Strengthening financial inclusion: lessons learned from a collaboration between World Bank & Rabo Partnerships

3 December 2024 14:33

With their large, often unparalleled, retail outreach to otherwise underserved areas and populations, Cooperative Financial Institutions (CFIs) have significant potential to deepen financial inclusion in rural areas. This mission aligns closely with Rabobank’s origins back in 1895, when Dutch farmers united as a solution to their struggles to obtain access to credit. Over the years, Rabobank managed to develop itself into a full-fledged, internationally recognised bank, while maintaining its cooperative structure and mission. However, in many countries CFIs fail to reach their full potential due to limited economies of scale, insufficient management capacity, and inadequate regulation & supervision, amongst others.

Bananas in Colombia

Structural challenges call for a systemic solution. That is why, between 2020-2023, the World Bank & Rabo Partnerships joined forces to strengthen the CFI sector and therewith enhance financial inclusion. We did so following an integrated approach, where RP was working with local CFI networks to solve operational challenges, and WB supported regulators and supervisors to ensure the appropriate enabling environment.

Based on a thorough analysis and country selection exercise, tailor-made pilot activities were implemented in Colombia, West Africa, and Ethiopia. Working with CFI networks, supervisors, and regulators in these jurisdictions brought a number of lessons learned, three key ones including:

    Integration and consolidation of CFIs are viable options for greater scale economies and functional efficiency that are essential for the survival and sound growth of CFIs. The improvement of regulation & supervision should enhance the limited capacity of responsible authorities and fill the gaps in CFI regulations, focusing on digitization of reporting; access to the payment system; and financial safety nets. Transformational changes require long-term commitment by all the stakeholders, and the level of effort is highly dependent on their readiness and the regulatory/supervisory/financial safety net environment.

But those are just a tip of the iceberg. A recently published report by the World Bank, co-authored by Rabo Partnerships, elaborates on all lessons learned of our joint program: mapping out activities and experiences per jurisdiction, and translating those in overall key lessons learned.

The report can be accessed here: Report Worldbank & Rabo Partnerships 2020-2023. For further questions or comments, please contact Rubiga.Sivakumaran@Rabobank.com.