Case Studies in Microfinance: Ecuador - Oscus (AMBATO) and Progreso (QUITO) Credit Unions

This paper studies the Oscus and Progreso credit unions in Ecuador. It examines the two institutions on the basis of three microfinance principles:

• Financial sector development to reduce the costs and risks of providing financial services to those who are not integrated into the formal financial sector because of low-income, gender, ethnic identity or remote location;
• Enterprise formation and growth resulting from the access to credit and deposit services;
• Poverty reduction as a result of access to reliable monetized savings facilities.

The paper studies the following aspects of the two credit unions:

• Institutional profile;
• Evolution;
• Governance and institutional structure;
• Management information and accounting systems;
• Financial services profile;
• Savings, deposit and lending services outreach;
• Financial sustainability.

It finds that Oscus and Progreso:

• Reach large numbers of low-income people;
• are located where low-income people live or work;
• Are self-sufficient, with no external subsidies for operating expenses.

The paper concludes that in order to develop as long-term viable financial intermediaries Oscus and Progreso need to:

• Deal with members' rights vs. debt capacity;
• Gain a better understanding of the difference between their right to access credit (as owners of the credit union) and their capacity to borrow.