rcpb case study final

8/8/2019 RCPB Case Study Final

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Cooperatives Learning to Move Down and Out

the Case of the Rseau des Caisses Populaires du Burkina(RCPB) Adding Village Banking Combined with Adult Education

to Their Traditional Lines of Service


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TABLEOF CONTENTS

Cooperatives Learning to Move Down and Out .................................................................1the Case of the Rseau des Caisses Populaires du Burkina (RCPB) Adding Village

Banking Combined with Adult Education to Their Traditional Lines of Service ............ ..1Cooperatives Learning to Move Down and Out .................................................................4the Case of the Rseau des Caisses Populaires du Burkina (RCPB) Adding Village

Banking Combined with Adult Education to Their Traditional Lines of Service ............ ..4Cooperatives Learning to Move Down and Out ..................................................................ithe Case of the Rseau des Caisses Populaires du Burkina (RCPB) Adding Village

Banking Combined with Adult Education to Their Traditional Lines of Service ............... iBuilding microfinance institutions from scratch became the norm in the 1990s for

fostering outreach and down reach of financial services to the poor. This MFI buildingmovement was in reaction to lack of interest among traditional financial institutions inthe 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 greaterinnovative spirit, the institution-building movement is running into the same cost issuesas the traditional institutions have faced. Ironically, many of the new MFIs are reactingin the same self-limiting ways that reduce commitment and innovation to engage the trulypoor, especially very poor women in rural areas. Even more ironic, one way to breakthrough this cost-structural impasse is to take advantage of the traditional financialservice infrastructure already located nearby where the very poor live............................... iThis case study examines the promising approach of grafting onto a financial

cooperatives (or network of cooperatives) existing service portfolios some of the sameservice delivery innovations around which many of the MFIs have been built, but atlower marginal cost for reaching out and down. The Crdit Epargne avec Educationprogram of RCPB in Burkina Faso is the longest lasting (since 1993), largest scale(66,706 all-women members of 3,416 caisses villageoises in December 2006) case of thiskind of innovation, for which there exists relevant historical and recent data on growth inoutreach, poverty level of clients reached, impact on clients and communities, andinstitutional performance and commitment.......................................................................... iExecutive Summary .............................................................................................................i1. Context ...........................................................................................................................12. Organizational Framework ............................................................................................. 9

2.1. International Organization ....................................................................................... 92.2. Local organization ................................................................................................. 12

3. Description of Very Poor Target Group ......................................................................23.1. Individual and Household conditions

.......................................................................................................................................... 2Specific data in this section is taken from a random sample of 210 CEE clientsconducted in 2003 (see Section 4 for information on sample selection). This data isfairly representative of the overall CEE clientele, with perhaps a bias toward moreeducational and economic opportunities due to the proximity to Ouagadougou.............23.2. Socioeconomic conditions ....................................................................................... 3

4. Poverty Targeting and Assessment ................................................................................. 5


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4.1. Poverty measurement practices ................................................................................54.2. Available Poverty Data ............................................................................................ 84.3. Poverty Targeting ...................................................................................................125.1. Financial Products ..................................................................................................135.2. Microenterprise Development Services .................................................................16

5.3. Non-financial Services ...........................................................................................185.4. Design and Product Development: .......................................................................205.5. Implementation Process ........................................................................................28...................................................................................................................................... 29

6. Results ...........................................................................................................................306.2. Impact .................................................................................................................... 306.3. Cost Effectiveness and Sustainability ...................................................................33

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Crdit pargne avec ducationRseau des Caisses Populaires du Burkina (RCPB)Burkina FasoAuthor: marc bavois, Freedom from HungerAugust 2007

SEEP Networks Poverty Outreach Working Groups MF/MED Approaches TargetingVery Poor People

Case Study No. X

The author wishes to particularly acknowledge the thoughtful contributions andremarkable memories of Alpha Oudraogo, Clestine To, and Daouda Sawadogo(among former and current RCPB staff), and Chris Dunford, Kathleen Stack, Ellen Vorder Bruegge and Christian Loupda of Freedom from Hunger, as well as the researchassistance of Kimberly Peeren of Freedom from Hunger, yet retains exclusive claims toany errors or omissions. Jan Maes provided a helpful review of an early draft.


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Building microfinance institutions from scratch became the norm in the 1990s forfostering outreach and down reach of financial services to the poor. This MFI buildingmovement was in reaction to lack of interest among traditional financial institutions inthe kinds of service delivery innovations needed to engage the truly poor, especially verypoor women in rural areas. While motivated by stronger social commitment and greaterinnovative spirit, the institution-building movement is running into the same cost issuesas the traditional institutions have faced. Ironically, many of the new MFIs are reactingin the same self-limiting ways that reduce commitment and innovation to engage the trulypoor, especially very poor women in rural areas. Even more ironic, one way to breakthrough 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 examines the promising approach of grafting onto a financialcooperatives (or network of cooperatives) existing service portfolios some of the sameservice delivery innovations around which many of the MFIs have been built, but atlower marginal cost for reaching out and down. The Crdit Epargne avec Educationprogram of RCPB in Burkina Faso is the longest lasting (since 1993), largest scale(66,706 all-women members of 3,416 caisses villageoises in December 2006) case of thiskind of innovation, for which there exists relevant historical and recent data on growth inoutreach, poverty level of clients reached, impact on clients and communities, andinstitutional performance and commitment.

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Executive Summary

Organizations

The Rseau des Caisses Populaires du Burkina (RCPB) is the leading microfinanceinstitution in Burkina Faso. Starting from a single cooperative in South-western Burkina

Faso in 1972, it currently enjoys national coverage and has significant presence in ruralareas with high poverty incidence.1 In 1993, RCPB adopted Freedom from HungersCredit with Education strategy, becoming the first cooperative institution to do so. Inkeeping with cooperative culture, RCPB refers to the product as Crdit Epargne avecEducation (Credit and Savings with Education), hereafter abbreviated as CEE.

Target group

RCPBs clientele prior to introducing CEE (and its mainstream clientele to this day)came mainly from modest and lower-middle-class backgrounds, and was overwhelminglymale. CEE offered RCPB the opportunity to address its mandate of community serviceand inclusiveness, through increasing female membership, specifically reaching out to

previously un-served poor and very poor women in rural areas in a wider perimeteraround each cooperative or branch. RCPBs CEE clients are typically illiterate, havelittle or no formal education, and engage in subsistence agriculture. The infusion ofcredit has allowed to them to expand or start small-scale income-generating activities inthe informal sector.

As of 31 December 2006, RCPB was offering the CEE service to 66,706 clients. A 2003study of a representative sample of those clients found that 76% belonged to food-insecure households (a measure of extreme poverty), while consumption data showed that20% of clients were under a dollar-a-day, 70% were under two-dollars-a-day and37% were below the national poverty line. Clients in rural communities, where RCPB

focuses its CEE outreach, had higher levels of poverty than those in peri-urban and urbanareas.

Targeting methodology

RCPB does not test or screen incoming clients for poverty levels. Client targeting islimited to geographic and gender dimensions. Consequently, outreach to very poorclients is achieved through promoting CEE in an inclusive way to all women in ruralcommunities with high incidences of poverty. The composition of groups in terms ofpoverty generally mirrors that of the community as a whole. It therefore appears that inthe absence of an active screening process, Credit with Education will more reliablyachieve deep poverty outreach in rural communities with greater incidences of poverty.

Microfinance Methodology

Credit with Education combines a modified village banking product with nonformaleducation sessions that promote behavior change in topics that most impact householdfood security. Both services are delivered in the same meeting opportunity by the samefield agent, in the communities where clients reside. Each group is a full-fledged

1 52.3% of the rural population is under the national poverty line, while 92.2% of the poor in Burkina Fasolive in rural areas.

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member in the cooperative, and opens a group (joint) account at the cooperative, whereindividual savings and the group fund are kept.2

The product reaches the very poor primarily by being inclusive in nature (it attracts arange of socio-economic circumstances, including the very poor, yet some of its features

make it less attractive to the better off), and has been adapted by RCPB over the years torespond to client demand, in particular to take into account high levels of client illiteracy.The product serves the very poor by offering them financial and non-financial servicesthat respond to their needs and wants and that are oftentimes not otherwise available intheir communities.

Organizational features

Crucial to RCPBs adoption and true ownership of CEE in a very short time were theorganizations mission and mandate, the leadership in place at the time, and the culturethat has grown around the product.

As a network of open-membership financial cooperatives, RCPB was seeking ways toreach out to more women and to reach poorer clients. The organizations mission andmandate to serve the entire community could be achieved with a product that targeted acompletely new market segment in a profitable way, therefore accruing benefits toexisting members. Alpha Oudraogo, RCPBs General Manager in 1993 (now theGeneral Manager of CIF) immediately saw the social and business benefits of adoptingCredit with Education and was able to convince the institution to pilot it.

Initially, CEE was directed from the national office, which ensured close supervision,timely adjustments, and created a strong culture among field staff. Conversely, as CEEgrew, RCPB wisely decentralized the service to anchor it at the cooperative level toensure local ownership, with technical supervision from regional units.

Another key to RCPBs successful adoption of CEE was its flexibility with regards tosome of its key tenets: CEE required decentralized services, the substitution of groupguarantee for savings or physical collateral, credit before savings, delegated loandisbursement authorization, even the prioritization of CEE recapitalization over otherloans. In the words of the current General Manager, CEE is a produit phare (beaconproduct) for RCPB.

Results

Credit with Education is designed to increase client income and savings, improve clientknowledge and practices on key health, nutrition and microenterprise management topics,and improve client self-confidence and status. In turn, these outcomes are expected tolead to increased household food security and improved health and nutrition, which arekey determinants of extreme poverty.

2 Incremental client repayment installments are also kept in the group account, and transferred to thecooperative at the end of the loan cycle.

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Several studies of RCPBs CEE clients have shown that the anticipated outcomes havebeen achieved, most notably with regards to increased income, asset acquisition, andimproved health knowledge and practices. However, there is no available longitudinaldata that could speak to demonstrated client movement out of food insecurity or above acertain consumption level.

There has been less impact on cooperative membership than had been anticipated. Eachgroup is a cooperative member, yet most clients have been challenged (or unwilling) tobecome individual members. RCPB has responded to the evolving needs of clients bydeveloping group lending products with education components (ACI, CFMU) that adaptthe classic CEE to mature clients and urban settings.

Cost effectiveness and sustainability

A decentralized product such as Credit with Education requires significant start-up costsfor equipment and the daily operations of a mobile team of dedicated field staff.Introducing Credit with Education to an existing financial institution already established

in rural areas allows for considerable cost-effectiveness through economies of scope,by leveraging existing physical infrastructure, management staff, and operational systems(whether internal or provided by a federating body), as opposed to building a newfinancial institution to offer the service. Working through cooperatives with availableliquidity and/or the ability to refinance across a wide network both reduces the cost offunds and provides a profitable outlet to idle assets.

RCPB has been offering CEE for nearly 15 years, and has achieved overall operatingself-sufficiency (115.5% in 2006). A complete product-line costing of CEE is currentlynot available, yet the service is part of a cooperatives standard package and is in highdemand by cooperative managers, who are not overlooking their financial bottom lineimperative. In fact, although no formal financial analysis was available, the leadershipteam at RCPB states that making CEE part of a new cooperatives product line hasshortened the cooperatives break-even time to 2 to 3 years.

Conclusion

Whether or not Credit with Education is a promising approach to reach the very poorbeyond the demonstrated successes of RCPB, as described in this case study, rests on theability of local organizations to adopt and successfully operate the product. Federationsof financial cooperatives in Mali, Benin, Togo, Senegal, Madagascar, and individualcooperatives in the Philippines and Ecuador have shown this to be the case.

What follows is a SWOT analysis from the point of view of a network of financialcooperatives (or a single financial cooperative) seeking to reach and impact very poorpopulations by adopting a Credit with Education service.3

3 Several of the points below draw on Stack and Thys, A Business Model for Going Down Market:Combining Village Banking and Credit Unions, 2000.

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Strengths internal to the organization that have made RCPB successful and/or are neededto make other organizations successful to adopting Credit with Education to reach thevery poor:

Steadfast vision of leadership for poverty alleviation Organizational mission to fight poverty

Organizational mandate to serve the entire community Existing physical network in areas with high poverty incidence Existing back office systems that can be shared across product lines. This is more

readily found in federations Cheap, available liquidity for lending as the product grows quickly.4 This

requires savings intermediation in a specific area, or through a network, sinceCredit with Education clients are net borrowers.

Technical competence of leadership Experienced financial services institution can better own and adapt the

products financial component Culture of market research and careful piloting Deep knowledge of community for better implementation

Weaknesses or challenges internal to an organization, that it must mitigate or overcomein order to successfully adopt Credit with Education to reach the very poor RCPBovercame most of these challenges:

Lack of experience in offering decentralized services must overcomeinstitutional / procedural challenges

Initial bias against providing decentralized services Ingrained savings before credit culture this is challenging when reaching out

to a group of net borrowers with limited assets

Lack of competency in education design and/or delivery, which makes owningthe education component more challenging Slowness in credit processing (Credit Committee approval) Frequent turnover in governance, requiring frequent training and sensitization

Opportunities external conditions that make it easier for an organization tosuccessfully adopt Credit with Education to reach the very poor:

Available, proven technology with operational systems less costly to adapt thanto design

Organizational credibility in the community

Little competition from financial service providers in many of the communities Integrated service a competitive advantage over competitors offering similar

financial products Portfolio diversification (in terms of clients; maturity; sector) Product attractive to funders interested in deep outreach

4 RCPBs transformation rate (loans/savings) in 1993 was 22%. Study Design to Assess the InstitutionalImpacts ofCredit with Education on Credit Unions in Mali, West Africa, 1998.

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Support organization with the competence and funding to support a launch Existing network of peer implementers for lateral learning (more relevant today

than when RCPB launched CEE) Prior client experience with group finance (ROSCAs) Regulatory scope to offer non-financial services

Threats external conditions that could keep an organization from successfully adoptingCredit with Education to reach the very poor:

Interest rate ceilings below what is required to fully recover the costs of providingdecentralized, integrated services.5

Dispersed populations Movement of cash to and from the field Client lack of experience dealing with financial institutions Climatic threats to clients (drought) Seasonal nature of client investments

5 In UMOA countries, the PARMEC law caps effective annual interest rates at 27% - but is not alwaysenforced. The PARMEC law was adopted in Burkina Faso in 1994, yet has not prevented RCPB forcharging 10% flat interest on 4-month loans. Other institutions in the region have been adversely affected.

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ACRONYMS

ACI Association de Crdit IntermdiaireADA Appui au Dveloppement AutonomeAFRACA African Rural and Agricultural Credit Association

APIM - BF Association Professionnelle des Institutions de Microfinance du Burkina FasoBCEAO Banque Centrale des Etats dAfrique de lOuestMFI Microfinance InstitutionCA Credit AssociationCEDRES Centre dEtudes, de Documentation et de Recherches Economique et SocialeCEE Crdit pargne avec ducationCFA Communaut Financire dAfriqueCFMU Crdit aux Femmes en Milieu UrbainCIF Centre dInnovation Financire (pre-2007)CIF Confdration dInstitutions Fatires (2007-)CWE Credit with Education

DID Dveloppement International DesjardinsFCPB Fdration des Caisses Populaires du BurkinaFSS Food Security ScaleIFPRI International Food Policy Research InstituteINAFI International Network of Alternative Financial InstitutionsINSD Institut National de Sant et de DmographieLSMS Living Standards Measurement SurveyOTIV Ombona Tahiry Ifampisamborana VolaPPP Purchasing Power ParityPRSP Poverty Reduction Strategy Paper RCPB Rseau des Caisses Populaires du BurkinaROSCA Rotating Savings and Credit AssociationUMOA Union Montaire Ouest-AfricaineURCPB Union Rgionale des Caisses Populaires de la BougouribaUSDA United States Department of Agriculture

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1. Context1.1. Country Socioeconomic and Poverty Data

Table 1.1. Burkina Faso Country Statistics

1.1.1. National Currency CFA FrancAmount Year 1.1.2. Population (millions) 13.2 20051.1.3. Population density per square kilometre 48.18 20051.1.4. Percentage urban / rural population 17.9% / 82.1% 20041.1.5. Inflation 2.1% 20051.1.5. Nominal Exchange Rate (current, X Currency per US$1) 500 Dec 061.1.6. PPP Exchange rate 183.65 20051.1.7. HDI value 0.342 20041.1.8. HDI ranking 174 20041.1.9. GDP/Capita (PPP US$) 1,169 20041.1.10. Local currency equivalent of $1-a-day international poverty line 198.34 2005

1.1.11. Population below national poverty line (%) 1 46.4 1990-20031.1.12. Population living below $1 a day (%) 27.2 1990-20041.1.13. Population living below $2 a day (%) 71.8 1990-20041.1.15. Population growth rate 2.6 1975-20041.1.16. Life expectancy 48.5 20051.1.17. HIV prevalence (% ages 15-49) 2 20051.1.18. Malaria cases (per 100,000 people) 619 20001.1.19. Population undernourished 17 2001-20031.1.20. Children underweight 38 1996-2004

1.1.21. Adult literacyMale

Female29.415.2%

2004

1.1.22. Net primary enrolment ratioMale

Female45%35% 2004

1.1.23. Net secondary enrolment ratioMale

Female12%8%

2004

1.1.24. Physicians per 100,000 people 6 1990-20041.1.25. Health expenditures per capita 68 20031.1.26. Gender-related development index (GDI) rank 133 20041.1.27. Gender-related development index (GDI) value 0.335 20041The national poverty line is defined as the amount of income needed to satisfy apredefined level of well-being, and calculated in terms of consumption (PRSP July 2004update).

Table sources: World Bank Burkina Faso Data Profile, April 2007 United Nations Human Development Report 2006 United Nations Human Development Report 2003 Don Sillers PPP Table, 2005 data

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1.2. Local context

The cooperatives of the RCPB network are present in 42 out of 45 provinces, and CrditEpargne avec Education (CEE) is offered throughout the network. This section willtherefore describe Burkina Faso as a whole, with particular references to rural areas,

where CEE service delivery focuses.1.2.1. Briefly describe local socioeconomic conditions

1.2.1.1. Geographic reference of location and size of population

Burkina Faso is a landlocked country in the Sahelian region of West Africa. Itspopulation of 13.2 million inhabitants occupies a territory of 274,000 squarekilometers. Much of the population is concentrated in the Central Plateau region andaround Ouagadougou.6

Map 1.1: Map of Burkina Faso

Source: CIA World Factbook

1.2.1.2. Local population characteristics:

1.2.1.2.1. Ethnic groups

The Mossi are the largest single ethnic group (representing 48% of the population),followed by a mix of about sixty ethnic groups, including Lobis (%); Bobos (6.8%);Mands 6.7%); Snoufous (5.3 %); Gourousni (5.1 %); Gouramantchs (4.8 %)

6 World Bank Burkina Faso Data Profile, April 2007

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and Touaregs (3.3 %); the remaining thirteen percent of the population is made upof minor ethnic groups.7

Map 1.2: Map of main Burkinab ethnic groups

Source: www.NationMaster.com

1.2.1.2.2. Most important economic activities

In 2005, the primary sector contributes 30.6% to the Burkinab GDP,while the secondary sector contributed 19.8% and the tertiary sector49.6%.8

Despite agriculture contributing less to GDP than the service sector, more than 80% ofthe population is engaged in subsistence agriculture, while stockraising is important toboth domestic consumption and export.Cotton is the main cash crop and accounts for most of Burkina Fasos export revenue.Several million Burkinab men live in Cte dIvoire (where their economic activities, andrelated remittances, were recently affected by the political crisis), while others migrate

annually to neighboring countries for seasonal agricultural employment.9

1.2.1.2.3. Cultural and religious background

Muslims make up 50% of the population, Christians 30% and 20% have traditional(animist) beliefs.

7 Kagone: Burkina Faso Pasture / Forage Resources Profile8 World Bank Burkina Faso Data Profile, April 20079 CIA World Factbook

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1.2.1.3. Natural resources, economic activities, markets, unemployment

A high proportion of the population is engaged in food crop production and stockraising,and participates in the informal economy.Information on markets is not available.

Natural resources include manganese, limestone, and marble.

1.2.1.4. For rural areas only: most important crops and livestock activities, water

supply (irrigation, rain fed), seasons and number of harvests, land availability,

ownership patterns and contracts.

Food crops include millet, sorghum, maize, and rice. Cash crops are cotton (the countrysmost important export product), groundnuts, karit (shea nuts), sesame and sugar cane.Livestock, once a major export, has declined.

Water irrigation is marginal, benefiting only 0.6% of cultivated land, and reaching only

15% of the potential irrigable land.

10

The climate of Burkina Faso is Sudano-Sahelian, characterized by one rainy season andone dry season, and increasing aridity from South to North.11 The dual climatic pattern isintensely felt in the seasonality of client income-generating activities. Womens work inthe fields during the rainy season leaves little income for other activities, and depressessome of the cash economy activities.

1.2.1.5. Occurrence of droughts, floods, natural disasters or conflicts

Burkina Faso faces recurring droughts, which severely impact subsistence farmingpopulations. The 2004 locust outbreak affected food production.

Political unrest in Cte d'Ivoire, an important trading partner and the single mostimportant destination for Burkinab migrant workers, has hurt Burkina Fasos economy.

1.2.2. Describe government policies aimed at the very poor

1.2.2.1. Social protection schemes by the government.

Not available.

1.2.2.2. Policies aimed to integrate the very poor, such as anti-discrimination and

affirmative action laws.

1.2.2.3. Property and land rights.

Not available.

10 FAO Lirrigation en Afrique en chiffres- Enqute AQUASTAT 2005 Burkina Faso11 FAO Lirrigation en Afrique en chiffres- Enqute AQUASTAT 2005 Burkina Faso

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1.2.2.4. Local government and non-governmental development programs.

Not available.

1.2.2.5. Other

1.2.3. Brief profile of microfinance environment.

1.2.3.1. List microfinance institutions (other than subject of case study) and other

financial institutions/services accessible by the poor.

In addition to RCPB, which is the largest microfinance provider in Burkina Faso, thefollowing microfinance institutions were identified:

Many savings and credit cooperatives and cooperative federations including :o UCEC/Z (Union des Coopratives dEpargne et de Crditdu Zoundweogo),

reaching 16,671 clients in 2006

o Several CVECA (Caisses Villageoises dpargne et de crdit autogres)networks following the CIDR model, notably CVECA Boucle du Mouhoun,reaching 22,520 members in 2006, as well as 1,349 members in urbanROSCAs

o URCBAMo UCEC/Sahelo Etc.

Lending institutions including:o GRAINE-Sarl (Groupe d'Accompagnement l'Investissement et l'Epargne

non-bank financial institution that emerged from CRS village banking

projects), reaching 22,000 memberso FAARF (Fonds dAppui aux Activits Rmunratrices des Femmeso CREDO (Christian Relief and Development Organization)

A number of other development projects include microcredit components Commercial bank down-reach is negligible for the time being, yet several are

opening microfinance windows.

1.2.3.2. Describe dominant microfinance models and services.

The dominant and most frequent institutional type in Burkina Faso are savings and creditcooperatives, which offer savings and individual loans, while a number of projects andNGOs offer group and individual lending products. Tontines (ROSCAs) are alsoprevalent, particularly in rural areas.

1.2.3.3. Demand versus supply of microfinance services.

Not available.

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1.2.3.4. Depth of microfinance outreach.

Not available.

1.2.3.5. Existing MF/MED initiatives (other than case study) aimed at the verypoor.

While the deep poverty outreach of the above institutions is unknown, a number ofinstitutions, some in partnership with Plan Burkina, are promoting savings-led groups inan attempt to reach the very poor.

1.2.4. Poverty

1.2.4.1. Existing Poverty data and geographic areas of the country where extreme

poverty is most concentrated.12

The national poverty line in Burkina Faso is defined as the amount of income needed to

satisfy a certain level of well-being. In practice, it is computed to ensure the caloricconsumption required by a normal adult (2,300 calories).

The following table provides poverty measurement data from the three most recenthousehold surveys conducted by INSD.

Table 1.2: Burkina Faso Poverty DataYear 1994 1998 2003

Poverty line (CFA) 41,099 72,690 82,672*Incidence 44.5% 45.3% 46.4%

Urban incidence 10.4% 16.5% 19.9%Rural incidence 51.0% 51.0% 52.3%

Urban contribution to total 3.8% 6.1% 7.8%Rural contribution to total 96.2% 93.9% 92.2%* US$ 484 at 2003 PPPSource: INSD data quoted in July2004 PRSP update

While urban poverty has been increasing, the vast majority of the poor can be found inrural areas, while over half of the rural population lives below the poverty line.

12 Unless noted otherwise, the information is this section is drawn from the July 2004 update to BurkinaFasos Poverty Reduction Strategy Paper, which in turns draws on data from nationwide surveys onhousehold living conditions, published by the Institut National de Sant et de Dmographie (INSD)

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Map 1.3: Incidence of poverty by administrative region, 1998 and 2003

Source: 2004 PRSP Update.

In 2003, the regions most affected by poverty (in terms of incidence) were: Northern;South Central; Central Plateau; Boucle du Mouhoun; East Central; and Southwestern.

When looking at contribution to overall poverty, the regions that contain the greatestnumber of the poor are the Boucle du Mouhoun and Hauts Bassins.

1.2.4.2. Does the target area fall within these extreme poor regions?

RCPB has near-complete national coverage, and will expand to the three remainingprovinces by 2010. The regions described above are already covered. The organizationhas chosen to make CEE a standard component of its product offerings when openingnew cooperatives. The networks expansion model takes into consideration the eventualprofitability of cooperative sites, in order to maintain the overall financial viability of thenetwork.

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1.2.4.3. If known, what is the proportion of population in the target area living

below $1-a-day and/or within bottom 50% of people living below the national

poverty line?

The following information applies to the country as a whole:13

27.2% of the population lives below a dollar-a-day, while 71.8% lives below two dollars-a-day. Rural / urban differentiation on these measures is not available.

46.4% of the population lives below the poverty line (52.3% in rural areas); the medianbelow the poverty line is not available.

1.2.4.4. Main determinants of poverty.

Not available.

13 World Bank Burkina Faso Data Profile, April 2007

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2. Organizational Framework2.1. International Organization

2.1.1. Name and type of the organization (INGO, multilateral agency, foundation,

other)

Freedom from Hunger is an international non-governmental organization based in Davis,California.Freedom from Hunger developed the Credit with Education methodology that is the focusof this case study, and introduced it to RCPB in 1993.

2.1.2. Organizational background

2.1.2.1. Mission and vision

Freedom from Hungers Vision is a world free from hunger.

Mission statement:

Freedom from Hunger brings innovative and sustainable self-help solutions to the fightagainst chronic hunger and poverty. Together with local partners, we equip families withresources they need to build futures of health, hope and dignity.

2.1.2.2. Brief history

Guiding Freedom from Hungers sixty-year history is the overarching theme of evidence-based, self-help innovations that address the causes of chronic food insecurity, deliveredthrough partnerships with local organizations.

In 1946, Clifford Clinton, a Southern California restaurateur, and Henry Borsook, a Cal

Tech biochemist, founded Meals for Millions (the precursor to the current-day Freedomfrom Hunger) for the worldwide distribution of Multi-Purpose Food (MPF), a non-perishable, high-protein powdered food supplement that Borsook had developed twoyears earlier.

By the 1960s, with a large number of organizations distributing MPF, Meals for Millionsturned from relief to development, and introduced the Appropriate Food Technologyprogram whereby local people were trained in food science, nutrition, agriculture, andfood processing. Starting in 1978, the Applied Nutrition Program taught localpopulations in developing countries to use greenhouses, seed banks, solar cookers, andcommunity gardens to address their own hunger and nutrition issues.

In 1979, Meals for Millions merged with the American Freedom from HungerFoundation, which had been founded in 1961 at President Kennedys behest. In 1987,the organizations name was shortened from Meals for Millions/Freedom from HungerFoundation to Freedom from Hunger, the current designation, to emphasize the long-termchallenge of creating a world without hunger. The organization worked through localpartnerships, developing culturally appropriate programs that prioritized helping childrenby empowering their mothers.

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In 1989, Freedom from Hunger implemented the first Credit with Education programs inMali and Thailand, and shortly made this approach its exclusive programmatic focus,refining the methodology and adding education curriculum over the years. Freedom fromHunger took two approaches to implementation: it founded two microfinance institutions

(CRECER in Bolivia and FOCCAS in Uganda, both now independent) who used thismethodology exclusively, and it introduced the product to existing financial institutions,in particular credit unions and credit union federations, starting with the Rseau desCaisses Populaires du Burkina in 1993.

After 2000, having reached several hundred thousand clients through direct partnershipswith local, independent microfinance institutions implementing Credit with Education,Freedom from Hunger reaffirmed its focus on outcomes (sustainably reducing chronicfood insecurity and poverty on a large scale) and diversified its programmatic inputs,developing a savings-led approach, expanding its range of education modules and addinghealth protection products and services. The organization is currently piloting new

distribution mechanisms to get these products and services, as well as otherorganizations innovations, to millions of chronically hungry families.

2.1.2.3. Type of support: funding, capacity building, technical assistance, direct

service provider, other

Freedom from Hungers relationship to independent organizations that implement Creditwith Education (such as RCPB) is that of trainer, technical assistance provider andcapacity-builder. Freedom from Hunger secures third-party resources from multilateraland bilateral agencies, other INGOs, and foundations to cover the costs of its training andtechnical assistance provision to local organizations. Freedom from Hunger also assiststhe local organizations to secure operating and lending funds, as needed.

2.1.3. Development intervention approach

2.1.3.1. Primary target group and development focus

Freedom from Hunger focuses its efforts on the chronically hungry poor and frames itswork in terms of outcomes. All programmatic activities (inputs) address directly orindirectly the three components of family food security availability, access andutilization.

Freedom from Hunger targets its programs toward women, particularly very poorwomen, as entry-points to the household with particular responsibilities toward the well-being of young children.

Programs are primarily designed for rural areas, but also reach peri-urban areas.Freedom from Hunger has chosen to concentrate on a few regions of the world with largenumbers of chronically hungry people, relative political stability, and existing civilsociety organizations with which to partner: South Asia (particularly India) and Southeast

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Asia (particularly the Philippines), West Africa and East Africa, the Andean Region ofLatin America, and Mexico.

2.1.3.2. Specialized in MF/MED or multisectoral

Freedom from Hunger promotes the integration of services: the provision to the sameprogram participant of a bundle of financial services, behavior-change education sessions(training in the areas of health, nutrition, microenterprise development, householdfinancial management) and health-protection products and services.

2.1.3.3. MF/MED model

Freedom from Hungers Credit with Education methodology originally combined amodified village banking model (adding Grameen-inspired solidarity groups to theFINCA model) with group-based, non-formal education on a variety of topics. Overtime, Freedom from Hungers improvements and implementing organization innovations

have broadened the financial service component options to encompass a variety oflending and guarantee models. A common feature of these variants is regular groupmeetings of participants, which provide the platform for training sessions and otherdevelopment interventions. A recent and more significant variation involves theformation of savings groups, who intermediate their own savings without external grantsor loans these groups also receive training sessions.

These products offered by a wide variety of institutions (NGOs, non-bank financialinstitutions, rural banks, credit unions, credit union federations, regulated financialinstitutions), either as a sole or main product offering, or as a specialized product line.

2.1.3.4. Other sectors

Freedom from Hunger also helps financial institutions establish linkages with otherorganizations, particularly for health care provision and access to health protectionproducts.

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2.2. Local organization

2.2.1. Organizational development (S)

Table 2.1. Institutional Background (all data as of 31 December 2006)

Issues Observations

2.2.1.1. Rseau des Caisses Populaires du Burkina2.2.1.2. Burkina Faso

42 of 45 provinces have at least onecooperative

2.2.1.3. Network of Financial Cooperatives103 individual cooperatives are eithergrouped into Regional Unions, whichare federated; or are directly federated

2.2.1.4. Registered with and supervised by the Ministry ofFinance

Entities belonging the three levelsdescribed above are each registered

2.2.1.5. Subject to the BCEAOs PARMEC law2.2.1.6. 19722.2.1.7. Financial services institution2.2.1.8. 19932.2.1.9. Savings and lending cooperative2.2.1.10. Build share capital; accept and intermediatedeposits; refinance individual credit unions as needed;ensure cost-recovery2.2.1.11. RCPB serves adult community members who liveor work in its catchment area.

The target market for the Credit with Education productsare poor and very poor women in rural and peri-urban areas

Membership represents 20% of thepopulation in RCPBs collectivecatchment area

2.2.1.12. 454,550 cooperative members, representing954,761 men and women clientsOf these, 66,706 are CEE clients, 2,721 are ACI clients and1,444 are CFMU clients *

The 454,550 share-holding membersare men, women, moral members andvarious types of groups

2.2.1.13. 709 staff membersOf these, 113 staff are specifically involved with CEE, ACIand CFMU

Also 1,545 volunteer Board members

* This case study describes Crdit Epargne avec Education (CEE) as RCPBsmain product for very poor clients. The Association de Crdit Intermdiaire(ACI) and the Crdit aux Femmes en Milieu Urbain (CFMU) are respectively atransition product for CEE clients and a urban adaptation of CEE; they are partof RCPBs outreach to the poor and will be referenced periodically throughoutthe case study.

2.2.2. Organizational development (S)

2.2.2.1. Mission and vision

RCPB Mission statement:To help improve the living conditions of the working peoples of Burkina Faso, through:

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The mobilization of local savings The development of reliable and profitable cooperative savings and credit entities The promotion of appropriate and accessible financial services Democratic administration and management according to cooperative rules and

principles, while a focus on and respect for humankind

RCPB Values: Respect for individuals Respect of the principles of honesty and integrity Respect for the common good Respect of law and regulations Respect of the organization

RCPB commitments: Pay attention and listen to members Be available and equitable toward members Fight poverty and relieve misery Strive for excellence and availability in work

2.2.2.2. Brief history

The birth of the current-day Rseau des Caisses Populaires du Burkina can be traced backto 1972, when the Dissin financial cooperative was established in Bougouriba (SouthwestBurkina Faso) through the promotion and mobilization efforts of Canadian MichelLagac from Dveloppement International Desjardins (DID). Two more cooperatives

were launched in 1973, and the following decade saw the steady expansion ofcooperatives in the area. By 1984, eleven cooperatives were operating in the Bougouribaand Poni regions and had formed a regional cooperative structure: the Union Rgionaledes Caisses Populaires de la Bougouriba (URCPB).

Beginning in 1987, the leaders of the nascent network decided to take a longer-term,more technical and more professional approach, and build local managerial competence.Local managers were appointed to head each regional unit, with DID technical advisorsfocusing on capacity-building. A National Coordination Unit was established (with amandate of purely technical support to the cooperatives), headed by a Burkinabseconded by a Canadian technical advisor.

During this period, RCPB which had previously focused on rural areas, expanded intourban areas, in an effort to build cooperatives with very strong economic potential andaugment the total resources available to the network on its way to attain nationalcoverage. The network systematically developed medium-term and annual plans andevaluations to direct its growth.

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The early 1990s saw several attempts to integrate more women into the cooperativesthrough group lending, in a deliberate effort to maintain focus on the institutions povertyalleviation mandate. The Womens Access to Credit program (Accs des Femmes auCrdit AFCRED) in the Yatenga region combined group lending with literacy training.This product showed poor results in terms of cost, revenues, impact and was ultimately

abandoned. In 1993, RCPB piloted Crdit Epargne avec Education (CEE), its adaptationof Freedom from Hungers Credit with Education product. CEE was highly successfuland formally became a cornerstone of the institutions growth and expansion strategy in1996.

By 1996, RCPB counted three regional unions (URCPB; URCPN; URCPC) and twopre-Unions in the Center East and in the West. The National Coordination Unit was inthe process of creating a national federating structure for the network, when URCPB, theoriginal regional union, dissociated itself from the network by calling for a hiatus (tempsdobservation). This rift within the network was the painful context in which theFdration des Caisses Populaires du Burkina (FCPB) was born in 1997.

In 2002, the URCPSOs14 financial situation was so dire that the government temporarilyassigned the union to FCPBs administration a situation that continues in 2007.URCPSO is expected to re-integrate RCPB formally once its economic troubles are over.

Since 2000, RCPB has emphasized capacity-building for its human resources (both staffand Directors), has engaged in a systematic computerization process to improve datareliability, and has broadened its market segments by finding new ways to financeartisans (Socit de Cautionnement Mutuel) and SMEs (Centre Financier auxEntrepreneurs).

Today, RCPB is by far the largest MFI in Burkina Faso, and one of the strongest in WestAfrica. With long-standing partnerships with DID and Freedom from Hunger, as well asparticipation in the CIF Confederation, it is on a solid footing for pursuing growth whilemaintaining focus on poor, rural women.

2.2.2.3. Objectives

RCPB is currently finalizing a 2008-2010 business plan that calls for complete nationalcoverage by expanding into the last three untouched provinces, growing totalmembership (not counting the individual clients belonging to member groups) to783,000, and restructuring and streamlining the network to ensure better service deliveryto the members.

2.2.2.4. Organizational culture, leadership, innovation (S, M)

Senior managers at the Federation level have a strong vision and a deep commitment toreaching poor populations and achieving impact. The General Manager at the time of

14 URCPB under a new name

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launching the product (now the Director of CIF, and still in frequent contact with RCPB),the Regional Director in the launch zone (the current General Manager) and the ProgramManager hired to run CEE provide organizational continuity that transcends themandated Board rotations.

At all levels of the organization, poverty alleviation efforts are identified with the CEEproduct. However, it is mostly at the senior management (Federation) level that theconverse is true, and that CEE is viewed in large part as a poverty outreach product.Currently, local managers can take a financial bottom line perspective on the CEEproduct since it expands their cooperatives membership (in particular femalemembership), grows, diversifies and improves the quality of the portfolio, and isprofitable.15 RCPB has become interested in Social Performance Management and willbegin instituting an SPM framework later in 2007, which should lead to more deliberatesensitization and communication throughout the organization regarding poverty outreachand CEEs unique contribution to these efforts.

Senior staff, many of whom have considerable longevity within the organization, as wellas solid technical skills, enjoy good working relationships with the Directors and haveconsiderable influence in decision-making. Decision-making and innovation are top-down. The Federation is able to build consensus among the Regions, who in turn ensureexecution at the cooperative level. Innovations and procedural changes are borne at theFederation level.

RCPB is one of the most innovating microfinance institutions in the region. With marketresearch and product design input from CIF, RCPB carefully tests and pilots productsbefore rolling them out.

2.2.2.5. Organizational structure, roles and responsibilities

The RCPB network consists of 103 Cooperatives (Caisses Populaires), 4 RegionalUnions (Unions Rgionales) and a Federation (FCPB).

15 The former General Manager has stated that launching a new cooperative with CEE has shortened thebreak-even period from over 10 years to 2 to 3 years.

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URCPCuagadoug

ou

URCPN

Ouahigouya

URCPCE

Koupela

FCPB

AT/BM

AT/CN

AT/CO

AT/CS

9Caisse

s 4Caisse

s 7Caisses 4

Caisses

C

19Caisse

s

22Caisse

s

14Caisse

s

17Caisse

s

URCPOBobo-

Dioulasso

Graph 2.1: Structure of the RCPB network

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The 103 individual cooperatives, which cover nearly the entire Burkinab territory, fallinto nine geographic areas. The cooperatives in the four oldest geographic areas haveformed (and finance) Regional Unions, which are legal cooperative entities registered

with the Ministry of Finance. These four Regional Unions in turn have formed (andfinance) a national Federation which is also registered with the Ministry of Finance.The cooperatives in the five other geographic areas directly belong to the national-levelFederation, without belonging to a regional entity.

The structure of individual cooperatives varies considerably, from single-employeeoffices to multi-branch cooperatives with a dozen or more employees (manager, cashiers,accountants, loan officers), according to the number of members and the level offinancial activity. They are chiefly responsible for credit and savings transactions withtheir members.

Regional Unions provide technical services to their constituent cooperatives, such asaudit and accounting, as well excess liquidity management and refinancing. They alsomanage credit above a certain amount, and provide a regional management function forthe network.Cooperatives in the five areas without a Regional Union receive similar technical supportservices from five Technical Units (Antennes Techniques), which are extensions of theFederation with no independent legal structure or governing body.

The Federation is responsible for the overall strategic direction of the network. It sets theexpansion strategy and develops new products, establishes policy and operationalprocedures, performs audit functions, and conducts recruitment and training for the entirenetwork. It ensures excess liquidity management and refinancing for its constituentmembers. The Federation has external representation responsibilities toward donors,partners, regulators and the microfinance industry.

The staff at the Federation level is organized into four main departments: General Managers Office (Direction Gnrale) Audit Department (Direction de lInspection Gnrale) Operations Department (Direction Rseau et Dveloppement) Finance and Administration Department (Direction des Oprations)

2.2.2.6. General qualifications and profile of field staff (S, M)

RCPB traditionally provides centralized financial services to its members: transactionsare conducted within the cooperative or its service points (branches). Clients interactwith cashiers and managers, and borrowers with credit officers (the credit officers visitclients for loan analysis and monitoring).

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Two new, specialized field positions were created at RCPB to implement CEE. Thesepositions focus exclusively on CEE and its derivations, and do not work on theorganizations mainstream product lines.

1) At the level of the cooperative, the animatrice (field agent) provides decentralized

services to clients in the communities where they reside, in a perimeter around thecooperative or one of its service points. The animatrices major responsibilities are to: Form Credit Associations (Caisses Villageoises) and train their members in group

management and financial methodology Monitor the repayment of loans granted to the Credit Association Conduct education sessions on topics of health, nutrition, microenterprise

management, household financial management, etc. Prepare periodic performance reports

Animatrices are required to have a 10th-grade education and prior work experience withfacilitation responsibilities, preferably at an NGO, but there is no requirement to have

previously worked with very poor populations.

The animatrices are all women as are the clients they interact with, and they must be ableto speak the local language and often belong to the same ethnic group as the clients. Theeducational requirement situates the animatrice in a higher socio-economic category thanthe clients.

The animatrice reports administratively to the cooperatives Manager or Credit Officer,depending on the cooperatives structure, but she is monitored by and receives technicalsupervision from the coordinatrice who is employed by the Regional Union, and isresponsible for 15 to 20 animatrices. The coordinatrices main responsibilities are to:

Monitor and provide feedback all aspect of the animatrices field work Provide in-service training to animatrices on various aspects of their jobs Engage in the recovery of delinquent loans Participate in the development and piloting of new products designed for women

members Prepare periodic performance reports

Coordinatrices, who are all women, are required to have a college degree, with threeyears of experience in a microfinance institution. Again, there is no requirement for themto have previously worked with very poor clients. Animatrices employed in cooperativesthat receive technical support from a Technical Unit rather than a Regional Union are

supervised directly from the Federation, until the Technical Units become fully staffedand their costs can be borne by the cooperatives they serve.

The wide difference in education levels between the two field positions is such thatcoordinatrices must be recruited externally rather than promoted from the ranks ofanimatrices.

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2.2.2.7. Training/sensitization (of staff, managers, board) on mission and poverty

outreach (S, M)

When Credit with Education was first introduced to the organization in 1993, senior

managers, and Federation- and Regional-level Directors participated in a workshopdesigned and facilitated by Freedom from Hunger staff. This workshop engagedparticipants to analyze thebenefits and challenges for the institution to adopt the new lineof service.16 In particular, RCPB was able to reflect on the opportunity to reach an un-served client segment: very poor women living beyond the cooperatives traditionalcatchment area, or unable to avail the services offered by the cooperatives.

Staff recruitment within RCPB is centralized: the Federation fills all open positions forthe entire network, and conducts initial staff training. Further in-service training isprovided at the Regional level. Training on CEE is focused on direct implementers(animatrices and coordinatrices), while cooperative Managers and Directors receive an

orientation to the product, its objectives and procedures.The field staff (animatrices and coordinatrices) are initially trained using curriculumdeveloped by Freedom from Hunger, with local adaptation to the institutional context.The CEE Program Manager and the Federations training department facilitate thetraining. Animatrices then typically shadow veteran colleagues in order to betterassimilate the field realities and subtleties of their duties. Over time, field staff receivein-service refresher trainings, as well as trainings on additional educational modules.These trainings take place at the regional or federation level, depending on how well thetraining is assimilated at the regional level, and how widespread the need for a particulartopic is.

Cooperative Managers receive an orientation to the CEE methodology, such that they areable to monitor the animatrices and their performance. Directors are also sensitized tothe product, in particular Credit Committee members who must delegate their loanapproval authority to field staff in order to ensure rapid group recapitalization at the endof a loan cycle. These trainings are performed by the areas coordinatrice, or by the CEEProgram Manager, using a scaled-down version of the MOT. At this level, greateremphasis is placed on increasing membership by reaching out to underservedpopulations, than on the fact that these are very poor populations.

2.2.2.8. Incentives for poverty outreach (S, M)

RCPB currently does not use a performance incentive system (monetary or non-monetary) for any of its employees. The performance evaluations of an animatrice do notspecifically address the poverty level of the clients she is responsible for.

2.2.2.9. Governance

16 This workshop was later standardized into a Management Orientation Training (MOT) that is conductedwith an institution interested in implementing Credit with Education.

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The three-level structure described in Section 2.2.5 is echoed in the governance structure.

Each cooperative belongs to its members, who elect a Board of volunteer Directors.

The Directors of the cooperatives in a given region elect the Board of their Regional

Union.Finally, the Federation is governed by a thirteen-member Board, composed of RegionalUnion Directors.

At each of these three levels, Directors (Dirigeants) serve for three-year terms (renewableonce) and belong to one of three bodies:

the Executive Committee (Conseil dAdministration); the Credit Committee (Comit de Crdit); the Audit Committee (Comit de Contrle)

Each of the three levels holds Annual General Meetings for its members; and preparesannual financial statements.

2.2.3. MF and MED services

What follows is a description of RCPBs mainstream product offerings, apart from thethree group products targeting women (CEE; ACI; CFMU). These will be described inSection 5. A number of financial products is currently under development and/or beingpiloted; these are not described here.

2.2.3.1. MF model and products/services.

The foundation of RCPBs activities is deposit services for its members. The averagesavings as of 31 December 2006 was $418 per member (account) or $199 per individual.

Ordinary saving accounts (sight deposits) have no minimum or maximum balance,transaction size or transaction frequency. Members make deposits and withdrawals inperson at the cooperative or its service point during opening hours. Ordinary savings arenot remunerated.

Term savings of 3 months or more are remunerated at 1.5% to 2.5% percent, but theserepresent less than 2% of total savings.

All of RCPBs loan products have a compulsory savings requirement, which can be metby freezing a set amount upfront or having an automatic monthly deduction from onessalary deposit.

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Table 2.2: RCPB loan product characteristics (excludes poverty-focused Credit with Education products)

Loan type Uses Max.length

Max. amount Publishedinterest rate

Applicationfee

Savingsreq.

Loaninsurance***

Consumption Salary advance 1 mo. 25% salary None 5% plus1,000 CFA

(US$5.45)

2% none

Social eventsAssetsHousing

12 mo.24-48 mo.60 mo.

5,000,000 CFA(US$ 27,226)

less than 10% ofcooperativestotal savings

dependant onmonthly income

10% flat peryear, prorated.

Note: 5% flatper year,prorated, forstaff andDirectors

1% plus1,000 CFA(US$5.45)

Note: staffandDirectorsonly pay the1,000 CFA(US$5.45)

25%** 1% under 24months.

1.5% above24 months.

Agriculture InputsEquipmentSector-specific credit*

10 mo.60 mo.12 mo.

Commerce InventoryMarket advancesEquipment

12 mo.12 mo.24 mo.

Group Joint or similarundertakings

12 mo. 250,000 CFA (US$1,361) per personand 5,000,000 CFA(US$ 27,226) per

group

none

* Directed credit to cotton and rice production.** The 25% forced savings on consumption loans are waived for members whose salaries are paid directly into their account at

the cooperative. They instead have 5% of their monthly net salary frozen on a savings account.*** Borrowers must contract loan insurance that covers outstanding loan balances in the event of death.

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2.2.3.2. Description of main target group (if not the very poor).

As of 31 December 2006, 954,761 persons were benefiting from RCPBs services (andbeing cooperative members, were all savers). Of these, 540,382 belonged to groups

(Credit with Education or other groups) and 11,375 were moral members, bringingRCPBs cooperative membership to 454,550, of which 108,788 had active loans.

RCPB clients are 72% men and 28% women, and mainstream clients come from modestand lower-middle-class backgrounds: farmers, small business owners, salaried workers,artisans, professionals. Groupings other than CEE/ACI/CFMU groups are organizedaround joint or similar economic undertakings.

2.2.3.3. Selection and/or eligibility criteria

RCPB membership is open to all adult men and women who reside or work in the

geographic area served by a cooperative. Moral members and groups can also join.All members can apply for loans starting three months after joining, with a fewexclusions related to poor repayment records, salary direct deposits outside of thecooperative, police records, and old age in the case of large loan requests.

2.2.3.4. Use of poverty assessment tool

Not applicable the poverty level of general RCPB members is not assessed.

2.2.4. Resources and external assistance

As of 31 December 2006, RCPBs total assets were worth US$ 99.2 million, including anoutstanding loan portfolio of US$ 62.7 million. Client savings were the largest liability atUS$ 69.5 million (70% of assets), while net worth was US$ 15.3 million (15.47% ofassets), the bulk of which consists of reserves and cumulated donations, and US$ 463,261in member shares.

In 2006 RCPB did not borrow externally, while in 2005 and again 2007 it serves as achannel for directing credit to the cotton sector (with 1.5 billion CFA and 1.7 billion CFAloans from BOA).

Total donations from the organizations inception have not been recorded, due in part tothe late federation of the cooperatives, but have been estimated by Planet Rating at 6billion CFA (US$ 12 million).17 Main funders include ACDI, DANIDA, PA/FMR, theEU and UNDP.

17 Planet Rating Rating of RCPB, July 2005

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Liquid Assets 25,089,890 Restricted funds 752,196

Outstanding Loan Portfolio 62,753,862 Member deposits 69,586,101

Receivables 5,133,802 Accounts payable 13,524,241

Fixed Assets 6,230,612 TOTAL LIABILITIES 83,862,539

Net Worth 15,345,626

TOTAL ASSETS 99,208,165 LIABILITIES + NET WORTH 99,208,165

Table 2.3: RCPB Balance Sheet as of 31 December, 2006 $US (500 CFA=$US1)

RCPB Asset Coverage at 31 December 2006

MEMBE

DEPOSI

70.1%

RESTRICTED

FUNDS

14.4%

MEMBER

CAPITALIZATION

0.5%

OTHER NET

WORTH

15.0%

Graph 2.2: RCPB Asset Coverage

In 2006, RCPBs total income was US$ 13.1 million. The operating cost ratio was10.08% while the 30-day portfolio-at-risk at years-end was 6.55%.

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2.2.5. Relationships (networks, partnerships, other institutions)

2.2.5.1. Networks

RCPB participates in the following networks:

Name Role to RCPB Value for poverty outreach

APIM-BF National promotion and coordination of microfinance

CIF18 Product developmentSocial performance managementRefinancingInformation technology

Product development for very pooSocial performance norms (planne

AFRACA

www.afraca.org

Lateral learning on agricultural and rural

financeINAFIwww.inafiafrica.org

Training and lateral learning Focus on women clients

ADAwww.microfinance.lu

Financial performance evaluation

Proxfin Lateral learning with DID partners Focus on social impact

West African Credit withEducation Practitioners

Lateral learning on CWE product andoperations

Table 2.4: RCPB network participation

Due to its longevity implementing this product, RCPB is also a regional leader amongWest African Credit with Education practitioners, and while much of the learning isexported by RCPB toward the other organizations, periodic conferences co-convenedby CIF and Freedom from Hunger are the opportunity to maintain institutional focus onthe very poor, through discussions on topics such as client responsiveness and socialperformance management.

18 CIF (formerly Centre dInnovation Financire; Confdration des Institutions Fatires since 2007),owned by six leading West African Credit Union Networks, and headed by the former FCPB GeneralManager, plays a key role in product innovation among its members. In particular, it has participated inmost of RCPBs market research activities and led the development of second-generation products aimedat mature CEE clients. The new Confederation will provide its members with a wider range of services asshown in the table.

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2.2.5.2. Partnerships

RCPB enjoys a long-standing partnership with Dveloppement International Desjardins(DID), which has supported the network technically and financially from its inception.

The focus on institutional strength and viability promoted by DID have made it possiblefor RCPB to diversify its product offerings toward the very poor in more rural areas.

2.2.5.3. Other institutions

PSI (Population Services International) disseminates health products and health messagesin Burkina Faso. During periods when RCPB was providing education sessions onmalaria prevention and treatment, clients have been able to purchase insecticide-treatedmosquito nets and treatment tablets from PSI distributors. The education sessions helpedcreate demand for these health products, and RCPB coordinated with PSI to ensure

product availability.

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3. Description of Very Poor Target Group

The following information concerns clients belonging to CEE groups. Clients belongingto ACI groups are all graduates from CEE, while clients belonging to CFMU groupsdiffer mainly in that they live in urban areas, with consequent differences in the

availability of education and employment opportunities, and service infrastructure.3.1. Individual and Household conditions

Specific data in this section is taken from a random sample of 210 CEEclients conducted in 2003 (see Section 4 for information on sampleselection). This data is fairly representative of the overall CEE clientele,with perhaps a bias toward more educational and economicopportunities due to the proximity to Ouagadougou.

3.1.1. Gender

All participants in CEE are women

3.1.2. Age

The minimum legal age to belong to a Credit Association is 18. 88% of clients are under50 years of age, with the oldest clients in their 60s and 70s. The average age of clients is38, while the median is 35.

3.1.3. Disability and chronic disease

Not available

3.1.4. Culture or religion

Not available assumed to follow national distribution (Muslim 50%; Christian 30%;animist 20% - see Section 1.2.1.2.3)

3.1.5. Ethnicity

Not available assumed to follow national distribution (48% Mossi see Section1.2.1.2.1)

3.1.6. Membership to socioeconomic groups, such as caste and class

Not available.

3.1.7. Household type, composition, marital status

The average household size is 11.47% of clients were in monogamous relationship, while 41% were in polygamousrelationships. 10% of clients were widowed.

3.1.8. Literacy

69% of clients are illiterate, while 7% can read a local language.

3.1.9. Education

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4% of clients finished secondary school, while 12% of clients only completed primaryschool..

3.2. Socioeconomic conditions

3.2.1. Refugee or IDP statusNot available - clients more typically come from well-settled communities.

3.2.2. Economic conditions (F, C)

The data in this section is taken from a longitudinal study undertaken the Burkinabconsultancy firm Sud-Consult in 2003, 2004 and 200519. It used a baseline sample of 302incoming CEE clients in three regions.

3.2.2.1. Underemployment

Not available

3.2.2.2. Income Sources

A majority of clients engages in subsistence farming.

The Sud-Consult study showed that the most frequent activity undertaken with loan fundswere agricultural product processing and selling (millet beer, shea butter, etc.), foodvending, and grain selling. The microenterprises are typically not the main source ofhousehold income.

3.2.2.3. Land ownership

Not available.

3.2.2.4. Asset ownership

Not available.

3.2.2.5. Income level

The Sud-Consult study compared the self-reported profitability of client microenterprisesupon entry into the program (2003) and after two years. It found that microenterpriseincome has increased on average by 74%, while profitability had progressed from 20% to30%.

3.2.3. Geographic conditionsThe information in this section generally describes rural areas of Burkina Faso whereRCPB implements CEE.

3.2.3.1. Rural/urban, remoteness from trading centers and roads, population

density

19 Coulibaly and Coulibaly/Lankoande, Suivi dimpact du Programme Crdit, Epargne avecEducation- Etude dimpact, Rapport de synthse, 2005.

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69% of clients live in rural communities.20 Access to roads varies, and during the rainyseason reaching clients communities is quite challenging.

3.2.3.1. Access to markets

RCPB targets communities in which the population has regular access to markets within

a reasonable vicinity, to ensure outlets for income-generating activities.3.2.3.1. Access to banks

Clients in peri-urban areas have access to a variety of financial institutions.Clients in some rural areas have access to other financial cooperatives who providecentralized services, which effectively restricts access. In general, RCPBs networkreaches deeper than its competition, and provides proximity (decentralized) servicedelivery.

3.2.3.1. Access to doctors and clinics21

Access to medical services is poor. 26.6% of rural residents do not have access (defined

as 30 minute distance) to healthcare facilities. Health and Social Promotion Centers (thesecond tier in a five-tier medical facility system, staffed by a trained midwife and nurses)performed nearly half of all consultations in 2003, and doctors only performed 3% ofconsultations (for the population as a whole).

3.2.3.1. Proneness to natural disasters

Not applicable.

3.2.4. Major vulnerabilities and risks encountered by target group (F, C)

Not available.

20 Dataset from HMQ study.21 July 2004 PRSP update

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4. Poverty Targeting and Assessment22

4.1. Poverty measurement practices

Client poverty measurement is not currently part of RCPBs routine activities. However,an external study conducted in 2003 generated data regarding the poverty level of theinstitutions CEE clients, and the findings are presented and discussed here.

In June 2003, Hugo Melgar-Quionez (Assistant Professor of Nutrition, Ohio StateUniversity) led a research team in Burkina Faso that conducted a survey for Freedomfrom Hunger using two poverty measurement tools (hereafter HMQ study)23. Thestudy focused on RCPB clients and included other community members.

This section also presents additional data from other African Credit with Educationpractitioners who share similar characteristics with RCPB.

4.1.1. Poverty data collection

4.1.1.1. Which poverty indicators are collected?

Two poverty indicators were used in the 2003 HMQ study:1) The level ofhousehold food security during the twelve months preceding the

interview. While the concept of food security is universal, this indicator must beadapted to the national (if not regional) context to ensure relevance to culture andto dietary habits.

2) The daily consumption per capita during the previous twelve months, computedfrom annual expenditure data in specific categories.

Both indicators offer interesting insights into different aspects of poverty. While theconsumption indicator is more sensitive across a wide spectrum of poverty levels, thefood security indicator readily identifies severe poverty and provides gradations withinthat range.

4.1.1.2. What poverty assessment tool is used?

The HMQ study in Burkina Faso administered two poverty measurement tools to thesame population sample, related to the two poverty indicators selected.

1) a Food-Security Scale(FSS) adapted by Freedom from Hunger from an existingU.S. Department of Agriculture Food-Security Scale. The USDAs FSS was

22 In this section, the PPP exchange rate used is 170.82, computed for 2003 when the data was collected,while the dollar-a-day line is 184.48 CFA, also for 2003.23 Melgar-Quionez, Testing Food-Security Scales for Low-Cost Poverty Assessment, 2004. The primary

purpose of this work, and of similar work carried out in Ghana, Bolivia and the Philippines, was to test thecorrelation between the FSS and the LSMS consumption module benchmark, and to determine whether theFSS could serve as a proxy indicator for poverty by correctly classifying households above or below aninternationally-defined poverty line. The data collected during this work provides useful information onthe poverty levels of RCPBs clients.

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originally developed for use in the United States, and had already been adaptedfor use in Mexico. This tool characterizes a households level of food securityusing a series of predetermined individual interview questions that query therespondent about his or her households food consumption during the previoustwelve months. In Freedom from Hungers adaptation of the tool, nine questions

query respondents on the occurrence of specific measured levels of foodinsecurity during the period; eight of these questions have a follow-up that seeksto qualify the frequency or chronic occurrence of these conditions. This dualscale (occurrence and frequency) helps identify progressively higher levels offood insecurity among respondent households, and ultimately registers the mostsevere food insecurity that occurred at any time during the year (other than veryrarely).

2) The LSMS consumption module from the Living Standards MeasurementSurvey developed by the World Bank, which in its entirety was used to constructthe $1-a-day and $2-a-day international poverty lines. The questionnaire used in

this study included the following sections: Household roster Education for each household member Food and cooking fuel Food as payment for employment Food consumed from own business Non-food items Daily expenses Health Dwelling expenses and services Remittances Durable goods

For both tools, it is critically important to word the questions in a way to take intoaccount local dialects, practices and values. Local enumerators performed a firstadaptation of each tools questionnaire, after which the tools were tested with a focusgroup of CEE clients sharing similar characteristics with the sample, before questionnairefinalization.

Both questionnaires are individually administered by an enumerator. The consumptionmodule tool can take over an hour to administer, especially if large household rostersmust be created, and is sometimes administered over several sessions to prevent responsequality drop-off. The FSS can be administered in ten to fifteen minutes.

The FSSs sensitivity is restricted to the very poor end of a range of poverty levels,while the consumption modules sensitivity applies to a much broader range.

4.1.1.3. When and how often are poverty data collected?

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The HMQ study was conducted in June 2003 and has not been repeated to date. Clientswere interviewed in their community of residence.

4.1.1.4. Which clients are measured?

See Section 4.2.2 for a description of the sample and methods of the HMQ Study.4.1.2. Use of poverty data

The poverty measurement exercise was a one-time event, and conceived and directed byFreedom from Hunger. RCPB has not used the data collected for internal purposes. TheHMQ study served to establish the accuracy and applicability in Burkina Faso of the FSSas a low-cost and valid measure of household food security and poverty levels.

4.1.2.1. What, if any, are poverty categories distinguished by poverty data?

4.1.2.2. How are each of these categories defined?

The poverty categories are part of tool design.

1) The Food-Security Scale yields a raw score of 0 to 9 (0 being most food-secure, and9 most food insecure). The original USDA categorization, whose dichotomy is useful instatistical analysis, is as follows:

Scores 0-2: food-secure household which may (or may not) be poor, but notso poor as to not be getting enough to eat

Scores 3-9: food-insecure household which can be interpreted as verypoor

The sensitivity of the tool within the food-insecure (very poor) range has allowedFreedom from Hunger to introduce a second cut-off point to the FSS, resulting in thethree following classifications:

Scores 0-2: food-secure household Scores 3-5: moderately food-insecure Scores 6-9: severely food-insecure

Yet, the FSS says little about (does not distinguish between) households that are food-secure (i.e. not defined as very poor).

2) The LSMS consumption module aggregates annual household consumption, which is

then divided by the number of household members and by 365, yielding consumption percapita per day in CFA. In order to relate this finding to international poverty definitions,conversion to US$ uses a purchasing power parity (PPP) adjustment.

Consumption per capita per day under a dollar-a-day24: very poor Consumption per capita per day undertwo dollars-a-day:poor

24 US $1.08 per day in 1993 PPP prices

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In the HMQ study, the PPP adjustment placed virtually all households above the povertyline in two countries, which seemed counterfactual to the researchers. 25 Consequently, inthe report, consumption per capita per day in CFA was converted to US$ at the prevailingmarket exchange rate out of concern for uniformity. However, data presented in Section4.2.2 uses PPP adjustments.

4.1.2.3. How are poverty data used by organization?

The study was studied and conducted by Freedom from Hunger, with minimalinvolvement on RCPBs part. The data set for RCPB clients has not been studied to itsfullest extent.

4.1.2.3.1. For client monitoring?

Not applicable.

4.1.2.3.2. For client screening?

Not applicable.4.1.2.3.3. For client targeting?

Not applicable.

4.1.2.3.4. For impact monitoring/assessment?

Not applicable.

4.1.2.3.5. For other uses?

Not applicable.

4.2. Available Poverty Data

4.2.1. Poverty distribution results by internal poverty data collection method

No data is collected internally see results from HMQ study in 4.2.2

4.2.2. Poverty data from a recent poverty and/or impact assessment study

The HQM study took place in July 2003. Hugo Melgar-Quionez worked with localresearch firm CEDRES (Research Center of the University of Ouagadougou) andreceived logistical support from RCPB and CIF. Twelve surveyors, two supervisors, andthree data-entry teams a local team of surveyors. The surveyors were selected for having

at least a Bachelors degree in a relevant field, fluency in local languages, and weretrained on the surveys concepts and methods. They participated in tool adaptation andrefinement.

The surveyors administered each of the two tools to a sample of 330 respondents, 210 ofwhich were CEE clients and 110 non-CEE clients.

25 The HMQ study rejects the explanation of an inadequate sample, stating that more likely, the problemrelates to the PPP adjustment methods relevance to the sites chosen for this research.

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The study area, chosen in consultation with RCPB, surrounded Ouagadougou andincluded rural villages, which is representative of the various locales in which RCPBoperates (69% of respondents reside in rural areas; 31% reside in peri-urban and urbanareas). Credit Associations were randomly selected in the area, and 8 to 10 clients were

randomly selected in each of these Credit Associations. As a result, they wererepresentative of RCPBs overall CEE clientele. If anything, their relative proximity toOuagadougou with more developed infrastructure and markets would suggest that theymight be less poor than RCPBs overall CEE clientele.

4 to 5 individuals were then selected in the Credit Associations vicinity. Theseindividuals were screened to not be participants in any microfinance program, and weresought out to be poorer or better-off than CEE clients, based on their income-generatingactivities (for the purposes of testing the sensitivity of the tools at various poverty levels).

The CEE clients surveyed had been in the program on average for 4.4 years. Non-clients

were surveyed to provide a wider range of poverty levels in an effort to assist thecorrelation work.

Food security data results

Table 4.1: Levels of food security

Sample SampleSize

food-secure

food-insecure

moderatelyfood-insecure

severely food-insecure

CEE clients 210 24% 76% 19% 57%

CEE clients < 1 yr 43 16% 84% 30% 54%CEE clients > 1 yr 167 27% 73% 16% 57%CEE clients rural 145 22% 78% 17% 61%CEE clients urban 65 28% 72% 23% 49%

Three quarters of CEE clients in the sample were food-insecure. The breakdown of thefood-insecure group according to the second cut-off point indicates that over half of theclients in the sample were severely food-insecure. The difference in food-security levelsbetween incoming clients and more veteran clients was not statistically significant.

Consumption data results26.

The mean expenditure per day per capita for clients was 397 CFA (US$ 2.32) with astandard deviation of 666 CFA. When clients were disaggregated by rural and urbandimensions, there was a striking difference in the mean expenditure per capita per daybetween rural clients (mean: 298 CFA US$ 1.74) and urban clients (mean: 620 CFA US$ 3.63).

26 this data comes from additional analysis on the dataset, and is not part of the HMQ report

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Below, an analysis of the client expenditure per capita per day is presented todemonstrate poverty lines according to the dollar-per-day PPP and two-dollars-per dayPPP poverty lines and the national poverty line as defined by Burkina Faso. The cutoffsfor being over or under the poverty lines are reported:

Table 4.2: Client Expenditure per CapitaCEE clients CEE rural CEE urbanCutoffs Over Under Over Under Over Under Dollar-a-day(184.48 CFA / day)

79.5% 20.5% 74.5% 25.5% 90.8% 9.2%

Two-dollars-a-day(368.96 CFA / day)

30.5% 69.5% 24.1% 75.9% 44.6% 55.4%

National poverty line(82,672 CFA / year)

62.4% 37.6% 53.8% 46.2% 81.5% 18.5%

One fifth of the clients in the sample were under the dollar-a-day line, while 70% were

under two-dollars-a-day, indicating that the majority of the clients were located betweenthe dollar-a-day and two-dollars-a-day poverty lines. Less than half of the clients wereunder the nationally-defined poverty line. The higher poverty incidence among ruralclients than among urban clients was statistically significant for all three poverty lines.

The food-security and consumption data give quite different interpretations of the level ofpoverty of CEE clients in this sample. This is perhaps unsurprising, since the measuresare of different dimensions and calculations of poverty. The reader may decide whichdimension (and measure of that dimension) better represents the true experience ofpoverty in Burkina Faso. The rural / urban comparison does indicate at a minimum that

RCPB is effectively reaching out to poorer clients to focusing its CEE service into ruralcommunities.

4.2.3. Poverty Data obtained through use of USAID certified poverty tool

Not applicable - no tool has been c

rcpb case study final

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