Agricultural Microcredit; Corporación Mundial de la Mujer Colombia (CMM-C)
Country: Colombia
Organization: Corporación Mundial de la Mujer Colombia (CMM-C)
2) Sector of activity: Financial Services
3) Description of your products or services: agricultural microcredit is a line of credit that is set up and implemented by the Corporación Mundial de la Mujer Colombia (CMM-C) and which seeks to support productive projects lead by families from rural areas with low incomes by providing non-farming and farming loads as well as technologies adapted to the flow of income of the applicants. Our loans allow low income families from rural areas of Fusagasuga and the Tequendama region to find solutions to inconvenient work capital and limiting factors in the production and marketing of products, improving living conditions of the family group and of the community. This line of credit emerges as a result of local demand. Banking of their economic right to obtain credit, they came to our office and made loan applications because the existing banks were unsympathetic to their needs. Those who did entertain them require high levels of guarantee in relation to the reality of the area and delay in granting and analyzing the loans. The CCM-C has developed a technology for small producer loans with a modified loan analysis process, flexibility in the required guarantees, agility and opportunity in the granting of loans and very personal relationships between the loans analysts and the clients.
4) Description of the operational model: in order to offer financial loan services, the CCM-C entrusts their own loan analysts with the responsibility for the loan grant process and maintain a strictly business relationship with the clients based on respect and cordiality which then enables them to obtain a high level of information and improve the efficiency in the case of repeat loans and default payments monitoring. The loan analysts move to the agricultural and non-agricultural production areas with the object of examining the production and colleting information necessary to the loan analysis. Thus the main actor within the service is the loan analyst who while collaborating on the collection of information and the loan analysis is also monitoring the repayments on a daily basis, enabling minimal reaction time in the light of difficulties that clients may be faced with. This agility in the process time of this line of credit (from the receipt of the application to the payment of the loan) takes 3 to 6 days and represents an important factor for decision in the eyes of the client.
5) Description of the financial model: the clients make their loan payments directly at our offices or during the analyst’s visit. These visits serve not only to monitor the client’s payment behavior but also the economical situation of the project and the client which in turn ensures a high percentage of loan repayment and in the cases in which default payments occur, to open up the possibility of a payment agreement that covers the requirement of the client and allows for the recovery of the loan. In the same fashion, these procedures ensure the long term financing of the unit and allow for results in respect to the service provided and increase our economical action base, focusing new resources on more people and projects which need financing. Obtaining resources to allocate agricultural loans essentially comes from portfolio recovery and in some cases supports the anchoring with a regulated financial system.
Client fees represent this approximate percentage of operational budget: 95%
6) Key operational partnership: given that the organization has not counted on a contributing member in the implantation process of the line of credit, it seems important to us to underline the technical assistance given to us by the Women’s World Banking (WWB), to which we are affiliated. This technical assistance was manifest through the visit to our site of an expert in agricultural loans. This expert then carried out a diagnostic of the management to date in the company of our CCM-C team. By means of on-site visits and interviews with certain clients, the collaboration led to the redesigning of the product. The following elements were modified: the operative norms, loan analyst profile, training process and loan analysis, all this with the aim of penetrating a larger market and improving cover in the area.
7) Current outreach:
We are at the Mature stage. Currently 80% of paths belonging to the Tequendama communities are covered. These include Fusagasuga, Pazca, Arbelaez, Silvania, Tibacuy, Granada. The line is in the mature phase after three and a half years of starting and it is expected that the cover will increase with a loan analyst who will be in collaboration with the whole population.
How many clients have benefited from your product/service in total? Over the last year? In August 2005 there are 674 clients, 70% of which are farm administrators who receive a minimum income to look after the plot of land. They must give a percentage of the production to the owners of the farm.
What percentage of your clients is below the poverty line ($2 per day)? 25% 25% have very low economic resources, their houses are in wood and they subsist on less
than 2$ a day. The remaining 5% are farm owners and live in good economic conditions.
What is the order of magnitude of the potential demand for your products or services? Which
other low-income groups, countries or regions could benefit from it? Try to quantify (number
of clients, market size in currency):
The number of clients is different from the number of people who will benefit from the loans. Given that the loans are granted per adult head and through this intermediary the other components of the family units and communities. The magnitude of the potential demand is thousands of people all over the rural area of Tequendama.
8) Scale-up strategy:
How many low-income individuals do you plan to benefit in three years from now? How are you planning to scale up or replicate your solution? What are the major constraints to scale up?
The number of loans currently granted is planned to double and reach approximately 1500. this multiplied by an average number of 4 people per family would mean that 6000 people on low incomes would be affected.
Which specific areas - and why - in your field would benefit most from investment by corporations, foundations, and other investors:
Once, the agricultural credit line is verified at the Fusagasuga branch, it was offered at the "El Colegio" municipality, in which our Corporation has an office. Results have been very satisfactory. At the Corporation's office located in Funza, the allocation work has started as well. This includes all municipalities from "Sabana de Occidente (Funza, Madrid, Mosquera, El Rosal Subachoque, Bojaca, Tenjo, Tabio, Cota, y Facatativa). Our expansion plans for this credit line will depend on the hiring of a credit analyst for our Fusagasuga's office, so we can expand our work in the region.
9) The organization: How does the initiative fit with your overall organization's strategic goals and priorities? How did the initiative start?
During the International Women’s Conference in Mexico in 1975, it was agreed that financial mechanisms should be created for women with few resources and that access to credit would allow them to participate in productive activities. This then materialized with the creation of the ‘Women’s World Banking’ in 1979 which is a non-governmental financial organization focussing on the participation of women entrepreneurs with low incomes. In the 80s, contacts were created Colombia, generating members in Cali (1982), Medellín (1985), Popayán and Bucaramanga (1986) and the Corporación Mudial de la Mujer in Bogotá (1989). In compliance with CMM-C’s strategy plan, an office was opened in Fusagasuga with the object of supporting credit services. In parallel to this we also received loan applications for the rural area, particularly for farming, which is why this particular product was set up to try and resolve problems in the rural areas of the region, supporting sustainable production in the face of working capital problems and limiting factors in production and marketing.
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10) On the mosaic diagram, which of these factors is the primary focus of your work?
- Factor: Limited purchasing power of individual clients
- Principle: Leverage the power of communities as both consumers and producers
Contact Information:
Name: Maria Mercedes Gomez de Bahamon - Manager
Organization: Corporación Mundial de la Mujer Colombia (CMM-C)
Mailing address: 250407
Country: Colombia
Email: gerencia@cmmbogota.org
Tel: (571) 2 55 56 65 - 3 46 39 11
Fax: (571) 2 17 67 72
Website: www.cmmbogota.org
Organization's legal status: Organizacion No Gubernamental
Number of Employees: 197
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