Environmental analysis The link between credit union membership and poverty alleviation

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2 Environmental analysis The link between credit union membership and poverty alleviation Although rigorous supporting evidence remains patchy, our work in the sector has reinforced our belief that there remains a strong link between the growth of CUs and poverty alleviation in developing economies. Strengthening and demonstrating the evidence for this link is an important driver for adopting monitoring and evaluation techniques in CU best practice (e.g. social performance management) What we believe The democratic control by members empowers all members, even the poorest. Supporting evidence CCA commissioned study of CU members in Ghana found CCA supported CU members had in general better financial literacy that nonmembers Members savings mobilisation largely not available to poorest through other MFIs Recent randomised control trial studies have shown that savings help to build a cushion to confront future shocks All members share in success of CU through dividends and competitive interest rates The same CCA study found that women members reported that their income is now more secure, while men reported that there income was higher that five years ago

3 ILCUF organisational development Staffing model The diagram below shows the staffing model that will be required to deliver on the strategic objectives outlined in this business plan. Permanent post is denoted by the blue box; contracted posts are denoted by the red boxes: CEO Compliance officer Technical advisor #1 Technical advisor #2 Technical advisor #3 (0.5 FTEs) Technical advisor #4 Fundraising and Comms Officer Intern Intern #2 FTE= Full Time Equivalent A new technical advisor will need to be recruited in order to deliver on the planned step-up in TA activity under the business plan Post will need to be recruited in Sept 2013 once Sinead Lynam leaves ILCUF

4 Internal analysis ILCUF s headline strengths and weaknesses ILCUF s key strengths and weaknesses as an organisation as identified by staff and partners ILCUF strengths Niche organisation associated with highly successful Irish credit union movement Near optimal size for flexibility and responsiveness CUs have a good image at home and ILCUF has a good reputation overseas (although should be promoted more at home) Engaged in long term genuine relationships and not constrained by donor cycles Committed board and staff ILCUF weaknesses Limited human resource- capacity for only short term country visits Slow development inherent in CU model- quick start and results of MFIs can be more appealing Absence of long term strategic planning with partners at the beginning of programmes Low profile at home Not systematic about learning from experience Works well through alliances and networks Lack of results focus Experience with and trusted by major donors Principles and advantages of CU model not always understood

5 Internal analysis ILCUF s emerging external funding income stream Declining CU contributions prompted ILCUF to seek funding from donor agencies proactively as a priority action in the strategic plan. The subsequent increased efforts yielded great results, with ILCUF being awarded 205,000 from Irish Aid in 2011 for a three year project in the Gambia, and 288,349 from the EU in 2012 for a thirty month project covering four West African countries.

6 Environmental analysis Mapping future opportunities for ILCUF 1/2 The chart below maps out the relative strength of the opportunities that exist for ILCUF over the coming 3-5 years. The analysis shows that Sierra Leone, Ethiopia, Russia, Moldova and the Gambia present the highest potential opportunities, and that this will require the strengthening relationships with IFAD, the WB, Irish Aid, the Frankfurt Business School and WOCCU. High CUA Sierra Leone Irish Aid Future CU development potential Medium Ethiopia CCA WOCCU IFAD FCA Ghana Liberia EU WOCCU UNCDF Russia WB CUA The Gambia Irish Aid IFAD Albania Low Country Key donors Key technical partners Low Medium Strength of ILCUF position High

7 ILCUF strategy 3-year strategic objectives and expected tangible outcomes Strategic Area Expected Tangible Outcome by mid Support for Partners in existing Countries At least one external evaluation of ILCUF support for local partners conducted annually 2 3 Protecting our CU donation base Developing our external funding model -Stabilised/moderately increased CU donation base to 605,000 -Significant increased awareness of ILCUF within CU movement External funding will on average constitute at least 35% of total income 4 Growth and expansion (new countries) -Strong working partnerships established with local partners in 1 or 2 new territories - Business planning supported in at least 1 of these countries 5 Enhancing ILCUF s TA capacity building model 2 new components to TA tool introduced and actively utilised with partners 6 Leveraging our knowledge and our results ILCUF established as highly competent in knowledge and results management-viewed as a key strength by donors and partners

8 ILCUF operational plans Support for partners in existing countries Year 1 2/4 Objective Key next steps Target Completion Date Gambia: rural outreach services improved with new IT system Development and assessment of financial literacy initiatives Evaluation of financial literacy initiatives Development of financial literacy tools Support provided to rolling out of the new IT software system (linked with the social performance agenda of the West Africa Credit Unions against Poverty Programme (WACCUP)) Assistance in developing social performance management Programme monitoring and support visits site visits for training and support x 2 Business planning development for NACCUG (external assistance from WACUPP) 09/13 03/14 06/14 12/13 06/14

9 ILCUF operational plans Support for partners in existing countries Year 1 3/4 Objective Key next steps Target Completion Date Ghana: regional hub delivers regional training & TA / West African Credit Unions against Poverty Programme (WACCUP) (note, this is 60:40 % funded by EU : ILCUF) Developing the regional hub Capacity building of the hub through mentoring Supporting the steering group Supporting the regional conference Supporting development of apex sustainability strategies Delivering training and technical assistance to CU movements in partner countries Supporting pro-poor expansion of CUs rolling out of poverty mapping development of social performance mgt promote graduation approach Develop knowledge management approach monitor progress and learning, reporting working in results of Mid Term review 10/13 12/13 12/13 06/14

10 ILCUF operational plans Support for partners in existing countries Year 1 4/4 Objective Key next steps Target Completion Date Liberia: TA & training needs established Development of LCUNA apex additional TA mission (in addition to West Africa TA hub programme) (this links to expansion to a new country) Develop MoU and agree work plan with WOCCU. This is to achieve our goals for LCUNA but it is also a first time venture to collaborate on the ground with a major partner. Strengthen legislative and supervisory framework and relations with State authorities. (At present the Central Bank is actually the main influence on CUs in Liberia through funding. ILCUF must engage with them to have a meaningful role) Responsible Person Staff time allocation 03/14 Advisor: MG 1 week Sierra Leone: training missions aid the capacity building of grassroots credit unions Training and technical assistance missions (x2) through CCA partnership Develop ILCUF s relationship with the soon to be appointed long term advisor Establish a vision for apex body. (it is necessary that the SEND project CUs and our project CUs start to liaise and develop shared vision and approach) 06/14 Advisor: MG 2 weeks

11 ILCUF operational plans Growth and expansion (new countries) Year 1 Objective Key next steps Target Completion Date Responsible Person Staff time allocation Prospective new countries identified and prioritised (e.g. Moldova, Liberia) List of prospective countries developed (10 in all) and ranked Concept note developed for board approval to investigate further 1 additional new country (the concept note will establish minimum thresholds of intervention) 09/13 12/13 Intern: EC Advisor: IK Advisor: MG 2 weeks 1 week 1 week Low level support initiated for new partnership Low level partnership supported to help establish viability of longer term engagement 03/14 Advisor: MG 3 weeks The partnership is monitored Advisor: MG 1 week

12 Internal analysis Expanding our core technical assistance delivery model ILCUF has an established track record of an effective and high quality technical assistance offering to its local partners. In order to maintain competitiveness (both in terms of CUs versus other financial service offerings and in terms of ILCUF s TA versus the services of our competitors), we have identified a range of areas where we may seek to augment our current core TA offering The growing emphasis on aid effectiveness has led to recognition programmes must invest in capturing and learning from results in order to safeguard their impact and sustainability into the future Credit union governance in some territories can fail to provide strong leadership, thereby restricting the growth of the movement. There may be opportunities to conduct formal governance assessments and/or provide training/recommendations on governance best practice Regulators, funders, donors, etc. are all demanding effective and dedicated risk management functions at all financial institutions. Effective risk management is necessary in order to ensure the longterm viability of credit unions. The credit union movement is facing unprecedented challenges to stay relevant in the lives of the poor. Effective strategic and business planning is critical to ensure credit unions remain competitive in this environment. Corporate governance Results focus / learning culture Risk management Mobile banking ILCUF s current core TA offering Business planning / strategy development International remittances Social performance management Ratings Rapidly establishing itself as a trusted and viable access solution in many developing countries. Assisting local credit unions / apex bodies in mobile banking strategies can help strengthen competitiveness World Bank estimates international transfers were $305M in Providers such as Western Union are expensive and not designed to serve low income clients with small transfer amounts. There may be opportunities to work with apex organizations in neighbouring countries to develop a low cost regional offering Rating processes are very good at identifying institutional weaknesses. They can be used to help improve CU institutional effectiveness and efficiency, as well as serving as a basis for developing international best practices. Global SPI standards such as the Universal Standards for Social Performance Management, and the Seal of Excellence for Poverty Outreach in Microfinance. Social audits are now mainstream in the MFI sector. New SPM tools and techniques can help credit unions analyze their own impact on poverty alleviation, which in turn can help to attract future donor and other funding.