Jocelyn Jean Baptiste and Louisemane Beaubrun, executives at the General Inspectorate of Credit Unions (DIGCP) of the Bank of the Republic of Haiti (BRH), presented an overview of the financial situation of savings and (CEC) between September 2020 and September 2021 at the 12th edition of the International Finance Summit, organized by the Group Croissance at the Marriott Hotel on April 25, 26 and 27, 2022. “CECs play an important role in the architecture of microfinance in Haiti. Their specificity as a company and their main objective make them the most scattered type of financial institution on the national territory, and they serve the most disadvantaged layer of the Haitian population.
By definition, a cooperative is an association of people voluntarily brought together to satisfy their economic, social and cultural aspirations and needs, the main objective of which is to collect the savings of its members and to grant them credit. In a country where access to credit remains very limited and often restricted to a small specific group, it is therefore normal that the cooperative as a movement attracts the population. It is therefore no surprise that this movement was to experience considerable but also anarchic growth during the 1990s.
The absence of a legal framework and of a control institution would lead to the crash of 2002 when a large number of members lost all their savings placed in CECs. This event was experienced as a real blow to the head of the victim members. The law of June 26, 2002 on the constitution, organization, control and supervision of savings and credit cooperatives (CEC) made it possible to fill this gap and helped the recovery of the sector. This law was supplemented by the decree of June 5, 2020 on microfinance institutions.
To see the evolution of the financial situation of the cooperative sector from September 2020 to September 2021 presented by the executives of the DIGCP, one is tempted to believe that the Haitian population has indeed regained confidence in the said movement.
A 59% increase in net operating surplus between September 2020 and September 2021
As of September 30, 2021, approximately 74 first-level financial cooperatives were identified in the ten departments of the country by the DIGCP. The department of the West had the largest number with 16 cooperatives and that of the Artibonite with 10. The departments of the North-West and the South-East follow with 9 cooperatives each, in front of the departments of the Center and the South (7). Nord and Grand’Anse, with three cooperatives each, occupy the bottom of the ranking, just after the department of Nippes containing five cooperatives.
The DIGCP has two federations of CECs: Le Levier and Le Sociétaire as well as one association, namely the National Association of Haitian Credit Unions (ANACAPH). As of September 30, 2021, Le Levier had 41 CEC-members while Le Sociétaire had 10. On the same date, cooperative assets amounted to 21.9 billion gourdes, an increase of 22.3%. More than half of this amount (11.5 billion gourdes) was used to grant loans. Members’ equity or shareholders’ equity amounted to 4.1 billion accounting for 19% of total assets, while the minimum required by the capitalization standard is 12.5%. It increased by 18% between September 2020 and September 2021.
The return on assets (ROA) of CECs increased by 1.29 percentage points, from 3.75% in 2020 to 5.04% in 2021. For its part, the return on equity (ROE) posted a significant increase from 18.19% on September 30, 2020 to 24.43% a year later, an increase of 6.24 percentage points. Net lending grew 4 percentage points faster than deposit growth. They totaled 11 billion gourdes and represented 67% of deposits as of September 30, 2021.
The cooperatives held an amount of cash that amounted to 8.7 billion gourdes at the end of the 2020-2021 fiscal year. This amount increased by 36% compared to September 2020. The liquidity ratio is assessed at 53.24% of deposit liabilities, while the minimum required by the standard relating to liquidity management is 25%. CECs therefore hold sufficient liquidity, which gives them a significant margin to extend more credit. They achieved a net operating surplus of one billion gourdes, an amount up 59% compared to the previous year.
The other good performance of the sector was the substantial drop in provisions for bad debts which fell from 693 million gourdes in 2020 to 546 million as of September 30, 2021, a decrease of 21%.
A fairly high concentration
During the 2020-2021 financial year, note Jocelyn Jean Baptiste and Louisemane Beaubrun, the activity of the cooperative sector was dominated by the twenty largest savings and credit cooperatives (CEC) in the country. Their assets, credit portfolio and savings, in relation to the sector’s total assets, represented 74.1%, 75.5% and 73.8% respectively. The three largest savings and credit cooperatives hold 25.3% of the sector’s total assets. SOCOLAVIM occupies the 1st place with assets representing more than 2 billion gourdes, or 9.60% of the total assets of the sector. It is followed by CAPOSAC with 1.8 billion gourdes (8.34%) and CPF of Cap-Haitien with 1.6 billion gourdes (7.37%).
At the end of the fiscal year in 2020-2021, the DIGCP listed 1,189,915 CEC members, of which 60% were men, 36% women and 4% legal persons (companies, associations). The leaders of the CECs numbered 817: 79% men and 21% women. The sector employed 1,874 employees, 64% of whom were men and 36% women. CECs can therefore play an important role in financing micro, small and medium-sized enterprises in Haiti (MSMEs) as well as in job creation.
According to the executives of the DIGCP, the CECs are also subject to the costs of the prevailing insecurity while remaining fairly profitable. They specify: “Despite the difficult socio-economic environment in which the CECs evolved during the 2020-2021 financial year, the sector was able to grow and generate fairly satisfactory overpayments. This shows the resilience of savings and credit cooperatives. Admittedly, there are CECs that have been affected by the country’s socio-political turmoil and, therefore, find themselves in a difficult situation, but thanks to the establishment of the Savings and Credit Cooperatives Support Fund, the sector is beginning to be equipped to help these caisses regain their financial health. »
This fund was created by the BRH to finance CECs that are in financial difficulty so that they can meet financing needs either to support their growth or to finance a project.
Given that the CECs are scattered throughout the national territory and offer a variety of financial services, continue Jocelyn Jean Baptiste and Louisemane Beaubrun, they present themselves as the best financial inclusion tool the country has to reach people living in areas the most remote in the country.
However, CECs are criticized for getting too close to commercial banks. They finance trade at 42.69%, housing at 28.92% and consumption at 16.44%. The share of loans allocated to the agricultural sector represents only 5.68%. The concentration on trade finance remains too high even if it can be explained by the higher profitability of the sector as well as a lower level of risk, compared to agriculture.
CEC performance between 2020 and 2021
Source: BRH/ DIGCP
Distribution of CECs by rank and geographical area
Source: BRH/ DIGCP