Sustainable rural financial services in ghanaPresentation Transcript
WCA Sustainable Rural Financial Services in Ghana Where we started Phase One: Pilot-Testing with SCIMP1 Prior to 1990 Susu collectors, ROSCAs, traders, money Informal financial sector Dominance of unregulated lenders, and families: informal credit arrangements. Large and disparate; State-controlled financial Individual units are very small with sector. limited profitability and little impact; Earlier interventions were: Low asset base, unsustainable Fragmented in location; savings mobilisation, and lending at high interest rates; Limited in scope. Trusted by smallholders, thanks to 1990 – 2000 community-based, flexibility, and minimum collateral requirements. IFAD experience with SCIMP: Modified unit banking system Rural banking Build up of rural poor’s tailored to specific needs of rural system confidence on formal banking; communities; Bridging large informal financial Institutional, operational, regulatory, sector, rural banks, and the and financial constraints. formal financial sector.
WCA Sustainable Rural Financial Services in Ghana Where we are Phase Two: Nationwide Scaling-Up with RFSP 2 2000 – 2010 Strategic focus up-scaled from SCIMP to countrywide project RFSP intervening at macro, meso, and micro levels: Easy access by the rural poor; responsive to their specific needs; and sustainable. Sustainability Innovation Lessons learned - challenges 6% RoE by 2007 Rural BankingMajor achievements of RFSP Improvement of access to lending 80% of rural banks Introduced tailored products by small-scale farmers below are profitable. financial products. expectation, in spite of the increased saving; Growth Efficiency Contradiction between IFAD’s 133 rural banks Mergers matching-grant approach (smart Increased from 115 in Increased mergers subsidy) and the Government’s 2002. among rural banks. continued pursuance of subsidized interest rate programmes; Competency Governance Upgraded National Policy Insufficient pilot-testing; Standards of regulatory for microfinance Co-financiers’ tendency to upscale on bodies enhanced. developed. its own (AfDB and the Bank).
WCA Sustainable Rural Financial Services in Ghana What is next Phase Three: Continuation and Replication3 Replication in WCA 2010 and on… IFAD launched Unsuccessful replication: RAFIP, successor of RFSP Insufficient pilot-testing and Cameroon, Niger preserving the good features straight to nationwide programme led to many challenges; and capitalizing on the 20- years of experience: Low demand of the Government and continued emphasis on credit Specific purpose for financing interest subsidy; agricultural value chains; Poor governance; Complementary to two ongoing agricultural value chains and one Low population density (Niger); rural enterprise programmes; Senegal, Nigeria Knowledge management served Disengagement from credit lines; for: Capacity building of Apex Bank Decision not to replicate in Senegal and rural banks to concretize in 2004; their coordinating role. Replication and expansion of RFSP features to RUFIN in Nigeria.