Evaluation of USAID-BANCOOP pilot project on the development of rural financial institutions in Peru

Evaluation covers the period 4/79-5/81 and is based on site visits. Given the adverse economic conditions in Peru in the late 1970's (e.g., negative GDP growth and 60% inflation) the performance of the Banco de las Cooperativas (BANCOOP), a bank for rural agricultural cooperatives, was very strong. BANCOOP's flexible, aggressive interest rate policy; its savings mobilization campaigns (four held from 12/79-4/81 and a fifth planned for 7-8/81); and the opening of 12 new offices, two in project areas, netted $800,000 in new savings deposits, well over the project goal of $150,000. In addition, 1980 deposits (approximately $4.5 million) were over eight times the 1976 level; new and outstanding loans in 1980 increased; and the deflated value (in 1979 soles) of new and outstanding loans roughly doubled from 1979 to 1980. On the other hand, while BANCOOP met the project goal of lending $400,000 to production agriculture, 85-90% of its loans went to short-term commercial borrowers because these borrowers were more reliable and accessible than farmers, BANCOOP had little experience with high-risk agricultural loans, and farmers preferred lower-interest Agrarian Bank loans to those of BANCOOP. Also, despite substantial long- and short-term technical assistance provided to strengthen BANCOOP's capacity to advise member cooperatives, the newly created BANCOOP Programming and Development Office was never fully staffed and was more concerned with BANCOOP programs than with assisting rural cooperatives. The evaluators recommend that USAID/P send a representative to the Colloquium on Rural Financial Markets to be held in Washington, D.C. from 9/1-9/3/81.