Moldovan Savings and Credit Associations' Experience
This case study describes briefly the economy of Moldova in which agriculture plays a very important role. Quoting from previous studies, the paper argues that local commercial banks do not have enough capacity to grant loans to private farmers.
The traditions of mutual financial systems that existed in Moldova were one of the main principles for developing rural financial systems as a network called the cooperative savings and credit associations of citizens (SCAs). The objective of the SCAs was to increase private farmers' and rural entrepreneurs' access to credit. The paper lists the salient features of SCAs:
- Not for profit, non-commercial, independent, specialized institutions;
- Regulated and supervised by the state;
- Each member having a single vote;
- Lending services extended exclusively to members.
The paper describes in detail the following aspects of SCAs:
- Capitalization;
- Credit repayment rate;
- Profitability;
- Sources of funds and inter links with other financial institutions.
The paper also describes the role of national federation of savings and credit associations of citizens (NFSCAs) and the rural finance corporation (RFC). Describing the process of formation of SCAs, the paper identifies the following as critical for growth and development of SCAs:
- Consolidation of capacities of local SCAs, development NGOs;
- Development of manuals for SCAS management;
- Support to SCAS leaders;
- Tracking System of SCAs performance.
This case study was presented at "Paving the Way Forward for Rural Finance" , an International Conference on Best Practices in the session titled "Agricultural Lending Practices: Non-Financial Services with Financial Products."
