Cooperatives and Rural Financial Development

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Cooperatives and Rural Financial Development

Hans Groeneveld

SVP Cooperative and Sustainable Business

Rabobank Nederland

15 November 2012

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Lack of basic financial services

60%

Basic financial services20%

Extended financial services 10%

Full financial services

10%

Rural population in developing and emerging countries classified by available level of rural finance

Source: estimations by Rabobank

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Financial players

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Standalone formalSACCO

Informal group

Time

SACCO network

Rabobank Nederland

(Credit led) MFI network

Bank (licensed)

Players and phases in rural financial development

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From access to finance to access to financial services Skipping traditional development stages: technological

innovations Overbanked in terms of institutions, underbanked in terms of

products Broadening of product range: structured products, warehouse

receipt financing, supply chain financing structures Consolidation of credit union type of institutions into banks

with cooperative characteristics

Recent developments

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Cooperative beliefs of Rabobank

3. Connecting with society: community as shareholder

- Locally rooted- Dialogue with many – local – stakeholders- Social goals- ‘Co-operative dividend’- Sustainable business

4. Connecting with each other:Network organisation

- Local meetings- Local boards of supervisors- Knowledge and information sharing- Virtual communities

2. Connecting with the future:Long term focus

- Long term relationships- In good and bad times- Future proof products- Solid enterprise- Innovations

Vision:

Together WE achieve more

1. Connecting with the customer:Customer’s interests first

- Corporate governance with members- Influence and say- Close (physical and virtual)

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Determinants for successful and viable cooperatives

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Coop

erati

ve p

erfo

rman

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Determining Factors

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Peru: access to producer finance (Norandino) Ecuador: financial inclusion for the lower segments of the F&A sector

(COOPAC San Jose) India: linking the poor to the formal financial sector (BWDA, Tamil

Nadu) Uganda: the added value of an APEX organization (UCCFS) Brazil: the importance of partnerships for APEX organizations (Sicredi) Rwanda: commercial bank with cooperative characteristics and

background (Banque Populaire du Rwanda) Tanzania: a broad retail bank with a focus on rural finance (NMB)

MINORITY STAKES!!

Rabobank cases

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Economic motives must be guiding principles No universal recipe: cooperative banks are not always

solution Quick development of players: scale, APEX, new products,

new technologies To ensure long-term focus by financial institutions on rural

areas, both rural and urban clients should be represented in their corporate governance

Concluding considerations

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Thank you for your attention!