THE “PROMISING PRACTICES” CASE STUDY SERIES: PROGRAMS, PRODUCTS AND SERVICES SPECIFICALLY DESIGNED TO

VERY POOR PEOPLE

REACH

Local Financial Institutions Learning to Move Down and Out: the Cases of Credit Unions and Rural Banks Adding Village Banking to Their Traditional Lines of Service I. Context

Building microfinance institutions from scratch became the norm in the 1990s for fostering outreach and down reach of financial services to the poor. This MFI building movement was in reaction to lack of interest among traditional financial institutions in the kinds of service delivery innovations needed to engage the truly poor, especially very poor women in rural areas. While motivated by stronger social commitment and greater innovative spirit, the institution-building movement is running into the same cost issues as the traditional institutions have faced. Ironically, many of the new MFIs are reacting in the same self-limiting ways that reduce commitment and innovation to engage the truly poor, especially very poor women in rural areas. Even more ironic, one way to break through this cost-structural impasse is to take advantage of the traditional financial service infrastructure already located nearby where the very poor live. This case study looks at how credit unions and rural banks—which pre-dated the MFI-building movement—have grafted onto their existing service portfolios some of the same service delivery innovations around which many of the MFIs have been built, but at lower marginal cost for reaching out and down. This case actually represents several cases spread over the world—West Africa, Madagascar, the Philippines and Ecuador—and over more than a decade of experience. Three common denominators of these various cases: 1. They all involve relatively small, institutionally fragile but financially self-sustaining, local financial service organizations that are owned by members or local investors and regulated as deposit-taking institutions under government charters. 2. These institutions are close to the communities they serve, which gives their leadership a sense of obligation to reach further out and down in order to address the poverty-related problems they see as they go out of the office to visit members, clients, friends and relations. Moreover, these communities include relatively large numbers of not just poor but very poor people (higher percentage of the local population than the national average, mostly because these communities are more rural than the national average). 3. Each case has a history with Freedom from Hunger, which offered them the opportunity to learn about, adopt and adapt key service innovations developed by the microfinance movement, most particularly, group-based lending to relatively poorer

women in relatively rural areas, who would not have been aware of, much less able to join or otherwise use the services of these organizations without these innovations. Tables 1 – 3 list the organizations by their acronyms and countries (contact information is appended at the end of the case study):  Federations of numerous, rather small credit unions in Africa—Benin, Burkina Faso, Mali, Madagascar, Togo  Individual credit and savings cooperatives in Ecuador and the Philippines; and individual Rural Banks in Ghana. These tables show standard portfolio and performance data for each federation or individual institution, as of the end of 2004, regarding just the portfolio of members and borrowers participating in the group-based lending program of the institution or federation. While the people involved in group-based lending may out-number the people who use the institution’s traditional (individual-oriented) lines of service, these individual-service users usually account for the great majority of the institution’s total portfolio of deposits and loans outstanding. The number of group-based program members is usually far less than 3,000 per individual institution, but the aggregate number for a federation of credit unions can be quite large (54,707 for FCPB in Burkina Faso) and very large worldwide: 162,865 (88,747 for African credit unions; 11,040 for Ecuadorian cooperatives; 20,484 for Ghanaian Rural Banks; 42,594 for Filipino cooperatives). Because these are deposittaking institutions, people do not have to be borrowers to be members; the number of borrowers is around 79 percent of the number of members in the group-based program. The average size of the groups is about 18, but it varies geographically. Group size is about 23 everywhere except for the African credit unions, which have much smaller group size (average ranging from 6 to 14). Virtually all these groups are composed entirely of women living in relatively poor rural communities. There is no means-tested targeting of poorer families; only a village banking design focused on the needs and constraints of women living in relatively rural communities. Recent evidence indicates that the peer-selection process of village banking may discriminate against the poorer members of the communities they draw their members from, especially the very poor and vulnerable who may be perceived by peers as posing untenable credit risk to the mutual guarantee mechanism. This case study presents evidence relevant to this concern about the village banking design.

II.

Description of Methodology
As already stated, the service delivery mechanism adopted and adapted by the local financial institutions is women-focused village banking. In addition, the village banking is integrated with adult education for essential life skills that improve child health and nutrition, women’s health and self-confidence, and family financial and enterprise management. These integrated services are adapted from the generic Credit with Education model offered by Freedom from Hunger (descriptive materials, training and operations manuals, and impact and other studies are available from Freedom from Hunger at www.freefromhunger.org and www.ffhtechnical.org). The rationale for this intervention package, or theory of change, is shown in the figure below:

High-Performance Program (HPP) Characteristics Large Scale

Freedom fro

The first step in the adoption process begins with a combination of interest of a local financial institution in doing more than it already does in the area served and awareness of the option offered by Freedom from Hunger to add a new line of service. The main attraction of this new line is the opportunity to reach out to people who are not currently served – thereby generating more business for the institution and more benefits for the local area. Freedom from Hunger specifically identifies and offers its services only to institutions that have a mandate to reach out to more women, to poorer people and more deeply into the rural areas than they currently know how to do without ongoing subsidy.

Credit

CostThe second step is a Management Orientation Training by Freedom from Hunger for the Effectiveness
senior managers and board of directors of the interested local financial institution (or federation of such institutions). The training thoroughly acquaints the institution leaders with the benefits and the challenges of adopting the new line of service. Most

Women’s Associations

challenging is the necessity to hire, train and supervise a new cadre of staff—field agents who take the service into the communities and to groups of women served. Associated with this new staff are new systems of management, including training, supervision, incentives, transportation, and quality control through monitoring and reporting. Another major challenge is the new clientele. Just to do business with (especially very poor) women in rural areas, the institution must address or somehow deal with their illiteracy, lack of self-confidence, limited entrepreneurial experience, social and geographic isolation and major health and nutrition problems for themselves and their families. The Management Orientation Training shows how adult education can be cost-effectively facilitated by the same field agents to address most of these constraints in the regular (weekly, biweekly or monthly) meetings of the women’s groups. (Literacy generally requires much more than the time provided by the regular meetings of the women in their groups.) The third step is the local financial institution’s decision to adopt the new service delivery mechanism, or not. If yes to adoption, then the institution must also decide how it will go through the adoption process. The fourth and biggest step is the adoption process itself. Freedom from Hunger has sufficiently documented the process and systems involved to allow an experienced and determined institution to go through the adoption process on its own. However, most institutions choose to partner with Freedom from Hunger to receive experienced training and other technical support for the adoption process. This involves: • • • recruitment and training of field agents and their supervisors training for management staff in the supervision and monitoring/reporting systems recommended for the Credit with Education line of service training of at least one in-house trainer for ongoing training of field agents, including skill upgrades and new recruit orientation training.

There are three major types of cost associated with adoption of the new line of service.  Cost of technical assistance and training from Freedom from Hunger, which in all the cases cited here was covered by grants directly to Freedom from Hunger  Cost of operational deficit over the period between inception and breakeven of the new line of service. In the first several adoption cases, Freedom from Hunger offered to cover all these operational deficits (from its own grants) in order to reduce the perceived innovation risk – that the new line of service would not generate sufficient surplus in later years to recover the operational start-up costs. Due to their cash flow constraints, local financial institutions have continued to seek this start-up subsidy even in the face of evidence that costs will be recovered, especially when the period to breakeven is shown in that country to be likely to span two or three years. However, most recently, some local financial institutions in the Philippines and Ecuador are showing willingness to cover the operational deficit with their own

resources, especially when they can see nearly identical institutions in the same country reaping substantial profit from the new line of service.  Cost of the loan portfolio required to fuel the new line of service as it grows rapidly. One of the attractions of local deposit-taking financial institutions is that they may already have substantial funds on deposit and as equity to invest in the portfolio of the new line of service. There was sufficient liquidity available in every case of adoption cited here, at least for start-up and early stages of expansion. No external portfolio financing was required.

III.

Results

Client-level Impacts Considerable evidence has been collected by Freedom from Hunger and others to show the impacts of Credit with Education for the women who participate and for their families, especially their young children. Summary analyses of the various studies1 show the following general impacts: • • • Effects of Financial Service: women have more income & assets; households have better consumption smoothing and shock coping Effects of Education: women learn essential information and put much of it into practice regarding breastfeeding, child feeding, diarrhea treatment, immunization, family planning, and HIV/AIDS prevention and coping Combined: women’s empowerment is bolstered; children’s diet and nutrition improve; client satisfaction and demand increase

The summary analyses drew from the results of the flagship study of impact from integrated village banking and adult education services conducted in the mid-1990s with women clients of the Lower Pra Rural Bank in Western Region of coastal Ghana. Also included in the analyses were less rigorous and comprehensive studies conducted with clients of Kafo Jiginew, a federation of credit unions in central and southern Mali, and the Reseau des Caisses Populaires du Burkina, a federation of credit unions throughout Burkina Faso. All three of these West African institutions are among the cases offered here. Poverty Status of Clients
1

Credit with Education Impact Reviews (available at www.ffhtechnical.org): No. 1 “Women’s Empowerment” by Barbara MkNelly and Mona McCord (October 2001) No. 2 “Economic Capacity and Security” by Barbara MkNelly and Mona McCord (Sept. 2002) No. 3 “Children’s Nutritional Status” by Barbara MkNelly and April Watson (October 2003) See also “Building Better Lives: Sustainable Integration of Microfinance with Education on Child Survival, Reproductive Health, and HIV/AIDS Prevention for the Poorest Entrepreneurs” by Christopher Dunford (Chapter Two in Pathways Out of Poverty: Innovations in Microfinance for the Poorest Families, edited by Sam Daley-Harris, Kumarian Press, 2002).

While there is extensive evidence of impact, there is less evidence of the poverty level of the clients who experience these impacts. The Ghana study rigorously compared participants with non-participants in communities randomly selected to receive the Credit with Education services and also with residents of matched communities randomly selected to serve as control for the participant communities. Before the introduction of Credit with Education service by the Lower Pra Rural Bank, there were no important differences found in the general characteristics of the people who later become participants compared to those who became non-participants (by choice in the participant communities and by chance in the control communities), including no differences in indicators of poverty level such as household assets and consumption. The conclusion is that women residing in participant communities had equal access to the Credit with Education service regardless of their poverty status. In other words, the distribution of poverty status among the women served by Credit with Education is the same as that in the general population of eligible women in the participant communities. The village banking design did not discriminate against poorer women in this case. What this conclusion does not yet address is whether or not the “poorer women” in these communities were in fact “very poor.” However, Freedom from Hunger defines “very poor” as being poor enough to be chronically food insecure. The impact study did show that incidence of food insecurity was quite high in both the participant and control communities and was substantially reduced among the participants (and their households) after at least one year of Credit with Education participation. The conclusion is that many “very poor” (food insecure) people resided in these coastal Ghanaian communities, and they joined the Lower Pra Rural Bank’s village banks in the same proportion as in the general local population. Moreover, the status of the very poor was substantially improved, for many to the point of leaving the category of “very poor.” The village banking design did not discriminate against even the very poor in this case. Corroboration of the conclusions of the Ghana study is found in a study of poverty outreach in the two Malian credit union federations included in the cases here.2 Participatory Wealth Ranking was used to sort all households in nine communities into four relative wealth groupings that local informants defined as: i. ii. iii. iv. Households which are food-secure Households vulnerable to food insecurity Households with periodic food insecurity Households which are chronically food-insecure

The wealth distribution of Credit with Education members mirrors the overall wealth distribution in the communities in general. Despite the program terms, a certain number of women from better-off households will join Credit with Education. And despite their extreme poverty, a surprising number of women from the poorest, most food-insecure households will also join.
2

“Mali Poverty Outreach Study of the Kafo Jiginew and Nyesigiso Credit and Savings with Education Programs.” Freedom from Hunger Research Paper No. 7 (May 2001), by Anastase Nteziyaremye and Barbara MkNelly. Available at www.ffhtechnical.org.

Women from the poorest third in the community were interviewed – women who had never joined the program, women who were current members, and women who were exmembers – in separate focus groups. The discussions revealed little to no evidence of the poorer women being systematically excluded either by better-off members or by program representatives. However, some poor women were self-excluding, choosing not to join out of fear for their already precarious economic situations. Does Credit with Education serve poorer clients than the other products of local financial institutions? The same study of the two Malian credit union federations also used a basic needs methodology, which creates a poverty index based on the population’s own perceptions, as the interviewees themselves define what is a “basic need” (that which no household should have to live without). Credit with Education clients were in the relatively poorest client category for both credit union federations. The same result was found in an IFPRI study of the OTIV credit union federation in Madagascar (another of the cases here) using the CGAP Poverty Assessment Tool.3 Credit with Education members appear to be the poorest group in the sample collected; “classical” members of OTIV were significantly better-off compared to both non-clients and “caisse feminine” (Credit with Education group) members. However, extending credit union services beyond the towns and large villages in which the branches are typically located seems to be more important than loan terms (including joint liability groupings) or even preferential lending to women. For example, in Mali, borrowers of credit union financial products designed for farmers were not significantly less poor than Credit with Education clients, though they were mostly men borrowing as individuals. The rural borrowers (farmers and Credit with Education clients), however, were significantly poorer than urban borrowers. The IFPRI study also found that the poorest households were much more likely to be rural than urban, and two-thirds of the Credit with Education clients were rural while the opposite was true for the “classical” members of OTIV credit unions. Products brought to the villages reached a relatively poorer clientele. The value of Credit with Education for poverty outreach by local financial institutions may not be so much in its evident cost-effectiveness (stimulating demand by the poor, even the poorest) but in its efficiencies (the group methodology in particular) for credit union operations in rural communities (facilitating supply to the poor, even the poorest). Impacts on Local Financial Institutions While there has been solid, diverse research on the client-level impacts and poverty outreach of credit unions and rural banks offering Credit with Education in rural areas,
3

“Assessing the Relative Poverty Level of MFI Clients – Development of an Operational Tool: Synthesis Report for the Case Study of OTIV-Desjardins in Madagascar.” International Food Policy Research Institute research report (April 30, 2000), by Cecile Lapenu, Manohar Sharma and Eliane Ralison. Available at www.cgiar.org/ifpri .

there has been less rigorous investigation of the impacts on the overall performance of these institutions – as affected by client recruitment costs and retention rates and loan portfolio performance. Still, there is indicative evidence. Executives of most local financial institutions cited here have reacted positively to their experience with the Credit with Education line of service. Their persistence in providing Credit with Education over the years indicates a degree of satisfaction with the performance of the line of service in helping the institution meet its objectives. In 20 of the 36 cases offered here, the institution has been providing Credit with Education for five or more years (three of them for 10-12 years). Moreover, this group-based service delivery design has spread within countries (from rural bank to rural bank, from credit union to credit union) by demonstration and word-of-mouth influence of early adopters on later adopters. There has been a similar diffusion internationally – from Burkina Faso to Mali, Togo, Madagascar and Benin (through the Desjardins network mostly) and from the Philippines to Ecuador (through the World Council of Credit Unions). Reasons for executive satisfaction seem to vary, but the most general one is that Credit with Education is very often a profitable line of service. Of the 25 institutions reporting the operational self-sufficiency ratio for their Credit with Education lines of service, 20 are reporting greater than 100 percent (all but one of these 20 report more than 110 percent). In Burkina Faso, the Reseau des Caisses Populaires du Burkina (RCPB) initiated its pilot test of Credit with Education in 1993, at which time the federation’s loan-to-savings ratio, or transformation rate, was 22%. The transformation rate improved to 150% in 1998, partly due to widespread adoption of the group-based line of service, which had allowed credit unions to transform surplus urban savings into loans for a rural market. These new clients generated regular income for the credit unions through interest payments on these redirected savings while achieving the social mission of the credit union to serve the community.4 In the Philippines, four credit unions initiated Credit with Education in August 1998, adding the new service to five or six other services. By the end of 1999, the new groupbased line of service accounted for 33% of the total clients and 8% of their outstanding loan portfolio. Only the Credit with Education service had zero percent of portfolio at risk. This led the four credit union managers to expand their support for Credit with Education and brought in another four credit unions, whose managers cited low delinquency as the primary reason for their interest. A comparison between the eight credit unions and others that had not yet adopted the new line of service indicated no difference in overall institutional performance, suggesting that this poverty-focused service did not create a drag on institutional performance. On the contrary, the return on assets ratios were generally better for the adopting credit unions, and they lowered their operating expense ratios after adoption.5 Since these data were collected, eight more credit unions have adopted the service, and the average operating self-sufficiency ratio
4

“A Business Model for Going Down Market: Combining Village Banking and Credit Unions” by Kathleen Stack and Didier Thys in The MicroBanking Bulletin (No. 5, September 2000). 5 Same as above

for the Credit with Education service in the 16 Filipino credit unions was 152% at the end of 2004. In addition, the new group-based, women-focused service is perceived as helping credit unions recruit new members. Women in rural communities are generally unable or reluctant to join a credit union directly, because they cannot meet credit union membership fee and deposit requirements, or they are unfamiliar or uncomfortable with formal financial institutions. However, these constraints are relaxed or non-existent for membership in Credit with Education groups – members join the credit union as a group rather than as individuals. However, they have no access to other credit union services besides the Credit with Education services. Credit unions offering the new service believed that once these group members became familiar with using formal financial services through the group and increased their earnings and savings, they would become willing and able to join the credit union directly as individual members. It also was thought that extending credit union services into the community would attract nonmembers of Credit with Education from those communities. To test these ideas about recruitment, field research was done with both Nyesigiso and Kafo Jiginew credit unions in Mali.6 In eight credit unions that had been implementing Credit with Education for about four years, 691 people just joining the credit unions as new individual members (57 percent of all new members in the credit unions) were polled by credit union managers and cashiers over a period of 12 months. The new members surveyed were primarily men (70%) and were divided among five primary professions (38% farmers, 16 % retailers, 16% salary workers, 16% housewives, 9% craftspeople). An average of 60% of new members surveyed lived within a 2-km radius of their credit union, while 11% lived more than 15 km away. Notable findings: • Credit with Education seems to influence people to join the credit union as “regular” individual members: half of new individual members (52%) knew of the Credit with Education service; 29% were informed about the credit union by a member and 17% by a field agent of the Credit with Education service; one person in five (19%) joined the credit union because of a Credit with Education member or field agent. • Credit with Education is more likely to influence people traditionally underrepresented in the credit unions -- women and individuals living in lessaccessible villages: 41% of women joined the credit union because of Credit with Education members and/or field agents, compared to only 9 percent of men; 84% of new members living more than 15 km from the credit union had heard of Credit with Education compared to only 41% of those living within a 2-km radius or less.

6

“Impact of Credit and Savings with Education on Recruitment of New Members to the Credit Unions of Kafo Jiginew and Nyesigiso.” Incomplete research report by Anastase Nteziyaremye, Kathleen Stack and Barbara MkNelly (Freedom from Hunger, Davis, CA, USA).

• Credit with Education allows a significant number of its members to improve their socioeconomic status and/or self-confidence enough to join a credit union as individual members: 35% of new women members were former or current Credit with Education members; the majority of these women joined the credit union after participating at least one year in Credit with Education. • Graduation to regular membership status did not require the women to leave their Credit with Education groups: 24% of the women joining credit unions were still Credit with Education members; their reasons for remaining (in frequency order) – valued the group’s solidarity, liked the education component of the service, wished to continue to borrow and save through their group as well as directly with the credit union. Without the benefit of these findings in Mali but after about six years of experience with Credit with Education in some of its regional federations, the board of directors of the Reseau des Caisses Populaires du Burkina adopted this line of service as a standard offering throughout its nationwide network. In fact, Credit with Education was used by the RCPB as the lead activity for member recruitment as it sought to create new credit unions in un-served rural areas. On the other hand, another initially very successful six-year experiment in offering Credit with Education was abandoned by Kafo Jiginew, a totally rural credit union federation in the southern cotton-growing areas of Mali. Management problems with the staffing of the new line of service were cited as the reason for this decision to cease the offering after it had already engaged with more than 16,000 rural women clients. There is substantial evidence of positive client-level impacts and satisfaction and positive effects on the Kafo Jiginew federation and individual credit union performance. Unfortunately, it remains unclear what were the senior executive perspectives that led to this cancellation decision.

IV.

Resources Required/Cost to the institution

The cost-effectiveness and sustainability of adding village banking to the established services of existing local financial institutions are demonstrated by the results just presented. There is an “economy of scope” in this strategy that reduces the start up and recurrent costs. Back office and overhead costs can be shared with other self-financing service lines of the local financial institutions. These deposit-taking institutions have the capacity to finance a new service line from internally-generated resources (savings). Credit risk can be spread over a diverse loan portfolio.7 Note that no cross-subsidy is required. The group-based service can be fully self-financing, even quite profitable. All these factors are reflected in the costs to Freedom from Hunger to help local financial institutions adopt and sustain a village banking service. It is much less expensive to work with well-established credit unions and rural banks than to create new institutions or work with nascent MFIs. Up to the year 2000, Freedom from Hunger spent US$ 6.4
7

See footnote 4

million in direct grants and technical assistance to create institutional capacity for reaching 30,000 women through two MFIs specializing in provision of Credit with Education in Bolivia and Uganda – that is, $211 per member. Yet it only cost $700,000 to create institutional capacity for reaching 36,000 women through two credit union federations in West Africa – that is, $20 per member.8 One tenth the expense in half the time.

V.

Challenges and Pitfalls/Lessons Learned

As in any “buy or build” business decision, the availability of existing, sound businesses to “buy into” is a critical determinant. Credit unions and (to a lesser extent) rural banks supply more lending and savings services than any other type of financial institution except commercial banks. They are widespread, even in rural areas beyond the reach of most commercial banks, and often have regional and national networks that can promote efficient diffusion of service innovations. However, these locally owned and operated financial service institutions tend to be institutionally fragile vessels, into which we pour at our peril ambitions for large-scale outreach to the very poor. The Kafo Jiginew case is a particularly cautionary tale, because all indications were that the adoption of village banking was enthusiastic and successful. The ambiguity of the reasons for cancellation of the village banking line of service highlights the intangible nature of management and staffing issues that can derail the adoption and diffusion processes. The risk of institutional idiosyncrasy can be mitigated, however, by spreading the risk over a fairly large number of institutions. Note that Kafo Jiginew is a rare case in the totality of cases offered her. There is more generally in Benin, Burkina Faso, Mali and Togo a regional problem that threatens any poverty outreach strategy that depends on charging relatively high interest rates to cover relatively high service delivery costs. The interest rate cap imposed on credit unions by policy of the Central Bank of West Africa (the BCEAO controlling the CFA franc monetary union) has made it more and more difficult to recover the full costs of offering the Credit with Education service in rural areas. This pernicious effect has dampened interest in and commitment to offering the Credit with Education service on a sustainable basis. Similarly, in Ghana, very high reserve requirements (at times over 50%, ostensibly to counter inflation) have so limited liquidity of the rural banks that Credit with Education could not be expanded by any rural bank to serve substantial numbers of women even where demand is high and management is willing. In sharp contrast, the Filipino credit unions benefit from an almost too loose regulatory framework. They have great latitude to charge whatever interest rates their markets will bear and use large proportions of their deposits to make loans. The surprisingly high operating self-sufficiency ratios that some of these credit unions enjoy indicates that they could offer Credit with Education quite sustainably at significantly lower interest rates. Not lowering the interest rates may be both exploitive of the poor and a barrier to entry by the very poor.
8

See footnote 4

Thus, the regulatory environment and the local institutional commitment to poverty outreach are major determinants of success for this strategy of poverty outreach through local financial institutions. An important learning from this study is that the major advantage of village banking for poverty outreach may simply be that group-based lending, in general, is a more efficient (and therefore more affordable) mechanism for delivering services in rural areas, and any services taken to rural areas seem to reach relatively poorer clientele. In other words, village banking may not be more attractive than other lending methodologies to very poor clients; indeed, many recent articles claim (without much solid evidence) that groupbased lending is less attractive than individual lending methodologies. Instead, village banking (as a rather efficient form of group-based lending) may simply keep costs low enough to facilitate delivery of credit and other services to rural areas that are too costly for other methodologies to reach. In short, village banking may enhance supply to rather than stimulate demand from the very poor. A recent review9 of four successful village banking programs in Latin America seems to refute this conclusion. It concluded that village banking is not more efficient than individual lending, because loan officer productivity (in terms of number of borrowers per loan officer) of financially sustainable village banking institutions is lower (286) than of financially sustainable individual lending institutions (422). However, the data base is from an IDB/CGAP inventory of Latin American microfinance institutions, which are predominantly urban, even the village banking institutions. If the comparison had been able to control for rural vs. urban residence and for the general poverty level of clientele of the institutions, it is reasonable to expect that the result would be reversed for institutions focused on rural outreach – group-based lending would likely be more efficient. However, it is clear that more careful research is needed before we can conclude that village banking is superior for sustainable outreach to rural populations. The Latin American review also concluded that the principle value of village banking is as a vehicle for offering non-financial services (as in the Credit with Education design). This may be especially true for very poor women in rural areas, given all their nonfinancial needs that constrain successful use of credit and savings services. Impact research provides clear evidence of impacts on child health and nutrition that would not occur without education added to the credit and savings services of village banking. However, there is as yet little evidence of how offering this or other non-financial services may enhance the bottom line of the local financial institutions. Good evidence of impacts on client recruitment and retention and on portfolio quality and efficiency is needed to gain and maintain the commitment of local financial institutions to provide non-financial services.

9

“A Tale of Four Village Banking Programs: Best Practices in Latin America” by Glenn D. Westley (June 2004). Inter-American Development Bank, Sustainable Development Department, Best Practices Series (Washington, DC).

VI.

Contact information/ sources of information

For further information, please contact Chris Dunford, Freedom from Hunger, 1644 Da Vinci Court, Davis, CA 95616 USA. Phone: 1-530-758-6200 x35. E-mail: cdunford@freefromhunger.org. Also see the attachment for contact information for the local financial institutions cited in this case study.

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