 3 chiefdoms a credit union programme was developed, while in 4 chiefdoms a microfinance programme (involving other entities) was developed.
18
beginning of WACUPP the number of participating credit unions has increased
in Sierra Leone by 1, and in Ghana by 717
.
Persons who were previously hesitant to join a credit union or who didn’t not
have the initial resources have now become fully active members. Loans have
been provided to a variety of trades, such as; farmers, millers, blacksmiths, and
foodstuff traders. These have changed life of some members by allowing them to
pay for school fees and afford better housing. There has also been a multiplier
effect felt through the local communities. Through the project, about 4 female
leaders have been trained, leading to their further development and they are now
councilors or MPs.
The key success of WACUPP in this regard is that it has persuaded CUs to
introduce GMF within their own resources, whereas before WACUPP GMF
existed only in CUs which were being subsidized by SEND projects.
Observations
GMF definitely adds value to credit unions. It maintains the credit union ethos of
emphasizing savings first, promotes female membership, and is focused on local
income generation.
Four credit unions undergoing GMF training were interviewed18
. They each
agreed that, if the project was not funding the training, their credit unions would
pay for it. However, they did admit that they were influenced by the fact that they
knew the programme. Therefore, it was suggested that GMF general education be
provided at the CUA Biennials and that it be put into a credit union’s education
budget with the fees specified.
Loans under GMF do not follow credit union rules (i.e.; they do not require
collateral). This makes graduation more difficult.
GMF record keeping and data regarding GMF delinquency need to be improved.
Recommendations
VI.A.1 Graduation Microfinance should be extended to more credit unions,
especially in Sierra Leone and Ghana. These should be well functioning credit
unions with staff, computerized systems and office space.
VI.A.2 GMF should be monitored by the credit union board and management, as
well as the programme’s promoters.
17 In Ghana there are 2 new ones in the Northern region and 5 in the Central Region. The Central Region was chosen since it is the 4th poorest (of 10) in the country. 18 Oguaa Teachers, Swedru Emmanuel, University of Cape Coast, and Progressive Women.
19
VI.A.3 Records should be maintained as applies to GMF delinquency. These
should then be compared to rates for traditional loans by the credit union.
VI.A.4 The cost effectiveness of GMF should be investigated. The key variables
to study would include: comparative delinquency, CSA loan charges, and staff
time (i.e.; whether GMF requires more).
B. Value chain
A value chain (VC) is a chain of activities that a firm operating in a specific
industry performs in order to deliver a valuable product or service for the market.
This concept comes from business management and was first popularized by
Michael Porter19
.
The idea of the value chain is based on the process view of organizations, the idea
of seeing a manufacturing (or service) organisation as a system, made up of
subsystems each with inputs, transformation processes and outputs. Inputs,
transformation processes, and outputs involve the acquisition and consumption of
resources - money, labour, materials, equipment, buildings, land, administration
and management. How value chain activities are carried out determines costs and
affects profits.
Credit unions provide financial services to the un-banked who are excluded from
the mainstream financial system in emerging countries. They are considered as a
powerful development tool, as they consist of providing micro or small “income
generating” loans, deposits, remittances and insurance schemes to micro-
entrepreneurs and small-businesses.
They provide financial services for both social and productive purposes. In order
to provide loan facilities to micro-entrepreneurs, credit unions receive savings
from members. The credit union movement is well structured with a clear split of
responsibilities at all levels of the value chain. In order to examine how this
might be best exploited in the project area, WACUPP undertook a study in 2012
in Ghana to appraise the applicability of value chain financing to the project.
The project management’s Report Number 2, for the second quarter of 2012
stated:
“The field research has shown that there are major challenges facing any credit
union movement which seeks to become involved in Value Chain Financing
(VCF). VCF requires significant expertise and financial resources. It requires
strong partners from the agricultural development sector and the private sector.
Investment in VCF requires time to come to fruition. The results are also highly
dependent on external forces such as weather, markets and trade policies.
19 Porter, Michael E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. New York: Simon and Schuster.
20
Graduation microfinance research has shown much more positive outcomes
within CUs however. For this reason WACUPP may achieve more by focusing its
resources on the introduction of Graduation Microfinance into the CU systems
rather than VCF.”
Further, the 3rd
report (1st quarter of 2013) noted:
“The workshop on graduation microfinance and the review of the field research
confirmed the views that were expressed in the previous report - that there are
major challenges facing any CU movement which seeks to become involved in
Value Chain Financing (VCF). VCF requires significant expertise and financial
resources. It requires strong partners from the agricultural development sector
and the private sector. Investment in VCF requires time to come to fruition. The
workshop confirmed the potential for CUs to innovate in graduation microfinance
and we therefore seek approval to amend performance indicator 5 to include the
launch of Graduation Microfinance projects.”
Therefore, it was determined not to pursue further investigations as regards value
chain financing. The decision demonstrated sage project management, especially
as regards determining what results would be feasible, given limited project
resources and a short time frame.
C. Social performance management
The Universal Standards for Social Performance Management ("Universal
Standards") is a comprehensive manual of best practices created by and for people
in microfinance as a resource to help financial institutions achieve their social
goals. Developed through broad industry consultation, the Universal Standards
apply to all microfinance institutions pursuing a double bottom line20
.
Each dimension contains standards, which are simple definitions of what the
institution should achieve, as well as essential practices, which are the
management practices that the institution must implement in order to meet the
standard. There are also one or more indicators per essential practice, which an
institution can use to assess whether it has implemented the practice. Meeting the
Universal Standards signifies that an institution has strong SPM practices.
Credit unions have always been concerned with the welfare of their members.
However, they must be equally focused on the financial sustainability of the
institution. Credit unions which manage only their financial performance will
almost certainly be driven only by financial outcomes, so institutions that also
have social goals must manage their social performance as well. By defining and
promoting strong SPM, the Universal Standards contribute to refocusing
institutions on the member.
20 Financial and social
21
In the past year, financial institutions21
have engaged with the Standards in
several ways:
self-assessment of their SPM practices against the “essential practices” listed in the Universal Standards,
development of action plans to change practice in areas where the self-
assessment showed gaps, and
implementation of essential practices that were not yet in place in their
institution.
A major focus of WACUPP is poverty reduction. The introduction and
institutionalization of SPM is the cornerstone of long term poverty reduction. This
aspect of the project is intended to:
- develop recommendations and strategies from the baseline assessment of
social performance of apex and emerging apex organisation
- develop a Poverty Index for each country to construct poverty indicators in piloted areas and adaptation of MIS to ensure routine collection;
- develop reporting and accountability mechanisms which place social performance on an equal basis with financial performance;
- review SPM based on assessments including client satisfaction and depth of outreach.
In the third quarter of 2013 ILCUF developed the key questionnaire tool which
apex bodies can use to test credit unions for their level of social performance22
. The
tool was presented to WACUPP partners and was very well received. In November
an expert launched the tool with CUA and NACCUG which began the collection of
data under a 3 month programme involving 40 CUs.
The NACCUG SPM exercise was undertaken by an expert from the Gambia MFI
Network (GAMFINET). Credit unions were selected at random for testing. In
Ghana a workshop was held with several credit unions. This was facilitated by the
Project Coordinator. Two of the involved credit unions23
were interviewed during
the MTR. They indicated that they understood the purpose of the SPM.
Observations
When a social performance survey is completed, the results are presented to the
financial institution’s board which then develops an action plan. It is unclear
whether or not the credit unions involved in the survey receive feedback from the
managers of the process. The process is very useful in determining the segment of
the population which is served by a credit union.
21 Through the international SPTF (Social Performance Task Force) 22 Tools were reviewed from organisations such as: Cerise, OikoCredit, and CCA (Development Ladder Assessment for Co-operative Enterprise). A questionnaire was then customized for credit unions. 23 Teachers Credit Union and Emmanuel Credit Union
22
Recommendations
V.C.1 Simply developing an action plan is not an adequate next step. The goal of
achieving positive double bottom line should be the ultimate focus. The SPM
survey should be integrated with a financial and statistical survey, with the financial
being based on operating ratios and the statistical on growth. Each of the variables
being examined must be measurable. The results of the survey should be analyzed
and the key deficiency areas should be identified as those which require technical
assistance and training. A follow-up survey would indicate the level of impact
(success) of the interventions. In this way, SPM would have a purpose of being
integrated into the credit union movement’s existing operations and a follow-up to
the results would be ensured.
V.C.2 It is not critical that all credit unions be surveyed. However, random
selection is inappropriate. The first such survey should cover as many credit unions
as possible. Then, those (possibly 20) which are closest to the mean should be
identified as the sample group for follow-on assessments.
D. Knowledge management
Knowledge Management (KM) is the process of capturing, distributing and
effectively using knowledge. WACUPP is primarily about knowledge
management, harnessing existing learning from both international sources and
within the region, and developing a high level of professional and practical
expertise throughout the credit union movements. This will help credit unions
comply with international best standards.
The project’s KM function is based at CUTraC. It is an approach which is evident
through all aspects of the project. The Project Steering Committee gathers the
representatives of all primary stakeholders to discuss national updates and share
innovations. Training offered by CUA in Sierra Leone and Liberia shares
successful practices. A recent visit by representatives of NACCUG to CUA
observed the implementation of the risk management programme. In February
2013 a website was initiated to share information internally to the project and
externally.
The project hub at CUTraC does not appear to be very pro-active. The majority of
knowledge management initiatives come from ILCUF. For the benefit of the longer
term, the hub should not be reactive, but rather it should initiate knowledge
exchanges and activities which would then result from discussions based on such
exchanges.24
24 One reason for this may be that telecommunications are still very poor across the region. Internet access is still very poor across the region, phone communication from Ghana to the other West African countries is far more expensive than it is from Ireland.
23
The website is seen as a platform for best practices. It contains information about
risk management, central finance, and training and includes manuals. The Financial
Literacy Manual from the Gambia is on the site and there will soon be a GMF
research manual.
Observations
The periodic Steering Committee meetings are critical. Given the minimal
resources of the Liberian and Sierra Leonean movements, they will, however, not
be able to be continued without external (project) funding.
The website is a very important mechanism which ensures that all stakeholders
have access to each other’s information in a timely manner and can adapt tools to
their own environment. At the moment, the website exists as an inventory of events
and documentation. The challenge is to identify how it can best be used and
managed. This is especially problematic in a region where website usage is very
low. In addition, access is very difficult and slow in all of the project’s countries,
with the possible exception of the Gambia.
Recommendations:
V.D.1 The activities of the project hub should be more pro-active.
V.D.2 All efforts should be made to identify further support for the Steering
Committee exchanges.
V.D.3 The website should ensure that all project documents, such as manuals and
policies, are posted.
V.D.4 The website must be interactive. This can be achieved through several means.
For instance, blogs should be encouraged, especially as pertains to specific topics.
The online discussions which to be generated would provide insight as to the
practical application of approaches, especially pro-poor ones. WACUPP would also
be able to generate discussions by starting a blog on a given topic.
Efforts should continually be made to ensure that the website is user friendly.
VII. Project Implementation Review
A. Effectiveness
1. What has been progress against planned activities?
The best way to measure progress against planned activities is by
reviewing the project’s performance results.
24
This statistic is from Gambia only.
1. Increase in CU membership
Country Membership
Baseline Nov/Dec
2011
Target
YR3
End of
Year 1
Update to
Jul-13 Dec. 2013
The Gambia 44,847 62,000 55,500 51,673
Ghana 400,839 485,000 479,002 531,543
Liberia 0 6,000 0 1,755
Sierra Leone 1,700 4,000 2,054 2,752
25 The effective date for these indicators is either December 2013 or March 2014, as indicated. 26 Operational Self-Sufficiency = Financial Expenses + Loan Loss Provision + Operating Expenses divided by Operating Revenue.
Performance indicator
Update25
Minimum threshold
Target # Description 12
months
24
months
30
months
1 Percentage of increase in Credit
Union (CU) membership 31% 8% 14% 20% 25%
2 Percentage of poor people among
new members (c.f. Poverty Index
sampling)*
42% 15% 20 % 30% 37%
(i.e. 47,239
members)
3 Number of CUs Apex Bodies
reaching an Operational Self
Sufficiency 26
>110%
1 0 1
(CUA,
Ghana)
2
(NACC
UG, the
Gambia)
2
(Ghana and
The
Gambia)
4 Percentage of women among new
members 40% 25% 32% 38%. 42.75%
5 Number of CUs launching Value
Chain or Graduation Microfinance
Projects
10
0 3 6 8
6 Number of CU apex organisations
using Social Performance Indicators
and Poverty Index (mid-term)
2 1 2 3 4
7 Number of new policies introduced
by the apex bodies into CU
movements - all meeting
international best practice. Minimum
standards in each policy agreed
4 1 2 4 5
25
TOTAL 447,386 557,000 536,556 587,723
Yr3 %age over
baseline 125%
Actual results
120% 131%
The overall target of 557,000 members has been surpassed. This is due mainly to the
great increase in Ghana membership. WACUPP hopes that all countries will meet their
own national targets by project end.
Status: target achieved.
2. Percentage of poor people among new members.
The target of new members under the poverty line is 37%.
Surveying in Gambia showed that 42% of new members are below the poverty line as of
the end of 2013. Surveying is to be done in Ghana and Sierra Leone.
In Ghana about 60% of the new members reached live in the extreme poverty zones in
the coastal and northern areas of Ghana, therefore, it is estimated that 40% of these new
members are below the poverty line. However this estimate needs to be validated by
surveying.
Status: part achieved
3. Number of CUs Apex Bodies reaching an Operational Self Sufficiency (OSS)
greater than 110%.
The target is that 2 apex organisations will reach this level.
CUA has reached the target, achieving an OSS ratio of 124.72% in 2013.
In 2013 NACCUG reached 100.25%. In 2011 it was 107.59% and in 2012 it was
100.72%. Therefore, there has been a three year annual trend of surpassing 100%. This
reflects a stable rate of financial sustainability. However, since the focus is on surpassing
110%, a special effort must be made in 2014 to take measures which ensure this.
It is reasonable to expect that CUA will reach the OSS target by the project’s end and that
NACCUG will also surpass this indicator if the proper steps are taken.
Status: part achieved
4. Percentage of women among new members
The following is the breakdown of new members during the project period:
26
Individual
Male
Members
Individual
Female
Members
Total
Individual
Members
% female
among
individual
members
Groups Total CU
Members
The Gambia
35,659
15,087
50,746
30%
927
51,673
Ghana
287,152
225,217
512,369
44%
19,174
531,543
Liberia
878
878
1,756 27
50% -
1,756
Sierra Leone
1,147
1,376
2,523
55%
229
2,752
Total 324,836 242,558 567,394 43% 20,330 587,724
The overall number of women among new individual members is 43%. This does not
consider the groups which are members of CUs (e.g. GMF and other groups which
together have one account in the CU). These groups are overwhelmingly female so the
real figure for representation of women in the CU is even higher.
Status: achieved
5. Number of credit unions launching Graduation Microfinance projects.
The target by the end of the project is 8. This has already been surpassed, as there are 3
in Sierra Leone and 7 in Ghana at March 2014
Status: achieved.
6. Number of CU apex organisations using Social Performance Indicators and
Poverty Index (PI) (mid-term).
The minimum threshold by project’s end is 3 and the target is 4. Thus far, this is being
done by 2 – CUA and NACCUG. It will be introduced in Sierra Leone in September.
First, the Sierra Leone delegates will be introduced to the system at the Steering
Committee meeting to be held the Gambia in August. The Sierra Leone delegates will be
given some exposure to SPM and PI at the Gambia Steering Group meeting. That will
entail showing them a SPM audit of a Gambian CU. Then the GAMFINET representative
who carried out the exercise in the Gambia will go Freetown and do SPM audits on a
sample of CUs.
Status: part achieved.
7. Number of new policies introduced by the apex bodies into CU movements - all
meeting international best practice. Minimum standards in each policy agreed.
27 Estimate due to lack of full data
27
At the recent (March 2014) Steering Committee Meeting in Liberia, 4 policies were
introduced:
- Membership
- Governance and Volunteers
- Standards of Conduct and Ethical Behavior for Officers
- Credit Control
At the next meeting (in August) two more policies – Gender and Operational
Management – will be introduced.
Status: part achieved.
2. What, if any, indications of change have occurred in relation to
objectives?
The only major change has been the judicious decision not to pursue value chain. Project
resources have since been focused on graduation microfinance, which is appreciated by
the credit unions and results in increased female membership and more locally generated
income.
3. To what extent have the objectives been met?
The project’s objectives are in the process of being met. The project has only been active
for less than 2 years and final results are pending. Nevertheless, the prognosis is that all
objectives will certainly be met, as defined by the performance indicators. Given the
short time frame, this is impressive in that, as is understandable given the regional nature
of the project across 4 countries, the project was slow to start-up.
The following are the project’s results areas and their status:
a. Regional capacity building services provide for the development of
sound community owned CUs on a cost recovery basis.
Capacity building has been provided in several ways. Experts from CUA have provided
training in Liberia and Sierra Leone. Representatives from the Gambia have visited CUA.
Liberian and Sierra Leonean staff have been trained at CUTraC. Training has been
provided at each Steering Committee meeting. In addition, specialized staff from the
Irish credit union movement have traveled to each of the four countries and provided on-
site technical assistance and training.
b. Economic autonomy of underserved populations increased by
expanding access to both financial and complimentary services.
Increased access to financial and complimentary services has been demonstrated by the
increase in credit union membership in each of the four countries. In percentage terms
28
this has been particularly striking in Liberia and Sierra Leone. It is equally important to
note that female membership has increased as a percentage of the whole during the
project period.
c. Graduation of very poor participants from extreme poverty.
Graduation has been achieved primarily through the GMF component of the project.
While this has been limited to several credit unions in Ghana and Sierra Leone, as a pilot
activity it has proven to be successful and replicable.
5. Evidence based lessons, approaches and best practices disseminated
through effective distribution channels.
The project’s emphasis on knowledge management has demonstrated that approaches and
lessons learned can be shared quite successfully. This has been through steering
committees, meetings, trainings, and the website.
A. Efficiency
Has the programme demonstrated a good use of resources?
The use of resources has been excellent. This project covers 4 countries and directly
benefits over half a million persons. Yet, external funding is relatively minimal for such
an endeavor. The successes to date have been due to the dedication of the credit union
movements in the Gambia, Sierra Leone, Liberia, Ghana, and Ireland. Each of these has
committed its own time and resources to achieving project objectives.
The contribution of the EU has been very generous. In addition, the ILCUF has provided
40% of the project’s financial resources. Given the fact that the project will only be
operational for 29 months, rather than 36 (80% of the intended time frame), the
achievement of the objectives has only been possible due to the dedication of the
stakeholders.
The estimated value of the project is €475,000 Euros. The number of new members
during the project period is projected to be about 153,00028
. Therefore, the cost per new
member is €3.02 over a period of 29 months. However WACUPP is of benefit to all CU
members as it improves the services and security of CUs for all members. At project end
there will be 600,000 CU members, therefore the project cost per member is €0.79
The project cost per beneficiary is much lower again as the entire family of the member
benefits from CU membership.
The use of EU funds has been particularly effective in that it has leveraged 40% of the
project’s value with its contribution. Thus, about 67% of additional resources were
generated for a common purpose.
28 Membership at project start was 447,386 and projected membership at the end of the project will be 600,000 (revised estimate at March 2014).
29
B. Relevance
1. Are the activities being carried out and related approaches likely to lead
to desired changes? If not, what are the constraints?
The activities which are being carried out will result in achievement of the planned
performance indicators. However, this should be viewed as just a start. The project’s
duration is very short. Through the prism of such a time frame, the activities and
approaches are certainly relevant. But, the changes must continue and, for this to
happen, approaches should be continued with relevant activities. An example of changes
effected by the project is SPM. Although this has existed in the microfinance world for a
number of years, it has been introduced to the credit union movements through
WACUPP.
A number of technical assistance and training activities are planned for the remainder of
2014. These should remain as scheduled. However, more specificity is needed to
describe the training to be provided from CUA staff to the Liberian credit unions.
2. Are the objectives still valid?
The objectives can be categorized as being on several levels. The first is poverty
reduction. Then, there is the overall objective of financial inclusion. The final level is
that of building sustainable member owned and controlled financial systems. Each of
these is still valid.
3. What, if anything, needs to be done differently?
The national stakeholders demonstrate a high degree of ownership in the project. The
project management (through ILCUF, CUA and the steering committee) is dedicated,
meticulous, inclusive, and extremely hard working. The only aspect which needs some
improvement is that of awareness of the project and its interventions by credit unions and
their members. Some of these are involved in SPM or GMF and have first-hand
experience as to impact. But these are a minority.
C. Sustainability
What are the likely long lasting effects and how sustainable are the changes?
Effective credit union movement development is generational. Under the proper
circumstances there can be positive outcomes in the short term. However, if these are to
be sustainable, efforts must be continued over longer periods. Systems must be
developed and become operational. Capacity building must take place from the credit
union to the apex organization level.
30
In the cases of the Gambia and Ghana financial sustainability of the apex bodies will be
achieved by the end of the project. But this will not preclude the need for an extended
outreach in terms of services. For instance, in Ghana, not all credit unions have access to
the CFF or risk management or the deposit guarantee scheme. Not all credit unions are
inspected on time. This risks problems being detected too late. NACCUG and its
membership are beginning to implement new services. These must be tested and rural
outreach (generally more expensive) must be achieved.
Liberia and Sierra Leone are in the beginning stages of reviving credit union movements
which have been devastated by war. Clearly the development of these movements will
take years. In the best of scenarios, a thriving credit union movement serving an
increasing number of members through a financially viable apex organization offering a
variety of services takes 6 to 10 years to achieve. This assumes a calm economic
environment, a safe and sound legal and regulatory framework, and technical competency
at key levels of the movement.
VIII. Alternative Approaches and Strategies
There are barely six months remaining in the project. The introduction of alternative
approaches and strategies, if feasible, would be limited within such parameters.
Nevertheless, the alternatives which can be introduced in this period are those found in
this report’s recommendations. Their implementation will enhance the achievement of
the project’s objectives, as well as set the stage for follow-on interventions.
IX. Recommendations
The following are recommendations listed by the entity responsible for
implementing each. These are: ILCUF, WACUPP, NACCUG, CUA, LCUNA,
and NACCUSL. The recommendations are listed in priority order for each
entity29
.
A. ILCUF
1. The Irish League of Credit Unions Foundation, preferably in concert with the
EU, should begin to design a follow-on project (and identify necessary
funding) which will apply the lessons learned from this successful
intervention.
2. ILCUF should ensure that the credit union movements involved in WACUPP
provide maximum input to the design of further interventions.
B. WACUPP
29 The recommendations for WACUPP are categorized by overall project needs and themes.
31
1. There is a clear need in each of the four countries to bring the legal and
regulatory framework up to date. This would also include clarification
regarding supervision, including who is responsible and how is it funded.
2. Given the legal and regulatory needs, as well as other evidence of the need for
better knowledge on the part of national policy makers, each of the four
movements needs to develop and implement a policy advocacy strategy.
3. Cooperative departments (or their equivalents) should only be concerned with
registrations (validating cooperative nature) and not with licensing financial
operations.
4. Experience and information exchanges with other credit union movements in
the region are critical and must be continued.
5. Consideration should be given in the future to establishing a subset of
indicators for each country.
6. The project might have more impact if there was a pool of trainers for each
country. In this way, the apexes could deliver training for its credit unions.
Graduation Microfinance
7. The cost effectiveness of GMF should be investigated. The key variables to
study would include: comparative delinquency, CSA loan charges, and staff
time (i.e.; whether GMF requires more).
8. Records should be maintained as applies to GMF delinquency. These should
then be compared to rates for traditional loans by the credit union.
9. GMF should be monitored by the credit union board and management, as well
as the programme’s promoters.
10. GMF should be extended to more credit unions, especially in Sierra Leone
and Ghana. These should be well functioning credit unions with staff, a
computer and office space.
Social Performance Management
11. The SPM survey should be integrated with a financial and statistical survey,
with the financial being based on operating ratios and the statistical on
growth. Each of the variables being examined must be measurable. The
results of the survey should be analyzed and the key deficiency areas should
be identified as those which require technical assistance and training. A
follow-up survey would indicate the level of impact (success) of the
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interventions. In this way, SPM would have a purpose of being integrated
into the credit union movement’s existing operations and a follow-up to the
results would be ensured.
12. Random selection of credit unions for the SPM survey is inappropriate. The
first such survey should cover as many credit unions as possible. Then, those
(possibly 20) which are closest to the mean should be identified as the sample
group for follow-on assessments.
Knowledge Management
13. All efforts should be made to identify support for the Steering Committee-
type exchanges.
14. The activities of the project hub should be more pro-active.
15. Efforts should continually be made to ensure that the website is user friendly.
16. The WACUPP website should ensure that all project documents, such as
manuals and policies, are posted.
17. The website must be interactive. This can be achieved through several means.
For instance, blogs should be encouraged, especially as pertains to specific
topics. The online discussions which to be generated would provide insight as
to the practical application of approaches, especially pro-poor ones. WACUPP
would also be able to generate discussions by starting a blog on a given topic.
C. NACCUG (The Gambia)
18. A special effort must be made in 2014 to take measures which ensure that
NACCUG’s OSS surpasses 110%.
19. The Gambia should play a larger role in mentoring the credit union movement
in Sierra Leone. Their situations are similar and specific exchanges, e.g.; with
the Teachers Credit Unions would be very appropriate.
D. CUA (Ghana)
20. The fact that so few credit unions are on-line is disturbing. CUA has tried as
many options as seem possible to expand the number, including the provision
of portable modems. Efforts should continue in this regard. One other
possibility could be the establishment of service centers – which were, in fact,
previously used in some West African countries. Service centers are common
points which are financed by a group (perhaps 10) of credit unions. The
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services provided depend upon the needs expressed by the credit unions.
Sometimes it could an itinerant bookkeeper and sometimes it could be a data
collection point.
21. Credit union supervisions in Ghana can be brought up to date by triaging
credit unions. Credit unions can be listed by asset size and a cut-off point
should be determined at which it would be certain that those credit unions
could be supervised on-site in a timely manner. The remainder would be
supervised off-site, only requiring an on-site visit if any irregularities are
found.
22. The CUA Stabilization Fund should not be terminated, as its purpose differs
from the Deposit Guarantee Scheme.
23. Consideration should be given to having the credit union pay for both loan
protection and life savings insurance.
E. LCUNA (Liberia)
24. LCUNA must strictly apply its requirement of member credit unions to pay
dues. Those which do not should not be allowed to vote at the next Annual
General Meeting.
25. The CBL program of providing loans directly to credit unions should be
terminated. It is not the role of government to play this role and it is a conflict
of interest for a regulatory body like the CBL to lend to the entities which it
regulates.
26. LCUNA should work with the CBL and CDA in determining a strict
definition of a credit union. This should be based on international best
practices.
27. WOCCU should be encouraged to work more closely with LCUNA. In
addition, all efforts should be made to ensure that the regional credit unions do
not undertake any of the current or future functions of the national apex.
28. Annual credit union audits in Liberia must be carried out.
29. No credit union should be multi-functional. There is too much of a risk of
mixing cost centers and there have been no examples of successful multi-
functional credit unions round the world.
30. Assistance should be provided to LCUNA members with strategic plans,
accounts, computerization (in select credit unions), and governance.
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31. Training to the Liberian credit union movement, such as that provided by the
project, should be continued.
F. NACCUSL (Sierra Leone)
32. Given the state of renewal of the movement in Sierra Leone, the basics of
grass roots promotion and developing NACCU as a service organisation must
be continued.
33. Capacity building for the staff and board of NACCU and its member credit
unions are a high priority.
34. Since new membership in Sierra Leone is attributed to GMF, this activity
should be extended.
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Appendix 1
List of Persons Met
WACUPP Workshop in Liberia Saye J Biyie LCUNA Chairman Ndella Faye Colleye GAMFINET Executive Director Bless Darkey WACUPP Programme Manager Emmanuel Darko CUA Managing Director Michael Gannon ILCUF Advisor for West Africa Mohamed Jalloh SEND, Sierra Leone Babaoucar Jeng NACCUG CEO Alimany Kamara NACCU Chairman Siapha Kamara SEND CEO Alhadji Kanu NACCU Supervisor Kevin Loughnane ILCUF Trainer Patrick Muriuki WOCCU Chief of Party. Liberia Charles Yaw Assuah CUA Chairman Yarkpazuo Gbusiwoi LCUNA Managing Director Other Credit Union in Liberia Mohammed Turao Chairman, Financial & Capacity Development Credit
Union CUTraC Birgit Flamma SBFIC Representative and Senior Advisor for Ghana Ernest Teye Topey Director, CUTraC GMF Training – Cape Coast Joseph Yaqson Acquah Oguaa Teachers CU Manager Abdul Malik Adjei OTCCU Loan Officer Michael Agbeyebiawo UCC CU Manager Eku Boateng Oguaa Teachers CU Project Manager Edna Caiquo WACUPP Project Assistant Iddrisu Fusheini SEND FINGO Bimbilla Acting GM Charles Adabaw Graham ECCU Manager Prince D Lekey PWCCU Loan Officer
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J. G. Nkum Swedru Emmanuel Credit Union Chairman Martha Odoom PWCCU Chairperson Sarah Quagraine Oguaa Teachers CU Chairperson Stanley Ofori PWCCU Manager Alfred Attom Prah UCC CU Treasurer Shafiu Shaibu SEND Director of Finance CUA William K. Adu-Agyei Supervisory Manager, Deposit Guarantee Anita Josephne Aidoo Manager, Central Finance Facility Ernest Aidoo Manager, Youth Savings Program Katherine Gabianu Health Officer Lydia Kissieh Deputy General Manager, Human Resources and
Administration Romeo Odonkor Audit Manager Solomon Owusunyarko Supervisory Manager Johnson Woth Insurance Officer
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Appendix 2 Trip Report: Dean Mahon Mid Term Evaluation West Africa Credit Union against Poverty Programme 16 March – 9 April 2014 Purpose The purpose of the mission was to undertake in-country research related to the Mid Term Review (MTR) of the West Africa Credit Union against Poverty (WACUP) Programme. This was preceded by an extensive review of all project documentation to date.
1. Liberia
A. Project Steering Committee (16/3 to 20/3) The MTR field work began in Liberia. Since the periodic project steering committee would be held there during his week it was a most opportune time for the Reviewer to become acquainted with the project’s stakeholders. In addition to the steering committee meeting an international workshop would take place, primarily for the benefit of the Liberian credit union movement.
In attendance at the Steering Committee were representatives from: ILCUF – the Irish League of Credit Unions Foundation, , CUA – the Credit Union Association of Ghana, , NACCUG - the National Association of Cooperative Credit Unions of the Gambia, LCUNA – the Liberia Credit Union National Association, NACCU SL – the National Cooperative Credit Association of Sierra Leone, and WOCCU – the World Council of Credit Unions. In addition, SEND – the Social Enterprise Development Foundation had a representative and the Executive Director of GAMFINET - the Gambian Microfinance Network was present in her capacity as adviser to NACCUG on Social Performance Management.
The agenda began with country updates and presentations from SEND regarding GMF and the NACCUG regarding SPM. What was quite interesting was the opportunity to compare and contrast key aspects in each country, such as; the par value of a share, legislation, regulation, taxation and the use of chapters in the representational structure. The committee meeting provided the consultant with the opportunity to meet with representatives from the Gambia and Sierra Leone, since visits to their countries were not part of the programme.
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The reviewer also attended part of a strategic planning session which was held for a number of Liberian credit unions. This was facilitated by the ILCUF staff.
B. Meetings with Liberian credit unions and LCUNA (21-22/3)
Meetings were held with 2 credit unions: In God We Trust Multipurpose Credit Union and the Liberia Financial and Capacity Development Credit Union (for members of the Carpenters Trade Union). In addition, the Training Officer from the Irish League of Credit Unions met with the Airport Workers Credit Union and shared his findings with the reviewer. One-on-one sessions were held with the LCUNA Manager and Chairman. The focus of these was to ascertain their assessment of the project’s impact and value, as well as prioritized areas of need.
C. Other During the entire week, the Mid Term reviewer benefitted from the presence of the ILCUF Advisor. Issues were discussed openly and background information was provided which would have been virtually impossible to learn via just email and Skype.
The ILCUF Advisor, LCUNA Chair and the reviewer also attended an inclusive finance workshop coordinated by the Central Bank. This included all of the major stakeholders in financial inclusion and provided an excellent opportunity to observe the approach and attitude of the government vis-à-vis credit unions. Prior to his departure from Monrovia, the reviewer received the past five years of accounts and statistics from the CEO of NACCUG by email.
II. Ghana
A. Graduation Microfinance (GMF) Training (24/3 to 27/3) GMF training was held by SEND in Cape Coast for 5 local credit unions: Oguaa Teachers Credit Union, University of Cape Coast Credit Union, Emmanuel Credit Union, Progressive Women’s Credit Union, and Keea Workers Credit Union. In attending the workshop the reviewer was able to best understand the GMF approach and appropriateness for these credit unions. An extensive discussion was held with the two SEND representatives who provided extensive history, background and lessons learned regarding GMF for credit unions.
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B. Meetings with credit unions (26/3 to 27/3)
During the workshop period, the reviewer met with the manager or chair of the following credit unions: Oguaa Teachers University of Cape Coast, Emmanuel and Women’s Progressive. The focus of these individual discussions was primarily on the usefulness and impact of GMF and the relative impact of the project at the credit union level.
C. CUTraC (Credit Union Training Centre) (28/3) Following the GMF training, the reviewer spent a day in Kasoa meeting with key CUTraC staff. These were the CUTraC Director and the representative of SBFIC (the Savings Bank Foundation for International Cooperation – of Germany)
D. CUA (30/3 – 9/4) The CUA General Manager was extremely helpful in providing background information and access to all of CUA’s line managers. He also provided his perspective on the project, as well as the credit union movement in West Africa. The reviewer met with those responsible for: the CFF (Central Finance Facility), Risk Management (Loan Protection and Life Savings Insurance), Computerization, the Stabilization/Deposit Guarantee Fund, Health, Youth Savings, Supervision (including MIS), and Audit.
E. Other During the reviewer’s first week in Ghana he was accompanied by the WACUPP Programme Manager and his assistant. This was very helpful, especially in Cape Coast and Kasoa. The reviewer was able to ascertain the Programme Manager’s perception regarding the project, including opportunities and challenges. While in Ghana, a special effort was made to review the following key project aspects: GMF, Knowledge Management , and Social Performance Management. (The latter was also reviewed while at the Steering Committee Meeting in Monrovia.) Recommendations regarding these will be in the Mid Term Review report. The reviewer received CUA’s accounts and statistics for the four year period through 2012. The unaudited 2013 data will be provided at the end of April, and the audited information two weeks later.