7th Regional Forum for IFAD-funded Projects, 12-15 November 2012, Banjul, The Gambia

Rural Finance Programme (RFP)
FIELD / CONTENT
1.TITLE OF THE CASE STUDY/EXPERIENCE / PARTNERSHIP BETWEEN AN MFI AND
COMMERCIAL BANK IN REMITTANCES INCREASES ACCESS TO RURAL COMMUNITIES
2.COUNTRY / The Gambia
3.NAME OF PROJECT / Rural Finance Project (RFP)
4.ACTIVITY START/END DATE / Please enter the starting and ending date (if applicable).
5.LOCATION / The Gambia is a small country. The RFP is being implemented nation-wide. The initiatives started in one of the regions;Western Region of The Gambia. The upscaling was implemented in all the regions of The Gambia
6.CONTEXT/CHALLENGE/ISSUE / The Gambia is a Least Developed Country. It depends on agriculture and re-export trade. However 60% of farming population lack access to financial services and only one in a thousand nonfarm enterprises obtains credit from commercial banks. Access to credit in the rural areas is often only provided by VISACAs but they are increasingly constraints by their limited financial resource mobilizations and diversifications of products to meet the growing demands of different segment of the rural clienteles. Remittances carry huge development potential if properly channelled. Remittances inflow to The Gambia (2004-2007) stood at more than US$ 430 million surpassing hugely FDA and FDI. As stable resources, remittances are important to The Gambia economy particularly in the rural areas where there is limited operations of the formal financial institutions. Both the lessons learnt and outcomes of the VISACA-ECO Bank pilot partnership initiative have been very promising in laying the solid foundation in addressing the accessibility problem in remote rural areas in the country. The expansion of the initiative generated visibile benefits to both IFAD, RFP, The VISACAs and ECO-Bank
7.OBJECTIVES / The ultimatum goal is to increase incomes of the MFIs by providing increased and sustained access to remittance and other financial services. The project seeks to demonstrate that remittances can be provided by rural microfinance institutions if fully supported as evidenced from the pilot initiative. The objectives include the following:(i)increase the number of MFIs involvement in remittance services (ii) Support VISACAs attain operational and financial sustainability iii) Ensure that linkage becomes a win-win partnership access to remittance services to about 8 MFIsrural poor population (iv) Support recipients of remittances to invest into profitable businesses (v) influence policy on remittances through enhanced knowledge capitalization
8.TARGET GROUP / The main beneficiaries are the poor rural population particularly women who form majority of the VISACAs. The VISACAs as major target group provide savings and credit services to members whilst the commercial bank increases its outreach. They are located in difficult-to-reach places. The VISACAs are built in each of the administrative regions to facilitate access to financial services. Most of the members receive remittances from their beloved from abroad. The Project and IFAD provide support to ensure the MFIs exists and are viable.
9.INPUTS / There has not been much input in such a case as in a production project. The main inputs are limited to: sign board, mobile phone, receipt books and electricity and in some cases a computer. The main expertise includes a cashier and support from the bank and the project. The cost recorded are associated to the sign board. The other cost are considered as part of normal operations. Thus the estimatedcost on the bank is GMD18,000. The total cost associatedto the MFIs based on as cost benefit analysis is GMD24,945.
10.ACTIVITIES
11.OUTPUTS
12.RESULTS/IMPACTS /
  • The VISACAs incorporated remittances services in addition to the savings and credit activities which was never thought of as a possibility
  • The rural communities especially those far away from banks accessed their remittances at their doorsteps.
  • The alliance made access to remittances by the population less expensive
  • The partnership became a reliable source of income for the VISACA. Based on the cost benefit analysis four VISACAs realised GMD129,335 compared to a total cost of GMD24,945
  • It is helping the MFI to address problems associated with cashiers’ remuneration. All the VISACAs involved were paying cashiers from the commission realised; thus making the staff turnover under control
  • It is contributing to improving knowledge and skills of VISACA staff
  • It is helping the VISACA to increase savings mobilisation
  • It is increasing confidence in the VISACAs
  • This experience has been acclaimed by the IFAD DSMs as an innovation

13.PARTNERS / The idea came out of the desire to expand access to financial services by ECO bank, The VISACAs and the Project. It was an attempt on these key institutions to exploit the huge potential of remittances transfer. Thus three main institutions collaborated and created a mechanism for facilitating access to remittances: IFAD financed Rural Finance Project (RFP), ECO Bank and the VISACAs. The project provided technical assistance. The ECO Bank was the lead agent in ensuring the partnership existed. It facilitated the licensing requirement to including the VISACAs as agents. It made sure that the required infrastructure exists to enable the VISACAs operate the facility. The VISACAs pay recipients of remittances from their offices located in the rural areas. The Project played its role of facilitation and coordination and ensure adherence to sound financial and project management practices.
14.DIFFICULTIES AND CHALLENGES ENCOUNTERED / The key challenges included working within an environment where the vision was not understood by key stakeholders and above all the idea of innovation not shared by the latter. The level of maturity of some of the VISACAs also affected attainment of the desired success.
15.SUCCESS FACTORS / The desire, commitment and willingness of the commercial bank to partner with village based microfinance institutions serve as the major factor. The existence of the VISACAs close to the recipients and maturity of those management committees was an incentive. The foresight and knowledge of the Project in the area of facilitation to access to financial services contributed a lot. Above all support of the IFAD DSMs made it attain the success ascribed and the visibility.
16.LESSONS LEARNED / The existence of a common and shared idea could lead to success. When commercial banks accept to work with microfinance institutions the issue of access to financial services could be an issue of the past in the Region. IFAD is advocating for impacting on the lives of the rural communities. There is no better way achieving this than encouraging partnerships. Building stronger partnerships means ensuring effectiveness in delivering services.
17.SUSTAINABILITY / Strong institutions are behind this great partnership. The partnership is a win-win alliance. The benefits derived are the driving engine for the lasting marriage. The Bank realised that it is worth linking with the VISACAs in the Gambia as it guarantees them a big niche in the remittance market. The VISACAs are realising income with minimal cost. The IFAD project realises that small is beautiful. Thus this ‘project’ will continue so long as remittances continue to flow
18.COMPLEMENTARY NOTES / The key partner ECO Ban could be contacted for more information
19.DOCUMENTS / Back-to-Office reports and a cost Benefit analysis report.