Presentation of the impact credit unions has on the poor in Ghana Expectations and main findings CCA Webinar 17 March 2011 Henk van Oosterhout

Contents Background info Ghana Developments credit unions in Ghana between 2004 and 2009 The CCA project “Institutional Strengthening of CUA and Credit Unions” Local environment of the surveyed credit unions Profile respondents (livelihood, income levels; financial exclusion) Impact on the respondents

General background Ghana Total population: 25 million Area size: 238,533 Sq km (size of the Oregon State or the UK) National currency: GH¢ or cedi (1 CAN$= GH¢ 1.45) GDP 6% Inflation:between 10 and 16% p.a. Main exports:Cocoa and gold

Poverty situation in Ghana: 28.5% of the population falls below the poverty line and declining Poverty is concentrated in the north and among female headed households

Financial sector in Ghana 27 commercial banks with about 536 branches (mainly in Greater Accra and Ashanti regions) 135 rural and community banks 18 savings and loan companies 422 credit unions (community, religion and workplace based) Informal financial sector (susu collectors, friends, relatives, moneylenders, ROSCAs and ASCAs)

6/4/2016Canadian Co-operative Association 6 Developments credit unions in Ghana between 2004 and 2009 # of credit unions grew from 250 to 422 Membership grew from 145,000 to 319,100 Asset growth from GH¢ 84 million to GH¢ 182 million Share capital growth from GH¢ 5.6 million to GH¢ 12 million Portfolio growth GH¢ 46 GH¢ 105 million Savings growth GH¢ 65 GH¢ 141 million Overdue rate: between 12.7 and 17% Borrower delinquency rate: between 16.7% and 18.3% Staff per borrowing clients is from 1 to between 100 and 130 Staff per members is from 1 to between 250 and 300 ROA between 9 and 10% ROE approximately 54% Classification of credit union: 100 satisfactory; 249 weak, very weak or distressed

6/4/2016Canadian Co-operative Association 7 Summary project “Institutional Strengthening of CUA and Credit Unions” Assistance in the development of 30 rural community credit unions through: Subsidies (payment of bookkeepers; office rent) Training of the Board and Committee members (Loans; Supervisory; Education) Targets: Increase membership from 4,000 to 9,000 Increase deposits from GH¢ 120,000 to GH¢ 1,050,000 Increase portfolio from GH¢ 30,000 to GH¢ 450,000 Increase assets from GH¢ 150,000 to GH¢ 1,150,000 Increase shareholders equity from 1GH¢ 5,000 to GH¢ 60,000

6/4/2016Canadian Co-operative Association 8 Initial findings of the project: All 8 credit unions experienced a rapid growth in membership, no difference between credit unions that received support and those that did not Supported credit unions experienced a rapid growth in female membership All 8 credit unions experiences a rapid growth in asset total All credit unions have low share capital Good progress in deposit taking and portfolio growth Basic financial products: savings and loans but accessible and flexible. Some impact on governance Financial reporting/bookkeeping needs to be improved Poor loan portfolio In five cases the cost per borrowing member has increased and in four cases the cost per active member did. No improvement in the OSS and FSS

6/4/2016Canadian Co-operative Association 9 Local environment of the surveyed credit unions Credit unions operate in cities and small towns, not in the countryside Very diverse environment from the vibrant Accra sub- urban region to the stagnant Brong Ahafo rural areas Most common livelihood of the respondents: informal petty trade, personal services, repair shops, food processing, little agriculture Poor infrastructure, high electricity bills Frequent fires and petty theft

6/4/2016Canadian Co-operative Association 10 Livelihood

6/4/2016Canadian Co-operative Association 11 Estimated annual income of members and non- members in the survey

6/4/2016Canadian Co-operative Association 12 Financial integration of the survey population

6/4/2016Canadian Co-operative Association 13 Developments over a longer period: Business and employment impact

6/4/2016Canadian Co-operative Association 14 Developments over a longer period: Income

6/4/2016Canadian Co-operative Association 15 Longer-term use of loans

6/4/2016Canadian Co-operative Association 16 Current use of loans

6/4/2016Canadian Co-operative Association 17 Reason to join the credit union

6/4/2016Canadian Co-operative Association 18 Reported use of savings

6/4/2016Canadian Co-operative Association 19 Causes of financial difficulties

6/4/2016Canadian Co-operative Association 20 What survey population does during financial difficult times

6/4/2016Canadian Co-operative Association 21 Other Impact : Empowerment

6/4/2016Canadian Co-operative Association 22 Other impact: Change in spending habits

6/4/2016Canadian Co-operative Association 23 Various impact issues of the project

6/4/2016Canadian Co-operative Association 24 Conclusion * Observed co-variance between membership in a credit union with income and asset situation * Credit unions play an important role especially in terms of social development, less so in terms of business growth and employment creation * Difficult to conclude whether credit unions are financially sustainable

6/4/2016Canadian Co-operative Association 25 End of presentation Thank you