CREDIT UNION STABILIZATION PROJECT

Evaluation covers the period 8/31/78-12/31/80 and is based on site visits, interviews, and a review of files. No problems occurred in the delivery of inputs and at least seven cooperatives have become financially viable. Nonetheless, while collections by cooperatives were higher than expected, repayments by cooperatives to CREDICOOP"s Stabilization Fund (SF) fell short. Only one cooperative is remitting all of its collections to the fund; the rest have used funds for relending purposes. Cooperatives have witheld repayments (the exact amount of which could not be determined) because of relending benefits as a result of CREDICOOP"s low fee on SF loans. CREDICOOP should not lend to those cooperatives who are not fully depositing the amounts they have collected and establish criteria for SF operation. New lending by cooperatives has exceeded targets and CREDICOOP loans to its members are approximately 3.6 times the projected amount. It is disturbing, however, that the proportion of lending to share capital in the case of three cooperatives exceeded the safe ratio of 2: 1. CREDICOOP should therefore monitor the portfolios of its cooperatives more closely. Some cooperatives still have not implemented the recommended administrative and accounting improvements required to monitor loan collections. CREDICOOP should assign someone to oversee loan recuperation procedures. Although theoretical courses, on-the-job training, and a salary maintenance program were offered, only two cooperatives participated and only one has improved its adminstration. CREDICOOP has not fully implemented the incentive plan. It should draft criteria for SF operations and implement an incentive/salary maintenance program to include elements outlined in the grant agreement. It should also analyze the training needs of each cooperative and conduct courses committed in Attachment A C. 2 of the grant agreement. Finally, CREDICOOP should appoint a staff member to monitor project activities.