Reaching the Hard to Reach - Linkages and Networking of Member-Owned Institutions in Remote Rural Areas
MOIs can link or network in three ways. They may deal directly with market suppliers of inputs, as with a commercial bank to access liquidity or a consulting company to access technical support. They may create or join a second-tier structure such as a federation, network or apex, and they may have links with bodies which support or regulate MOIs, such as NGOs or government agencies. Small MOIs, particularly those operating in remote areas, may need to link with other institutions for financial intermediation, or in order to obtain non-financial services such as advice or capacity building. Or, they may be compelled to link to ‘higher’ level institutions for regulatory purposes, or because they are a part of a multi-tier national cooperative structure.
Summaries of the seven cases which were chosen for this study are appended to this paper. Five of these local primary MOIs, the SHGs in West Bengal and Andhra Pradesh in India, some village savings and loan associations (VSLAs) in Niger, the MC2s in Cameroon, and a rural cooperative in Mixtlan in Mexico, have close links to other ‘higher level’ secondary groups of groups, or to other types of institutions, in order to help their members achieve the objectives for which they joined the primary group.
The other two MOIs have no very close linkages. The Muntigunung LPD (Lembaga Perkreditan Desas) in Bali is itself a government sponsored institution, and thus has some supervisory and financial links to local government bodies, but these relationships are for formal refinance and regulation rather than for membership or commercial dealings. The Jardín Azuayo Cooperative in Ecuador is a large self-sufficient institution with semi-autonomous branch offices but has no especially close links either with second tier MOIs, private businesses or government bodies. These last two MOIs may borrow or deposit funds with banks, or carry out other inter-institutional transactions, but the relationships are less close and are not with institutions which are in any way owned or controlled by them. The purpose of this paper is to examine whether these close linkages serve their purpose, whether the costs of making and maintaining the link are more or less than the benefits which the link provides.
Linkages can be to secondary higher tier MOIs, or to private businesses, NGOs, government bodies, or to banks, which may of course themselves be owned by private interests, by cooperatives or by government. Our seven cases include examples of all these, if we define any kind of inter-institutional relationship as a ‘linkage.’ If by this term we intend closer and more permanent relationships, which are of course possible between private businesses as well as MOIs, such as between a manufacturer and a sole distributor, or a franchisor and franchisee, then all our five close linkages are between primary and secondary level MOIs.
The word ‘network’ is also used in some of the cases, in particular to describe the grouping of VSLAs which CARE has promoted in Niger. The grouping in Niger, however, is not merely a vehicle for the exchange of information or for aggregating individual attempts to influence policy, like many associations. It carries out financial intermediation functions and requires its member MOIs to deposit part of their members’ savings with it, and it generally acts like any secondary tier cooperative or federation. We have therefore treated it as such.