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SME Lending Toolkit helps credit unions disburse $41 million in loans

WOCCU TIFI Project releases learning brief on successful pilot program

MADISON, WI (April 23, 2024) — A toolkit developed by World Council of Credit Unions’ (WOCCU) Technology and Innovation for Financial Inclusion (TIFI) Project in collaboration with partner credit unions led to the distribution of 1,767 loans worth $41 million to small and medium enterprises (SMEs) in four countries.

Those are some of the results from the SME Lending Toolkit pilot program conducted in partnership with five credit union associations, 23 individual credit unions and one credit union service organization in Kenya, Burkina Faso, Senegal and Guatemala.

That data and the lessons learned from the pilot are featured in the new TIFI SME Lending Toolkit Learning Brief, which also shows the average loan ranged from roughly $11,000 in Kenya to more than $102,000 in Guatemala, with just a 1.53% portfolio at risk.

“Many of these credit unions had experimented with SME finance in the past, but the high portfolio risk drove them to reduce or stop that lending altogether. The SME Lending Toolkit took a holistic approach by supporting credit unions to leverage the strengths of the cooperative model, while adjusting their strategies, staff capacity and operations to the needs of SMEs. It has allowed them to increase their SME portfolios and better manage their risk,” said Eileen Miamidian, WOCCU Technical Director of Inclusive Financial Services.

The implementation of the toolkit also generated a series of important lessons for credit unions seeking to increase outreach to SMEs in their markets, including that:

  • Credit unions can play an important role in financing SMEs. Their presence in the market and large member base gives them an edge in identifying and serving SMEs in need of finance.
  • Many credit unions require a change of mindset to make the adjustments needed to offer market-responsive SME products while managing risk. Comprehensive capacity building can enable the board of directors (BOD) and senior management to lead this change.
  • Digitalization and innovation are essential to meeting the financial needs of SMEs.
  • Sustainable SME finance includes environmental and social considerations.

The TIFI Project is a six-year activity funded by the USAID Cooperative Development Program (CDP) that will conclude in August 2024. WOCCU is continuing the work of the TIFI Project and expanding on it in those same four countries through USAID-CDP Accelerating Growth and Inclusion in Lending for Credit Unions (AGIL4CU) Project (2023-28).

The AGIL4CU Project is further advancing the ability of credit unions to provide value to their members and contribute to the economic development of their communities, while extending business and climate financing to underserved market segments, including women and youth.

Click here to read the TIFI SME Lending Toolkit Learning Brief in its entirety.

Eileen Miamidian


About World Council of Credit Unions

World Council of Credit Unions is the global trade association and development platform for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach. World Council has implemented 300+ technical assistance programs in 90 countries. Worldwide, 82,758 credit unions in 97 countries serve 404 million people. Learn more about World Council's impact around the world at www.woccu.org.

Contacts

Greg Neumann
E-mail: gneumann@woccu.org
Phone: +1 608-395-2048

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