August 2006: Update from the Field: Rural Banking in Burkina Faso
During my recent visit to Burkina Faso, I had the opportunity to visit seven epicenters, including all of the five epicenters with an officially recognized rural bank or "Caisse Communautaire."
The five epicenters with rural banks are Loaga, Nagreongo, Nongfaire, Toulfé, and Zincko. I met with the Conseil d’Administration (Board of Directors), Comité de Crédit (Credit Committee), and Comité de Controle (Audit Committee) of all the banks, and we discussed each of their roles, the challenges facing the banks, and perspectives for the future.
Of all the rural banks, I was most impressed with Nongfaire, which received its official government recognition in December 2004. Nongfaire epicenter is located about 175 km northeast of Ouagadougou and is composed of 5 partner villages. Almost all of the women in Nongfaire use their loans to practice animal husbandry, and before the intervention of THP and AWFFI in the area, these women did not have access to credit.
The repayment rate at Nongfaire rural bank stands at 97% and is rising (last quarter repayment was 100%). The bank leadership and the loan groups are very well-organized and efficient. The leadership is able to secure a high repayment rate through the policy of rejecting any repayment that is not complete. If a loan group of ten women is making a repayment and is even 50 Francs CFA (~$.10) short of the total due, the bank will refuse to accept the payment. The banks leadership has also been effective in mobilizing savings deposits. At the close of 2004, members' deposits at the Nongfaire bank totaled 1,140,700 Franc CFA. By the close of 2005, deposits had nearly quadrupled to 4,257,975 Francs CFA.
The bank has drawn the attention of neighboring villages. After witnessing the tangible improvements which the Nongfaire women have achieved in their lives through membership of the bank and access to loans, women from these neighboring villages have asked to also join the bank. The Board of Directors has approved their request, and as a result, membership is expected to more than double in 2006. While the number of members at the end of 2005 was 293, the bank leadership anticipates having over 600 members by the end of 2006.
The principal obstacle for the bank at this point is their limited funds. As these new members are joining the bank, they are hoping to access credit. Current funding levels will permit only 10-15% of the new members to have immediate access to credit. As a result, THP-Burkina, in partnership with the bank's leadership, is currently exploring alternate sources of financing for this bank so that it can better serve its growing membership.
In addition to the rural bank epicenters, I also visited Bissiga and Yegueresso epicenters. Bissiga, located in southeastern Burkina Faso, has begun rual bank mobilization after successfully completing four direct credit loan cycles. The AWFFI partners have already elected their rural bank leadership. The bank leaders are now focusing their efforts on a sensitization campaign to increase membership before seeking official recognition.
Yegueresso, located in Southwest Burkina Faso just outside the city of Bobo-Dioulasso, is one of the youngest epicenters in Burkina Faso and has impressed the staff with its dynamism.Over 1,000 women are participating in the AWFFI program and receiving loans and training. Repayment for the first loan cycle was 100%, and the AWFFI partners are now in their second loan cycle. The fact that the majority of loan recipients are small-scale traders and can make repayments every one to three months enables the loan fund to turn around quickly and to serve more people. (Women who use their loans for animal husbandry and agriculture typically need six months before they can make a repayment).
The microfinance program at Yegueresso has now expanded to include the men as well. In May, 50 men received loans. If these men are able to repay their laosn in the same manner as their female counterparts, the SIPA credit for men program will expand to serve more men in 2007.