The Landscape thru WOCCU’s eyes

Barry LennonWorld Council of Credit Unions (WOCCU)

April 10, 2007

COOPERATIVE FINANCE

Financial CooperativesFinancial Cooperatives

1.Changes in the markets we serve;

2. Innovations in products and services; and

3.Market opportunities and challenges.

OPPORTUNITIES AND CHALLENGESOPPORTUNITIES AND CHALLENGES

PREDICTIONS IN 2001PREDICTIONS IN 2001

1) More research and attempts to reach poorer clients

2) Greater mix of client responsive services

3) Differences between Microfinance and Consumer finance will blur

4) Renewed interest in ag & rural finance

5) More flexible lending for non-enterprise finance (housing, consumption, etc.)

6) Progress offering savings services for the poor

7) More payment services and use of technology

8) The credit union “star” may rise again

Kate McKee, USAID

INTERNATIONAL PROGRAMSINTERNATIONAL PROGRAMS

Davao, Philippines

Nairobi, Kenya

Tashkent, Uzbekistan

Cochabamba, Bolivia

Bogota, Colombia

Guatemala –Reg Manual

Veracruz, MexicoLeon, CPM Mexico

Michoacan, Mexico

Coop Development Program

Bansefi, Mexico

Quito, Ecuador

Colombo, Sri Lanka

Lima, Peru

Kigali, RwandaKampala, Uganda

Battambang, Cambodia

Afghanistan

13 countries

196 financial coops

3.8 million clients

WOCCU’s program agendaWOCCU’s program agenda

• Increasing scale and depth of CU services Shared branching IT solutions

• Greater rural outreach• Value chain finance & linkages • Leasing

• Remittances & linked products• Special populations (HIV AIDS, youth & IDPs) • Private service providers for CU’s• Regulation and supervision (regulation & supervision)• Working in conflict & Islamic finance• Wholesale lending (housing & SME’s)

1.1. Changes in the Market we Changes in the Market we serveserve

• More post-conflict opportunities

• Push to deepen and broaden markets

(HIV AIDS, youth, rural households & extreme poor)

• Greater risk of local government intervention

(caps on interest rates; inappropriate regulation and supervision;

reentry of public development banks)

• Greater sophistication of demand (more variety)

• Weak donor support for cooperatives

2.2. Product & serviceProduct & serviceinnovationsinnovations

• Remittance transfers & linked products

• Value chain finance & leasing

• Shared branching & ATMs

• Remote technology devices (POS)

• Reaching scale and hard-to-reach clients HIV AIDS affected households The extreme poor

• Islamic banking

Remittances Remittances via IRvia IRnetnet

Year # of transactions Value (US$) AVG

2001 5,873 $4,026,639 $686

2002 113,177 $53,270,705 $471

2003 433,609 $196,305,809 $453

2004 762,881 $333,157,822 $437

2005 950,891 $396,054,037 $417

2006 1,242,660 $494,358,048 $398

Totals: 3,509,091 $1.48 billion $421

8 COUNTRIES8 COUNTRIES

Shared branching Shared branching networksnetworks Bolivia

• Rural Branches

• Central Corporate

• Shared Branching

Ecuador

• Shared Branching

• Debit Cards

• Point of Sale

Shared branchingShared branching

Redcoop CU

CU

CU

CU

CU

CU

CU

CU

BBBB

B

B

B

B

BB

B

B

B

B

B

B

BB

B B

B

B

B

B

Guatemala

Ecuador

Bolivia

ATM expansion planATM expansion plan

Credit Union

$1.00 per transaction

$0.50 per transaction

$0.35 per transaction

Partnership programPartnership program

1. Bahamas / Massachusetts 2. Barbados / Missouri 3. Bolivia / Ohio 4. Costa Rica / Alabama5. Ecuador / Colorado6. Georgia / Poland 7. Hong Kong / British

Columbia8. Jamaica / Texas9. Kenya / Pennsylvania10. Macedonia / Michigan11. Mexico Alianza / New

Mexico

12. Mexico CPM / California & Texas

13. Mexico Libertad /Arizona14. Nicaragua / Washington DC15. Panama / Iowa16. Paraguay / Minnesota17. Philippines / Washington18. Puerto Rico / New York19. Rwanda / Maine20. Suriname / North Carolina21. Trinidad / Connecticut22. Uzbekistan / Oregon

3. Opportunities and Challenges3. Opportunities and Challenges

• Governance (ACCEPTING CHANGE / AVOIDING BACKSLIDING)

• Actual reform process of existing cooperative systems (TIME & RESOURCES)

• Staff training

• Appropriate products

• Cost effective delivery systems (TECHNOLOGY

SOLUTIONS)

• Greater sharing of skills & experience

• Greater donor support

ONLY USE FOLLOWING ONLY USE FOLLOWING SLIDES IF THERE’S TIME SLIDES IF THERE’S TIME REMAININGREMAINING

Distribution of DepositsDistribution of Deposits

$ 0 - $300 $300 - 500$501 - 1,000

$1,001 + TOTAL

# Savers 300,071 19,561 22,640 33,735 376,007

% total 80% 5% 6% 9% 100%

Total savings ($ millions) $13.5 $7.7 $16.0 $152.7 $189.9

% total 7% 4% 8% 80% 100%

AVG $45 $394 $707 $4,526 $505

11 credit unions (Dec 06)

Distribution of LoansDistribution of Loans

LOAN PURPOSENUMBER OF

BORROWERS % BALANCE OUTSTANDING %

Agriculture 2,650 3% $4.3 MILLION 2%

Housing 8,643 11% $37.4 MILLION 19%

Microenterprise 26,681 34% $68.5 MILLION 35%

Commerce 5,797 7% $13.9 MILLION 7%

Consumption 34,476 44% $72.6 MILLION 37%

Other 823 1% $636,327 0%

TOTAL 79,070 100% $197.4 MILLION 100%

11 credit unions (Dec 06)