Publication: Providing Financial Services in Rural Areas : A Fresh Look at Financial Cooperatives
Loading...
Published
2007
ISSN
Date
2012-06-13
Author(s)
Editor(s)
Abstract
This report demonstrates that financial cooperatives can be sustainable providers of financial services in rural areas and development assistance needs to consider supporting them as a means to enhance access to rural finance. It does not suggest that financial cooperatives are the only providers or the preferred channel in all circumstances. For financial cooperatives to function as sustainable institutions, governments need to provide an enabling environment, not exercise excessive control that restricts growth and consolidation, and not use them as channels to provide subsidized credit. Integration into networks has wide-ranging benefits for financial cooperatives, ranging from improved governance to the ability to provide a wide range of services.
Link to Data Set
Citation
“World Bank. 2007. Providing Financial Services in Rural Areas : A Fresh Look at Financial Cooperatives. © World Bank. http://hdl.handle.net/10986/7935 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Rural Banking(World Bank, Washington, DC, 2010-05)This case study describes the history and business model of the Rural and Community Bank (RCB) network in Ghana, analyzes its performance, identifies key issues, and makes recommendations on the way forward. The study analyzes the service delivery and financial performance of the RCBs. Before the establishment of RCBs in the late 1970s and the subsequent expansion of other service providers into rural areas, access to institutional credit for farm and nonfarm activities was scarce. The main sources of credit were moneylenders and traders that charged very high interest rates. In many rural communities, secure, safe, and convenient savings and payment facilities hardly existed. The first RCB was established in a farming community in the central region of Ghana in 1976. Rural communities showed tremendous interested in the community ownership and management features of RCBs, and by 1984 the number of RCBs reached 106. The introduction of a check payment system for cocoa farmers also spurred the establishment of local banks in many communities. The financial performance of many RCBs started to decline, however, for several reasons, including a drought that affected the country in 1983, weak governing ability, conflicts within boards of directors, and ineffective management in many RCBs. By the end of 2008, 127 RCBs were in operation with a total 584 service outlets. RCBs are regulated by Ghana's central bank, the Bank of Ghana, and thereby form part of the country's regulated financial sector. RCBs are the largest providers of formal financial services in rural areas and represent about half of the total banking outlets in Ghana.Publication Egyptian National Postal Organization : Postal Financial Services and Access to Finance(World Bank, Washington, DC, 2007-08)ENPO is an organization employing 48,000 staff and operating a network of more than 9,000 access points (of which 3,500 post offices, 6,500 agencies, of which 1,500 are currently active). A commercial entity with management autonomy, ENPO is primarily a provider of basic financial services. Other services are mail (regular and express), parcels and Government services. Postal financial services, with three main business lines (savings, payments and giro services) and 15 million savings accounts, generate around 50% to 60% of ENPO s total revenue, and occupy an estimated 15% of ENPO s staff. Although available accounting and financial information are limited, it seems that postal financial services are operated at a profit. For ENPO which is currently in a transition phase from an administration-type of organization, moving towards a corporate-type of organization, the strategic option will play as an accelerator of change (in case the Government decides for a drastic move towards bancarization) or as a consolidator of incremental reform (in case the Government opts for a progressive approach, potentially using alternative approach to grab the business opportunities of growth, but likely avoiding social tensions within the organization). In any case, moving forward the postal financial services agenda will call for (i) a review of the legal, regulatory and institutional set-up, (ii) building capacity in the network and assessing the return on investments, (iii) rapidly identifying the postal financial services as a business unit within the organization and assess its contribution to profit, as well as (iv) getting a better understanding of the cost structure so as to enable ENPO to be in a strong position during negotiations of service level agreement.Publication Expanding Opportunities for Rural Finance in Colombia(World Bank, Washington, DC, 2015-12)The purpose of this note is to provide policy recommendations to improve access to credit of rural populations and small agricultural producers under financially sustainable schemes. Although the agricultural sector remains an important source of employment, agricultural credit is a small fraction of commercial credit in Colombia. The share of agricultural credit in Colombia is below levels observed in other countries in the region. Colombian commercial banks have limited credit volume in rural areas, concentrating their lending activities on more profitable urban populations. General deposit warehouses and the agricultural commodity exchange (Bolsa Mercantil de Colombia (BMC)) provide funding for agricultural activities, but they are underdeveloped compared to regional peers and serve medium and large size producers. Overall use of mobile- and internet-based payment financial products remains low in rural Colombia. According to 2014 Findex survey data, just two percent of adults report using mobile banking, defined as a mobile platform for making transactions from an account at a financial institution. Public credit guarantee system (FAG) coverage should be modified to incentive the use of mobile guarantees and agricultural insurance. This will ensure that financial institutions have only covered tail risks, providing incentives to use mobile guarantees.Publication Innovative Agricultural SME Finance Models(International Finance Corporation, Washington, DC, 2012-11)This report is organized into three main sections. Section one sets out the context by describing the particular challenges and opportunities related to financing agriculture, followed by defining the target group of agricultural SME s. Section two describes a set of innovative financing models. Section three then provides a framework for an indicative assessment of these models by gathering and forming observations from the case studies. The model observations are then highlighted in three types of country contexts in which bankers in developing countries may find themselves. Preliminary assessment results are presented. The report concludes with key lessons learned on innovative agricultural financing, relevant case studies, and an outlook on further work in this area. Annexes present methodologies and case studies representing the various models.Publication Country-Level Effectiveness and Accountability Review : Madagascar(CGAP and the World Bank, Washington, DC, 2005-10)This Country-Level Effectiveness and Accountability Review (CLEAR) examines the efficacy of microfinance aid in Madagascar, based on an objective analysis of donor assistance for the sustainable development of financial systems targeting the poor. The three levels of the financial system are the micro level (e.g., retail institutions), the meso level (e.g., apex, technical service providers), and the macro level (e.g., regulations and policies). At the micro level, there is a large number of stakeholders, and an increasing interest of banks and private investors, including a predominant stake by the Decentralized Financial Systems (DFS), as well as major roles by the local Savings Institution and the Post Office. At the meso level, there is a supply of services such as auditing. Finally, at the macro level, coordination and supervision exist, and a specific legal framework on microfinance is in place. Notwithstanding, microfinance in Madagascar remains weak, and, concerns suggest DFSs carry structural weaknesses at various levels. Additionally, it is specified services in support of microfinance are still rare, and its quality it debatable. Professional organizations need to be strengthened, particularly as lack of reliable information on financial results is concerned. At the macro level, supervisory and coordinating agencies rely on limited means, whereas the legal framework is not fully supportive. Risks suggest potential market disruptions resulting from subsidies and interest rate hikes, an implication by which the Ministry of Agriculture not always agrees with the Microfinance National Strategy. Finally, the judicial system does not rely enough in favor of the development of the financial sector.
Users also downloaded
Showing related downloaded files
Publication Using Immunization Coverage Rates for Monitoring Health Sector Performance : Measurement and Interpretation Issues(World Bank, Washington, DC, 2000-08)Immunization against childhood diseases such as diphtheria, pertussis, tetanus, polio and measles is one of the most important means of preventing childhood morbidity and mortality. Despite the low cost of basic childhood immunizations, nearly 3 million children still die each year from vaccine-preventable diseases. Achieving and maintaining high levels of immunization coverage must therefore be a priority for all health systems. In order to monitor progress in achieving this objective, immunization coverage data can serve as an indicator of a health system's capacity to deliver essential services to the most vulnerable members of a population. This note discusses the use of trends in immunization coverage data, and argues that immunization is a health output with a strong impact on child morbidity, child mortality and permanent disability. This note discusses measurement and interpretation issues for coverage data collected through surveys and administrative records.Publication Business Ready 2024(Washington, DC: World Bank, 2024-10-03)Business Ready (B-READY) is a new World Bank Group corporate flagship report that evaluates the business and investment climate worldwide. It replaces and improves upon the Doing Business project. B-READY provides a comprehensive data set and description of the factors that strengthen the private sector, not only by advancing the interests of individual firms but also by elevating the interests of workers, consumers, potential new enterprises, and the natural environment. This 2024 report introduces a new analytical framework that benchmarks economies based on three pillars: Regulatory Framework, Public Services, and Operational Efficiency. The analysis centers on 10 topics essential for private sector development that correspond to various stages of the life cycle of a firm. The report also offers insights into three cross-cutting themes that are relevant for modern economies: digital adoption, environmental sustainability, and gender. B-READY draws on a robust data collection process that includes specially tailored expert questionnaires and firm-level surveys. The 2024 report, which covers 50 economies, serves as the first in a series that will expand in geographical coverage and refine its methodology over time, supporting reform advocacy, policy guidance, and further analysis and research.Publication The Container Port Performance Index 2023(Washington, DC: World Bank, 2024-07-18)The Container Port Performance Index (CPPI) measures the time container ships spend in port, making it an important point of reference for stakeholders in the global economy. These stakeholders include port authorities and operators, national governments, supranational organizations, development agencies, and other public and private players in trade and logistics. The index highlights where vessel time in container ports could be improved. Streamlining these processes would benefit all parties involved, including shipping lines, national governments, and consumers. This fourth edition of the CPPI relies on data from 405 container ports with at least 24 container ship port calls in the calendar year 2023. As in earlier editions of the CPPI, the ranking employs two different methodological approaches: an administrative (technical) approach and a statistical approach (using matrix factorization). Combining these two approaches ensures that the overall ranking of container ports reflects actual port performance as closely as possible while also being statistically robust. The CPPI methodology assesses the sequential steps of a container ship port call. ‘Total port hours’ refers to the total time elapsed from the moment a ship arrives at the port until the vessel leaves the berth after completing its cargo operations. The CPPI uses time as an indicator because time is very important to shipping lines, ports, and the entire logistics chain. However, time, as captured by the CPPI, is not the only way to measure port efficiency, so it does not tell the entire story of a port’s performance. Factors that can influence the time vessels spend in ports can be location-specific and under the port’s control (endogenous) or external and beyond the control of the port (exogenous). The CPPI measures time spent in container ports, strictly based on quantitative data only, which do not reveal the underlying factors or root causes of extended port times. A detailed port-specific diagnostic would be required to assess the contribution of underlying factors to the time a vessel spends in port. A very low ranking or a significant change in ranking may warrant special attention, for which the World Bank generally recommends a detailed diagnostic.Publication Global Economic Prospects, January 2025(Washington, DC: World Bank, 2025-01-16)Global growth is expected to hold steady at 2.7 percent in 2025-26. However, the global economy appears to be settling at a low growth rate that will be insufficient to foster sustained economic development—with the possibility of further headwinds from heightened policy uncertainty and adverse trade policy shifts, geopolitical tensions, persistent inflation, and climate-related natural disasters. Against this backdrop, emerging market and developing economies are set to enter the second quarter of the twenty-first century with per capita incomes on a trajectory that implies substantially slower catch-up toward advanced-economy living standards than they previously experienced. Without course corrections, most low-income countries are unlikely to graduate to middle-income status by the middle of the century. Policy action at both global and national levels is needed to foster a more favorable external environment, enhance macroeconomic stability, reduce structural constraints, address the effects of climate change, and thus accelerate long-term growth and development.Publication Global Economic Prospects, June 2025(Washington, DC: World Bank, 2025-06-10)The global economy is facing another substantial headwind, emanating largely from an increase in trade tensions and heightened global policy uncertainty. For emerging market and developing economies (EMDEs), the ability to boost job creation and reduce extreme poverty has declined. Key downside risks include a further escalation of trade barriers and continued policy uncertainty. These challenges are exacerbated by subdued foreign direct investment into EMDEs. Global cooperation is needed to restore a more stable international trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Domestic policy action is also critical to contain inflation risks and strengthen fiscal resilience. To accelerate job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. Countries in fragile and conflict situations face daunting development challenges that will require tailored domestic policy reforms and well-coordinated multilateral support.