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The Efficiency of Multi-Tier Savings and Credit Cooperatives in Developing Countries

A Study Based on Empirical Research in West Africa


Marcel Gounot

As a means of fighting poverty, the support of microfinance institutions has gained major significance in development aid. However, the widespread expectation that these institutions would quickly become self-sustaining has so far only rarely been fulfilled.
This applies in particular to multi-tier savings and credit cooperatives, whose way of functioning is examined in the present study using innovative organisation- and cost-analysis instruments. The analysis reveals the dominance of the upper institutional levels, which attempt to position themselves as intermediaries for public development aid and as a result generate extremely inefficient operations, instead of providing efficient support services for the lower level institutions.
To enable multi-tier savings and credit cooperatives to develop their full potential, radical reforms and a change of attitude on the part of the cooperative managers and international donors are needed.
Contents: Multi-tier savings and credit cooperatives in developing countries – The rural financial market as business potential – Empirical case study: low outreach in spite of attractive products; deficits in the cooperative superstructure; unprofitable customer relations – Are multi-tier savings and credit cooperatives capable of reform? – Increasing efficiency by optimising the connection between grass-roots autonomy, central control and external monitoring – Recommendations for development cooperation.