|Financial Systems for Rural Development (GRET)|
The seminar's aims at the outset were to learn about the experiences of others in each country, not to draw recommendations from them, but to enable each of us to think about and enrich our own experiences. However, a few lessons can be learned.
- First of all, as far as credit is concerned, there are a few general principles to observe, and formulas adapted to each country must be sought based on its history, society and economic situation, etc.
Finding appropriate solutions requires almost systematically going through an experimental phase. Trial and error is inevitable and all projects are marked by successes and failures that progressively lead to the best solution. The example of the Grameen Bank which is considered a success should be mentioned, yet it took seven years to find effective operating formulas in Bangladesh.
It should also be emphasized that experimenting is never finished. Periodically, we must learn how to adapt to change. In other words, to operate well, a project must avoid routines and implement systems for monitoring, evaluating and studying that regularly enable us to see the positive and negative impact from the credit and offer the necessary changes. In the case of Vietnam and Cambodia, pairs of Cambodian or Vietnamese and French students enabled accurate studies for measuring the impact of credit in the villages, collecting the farmers' opinions about credit and what they wanted to see changed.
- Secondly, the need to strive for the sustainability and durability of the financial institutions created should be emphasized. To do so, certain conditions must be observed:
- strive for financial self-sufficiency, which involves having an interest rate policy enabling income that covers the costs;
- a policy of cost control;
- strategies enabling maximum reduction of the loan loss rate;
- development of own resources, notably through savings and equity.
It is noteworthy that for the NGOs or the projects, thinking about sustainability, means putting themselves in the perspective of the post-project. From the start, it needs to be considered whether the farmers' skills are sufficient for continuing the management of the structures created, or if a support team financed by the financial products will be needed, or if the structures will be integrated into the country's banking and financial system.
- Thirdly, the lesson learned is that a balance should probably be found between the banks and the decentralized systems in which the farmers can manage part of the credit business, which does not exclude a link with the banking sector. On the contrary, the encounter of descending (ice. banks towards their customers) and ascending (which enable involvement of the farmers) logics should probably be investigated more. In the case of the Grameen Bank, the borrowers are consulted regularly and can give their opinion on the credit and savings systems.
- The seminar's fourth lesson concerns the need for training. To succeed in the three previous areas, the need for training concerns the managers of the financial systems and the farmers in charge. Good training is not limited to management, computer skills or banking techniques. Rural credit requires a wide range of skills. A rural credit agent should be all of the following:
- a bit of an agronomist so he can discuss the credit objects and understand the farmers' problems;
- a bit of an economist so he can make profitability, financial and economic calculations;
- a bit of a sociologist so he can understand the aspects related to trust, solidarity and the different social groups in the village (role of the notables, of the women) and so he can adapt the system to these factors;
- a teacher for listening, for explaining information and for persuading;
- a banker for the management and rigor of the system.
To attain this result, training must associate theory and practice with phases in the field, brainstorming and theory. Moreover, training must not be considered as done once and for all; it should be on-going to enable credit agents to go through the cycle again.
As a result, to be a good credit agent, one needs a scientific mind, that is to say, not have preestablished theories or dogmatic preconceived ideas but be capable of analyzing reality with the farmers, seeing the main problems expressed more or less rapidly and clearly by them.
Based on this information, one should be capable of putting forth hypotheses, then testing the different solutions, evaluating their results before going on to a generalization phase. Success depends on a perpetual movement of adaptation and confrontation with the results and with reality.