Ecuador: Small step, big impact

In the early 1990s, the DGRV set up a credit fund in Ecuador. Medium and long-term investment loans for small and medium-sized enterprises (SMEs) were made available and channelled through savings and credit cooperatives (SCCs). This enabled the cooperatives to refinance long-term loans for farming inputs and investments to supplement the savings they had mobilized themselves. Training programmes for the cooperatives facilitated the processing and monitoring of these investment loans.
In 1999, sixteen regular users of the fund established FINANCOOP, a central credit cooperative with central bank functions. In 2003, FINANCOOP was able to meet the equity capital requirements specified by the banking supervisory authority, and was given a licence as a result. The number of members has risen to more than 70 SCCs in the meantime, including all cooperatives covered by statutory banking supervision.
The integrated cooperative structure which has evolved with support from the DGRV has contributed to a sustainable development of the SCCs in Ecuador. None of these cooperatives has failed despite the large-scale banking crisis in 1999.
The consolidated balance sheet total of the Ecuadorian SCCs amounted to some 1.3 bn USD at the end of 2006, including savings deposits equivalent to 1.1 bn USD. The cooperatives have 1.7 m members out of a population of 11 m. This gives an idea of how important the SCCs are in this country both economically and socially. In many rural areas and small towns in Ecuador, SCCs are often the only providers of financial services for small business people, craftspeople and farmers.
By supporting the SCCs, the economic and social status of developmentally-relevant target groups could be invigorated. A major contribution has been made to the support of local economic structures and reduction of poverty, especially in the rural areas and small towns. The high proportion of women amongst both the membership and leadership of cooperatives is proof of the fact that a process of empowerment has also been initiated. Moreover, attention needs to be drawn to the fact that there has been greater environmental awareness amongst many SCCs during the last few years. Environmental campaigns are supported and funding made available for concrete programmes in the region‘ s tropical forests.