ILO’s Cooperatives Unit and Social Finance Programme co-organize an elective session at the Rural development academy 2021

ILO’s Cooperatives Unit and Social Finance Programme co-organized an elective on “Sustainable Finance and Cooperatives in Rural Areas” to highlight the role of cooperatives in the rural economy and access to financial services through a range of traditional and emerging financial service providers.

News | 29 April 2021
From 12 to 23 April 2020, the ILO and the International Training Centre of the ILO (ITC-ILO) organized the “Rural Development Academy: Human-centred recovery from the Covid-19 pandemic through decent work in Africa”. This edition of the Rural Academy provided an opportunity for the participants to share a range of innovative approaches, tools and methods for promoting decent work in human-centred recovery to the COVID-19 crisis in the rural economy of the African region. The Academy brought together 100 participants from ILO’s tripartite constituents, policy makers, practitioners in partner development agencies and international organizations, social innovators and entrepreneurs, financial services providers, members from academia and civil society organizations.

The ILO’s Cooperatives Unit and Social Finance Programme co-organized the elective on “Sustainable Finance and Cooperatives in the Rural Areas” which took place during the second week of the academy. The session on the first day focused on the role of cooperatives as a member-driven ownership model in the rural economy with regard to employment creation, transition from informal to formal economy and as source of service provision for their members. It provided an overview of cooperative principles, types of cooperatives and their economic contributions. It also reflected on challenges and strategies devised to overcome those challenges. A practical case on the role of cooperatives in rural development in Uganda was presented by Mr Ivan Asiimwe, General Secretary/ CEO of the Uganda Cooperative Alliance. The presentation highlighted the contribution of different types of cooperatives in rural areas ranging from savings and credit cooperatives, agricultural production and marketing cooperatives to energy and health cooperatives.

On the second day, the elective explored how access to financial services through a range of traditional as well as innovative delivery channels can contribute towards unlocking the potential of rural areas in this crisis situation. It focused on how vulnerable rural populations or rural workers could benefit from increasing household income and employment, improving food security, and risk mitigation but also rural employers from increasing working capital, seasonal bridge funding, insurance solutions for risk mitigation, or effective payment / money transfer mechanisms. The session also focused on the main bottlenecks of financial service provision in rural areas during Covid-19 and discussed the potential of a range of financial products and delivery mechanisms, including informal and semi-formal financial services providers and financial cooperatives, but also banks, impact investors, and insurance companies, to germinate growth and security relevant to policy dialogue and programme design.

Participants discussed suggested interventions in Ivory Coast, Kenya, and Zambia that could be facilitated by an impact investing funds and related technical assistance facilities. The session further zoomed into Covid-19 measures currently implemented by financial sector regulators and industry support organizations and emphasised that stakeholders need to work across the different levels of the financial sector to enable the system to create positive development impacts including on decent work.

The session on the third day looked at insurance as both a protective and productive tool and its contribution to social and economic development in rural economies. The presentations showcased how insurance can protect against setbacks due to losses, smooth consumption, prevent the sale of productive assets while on the productive side it encourages engage in “riskier” but on more productive and lucrative activities enabling increased investment on the enterprises/farm, which can aid with higher production and income. The presentations further highlighted how insurance could play a role in achievement of SDGs as well as examined how cooperatives and other social organisations can act as aggregators for providing insurance to their members. In addition, the benefits that cooperatives and other mutual insurance associations can derive were also explored.

Alhajj Ali Muhammad Katu, General Manager of the Ghana Agriculture Insurance Pool, shared the experiences of introducing agriculture insurance in the country. He discussed a range of products, both indemnity as well as index based, related challenges in developing appropriate products and factors that impact implementation.

Building up on the discussions, Josephine Muchwezi Berton, a consultant on agricultural and climate insurance with IFAD talked about the government supported Uganda Agriculture Insurance Scheme that highlighted the importance of public private partnerships in rural development. In addition, the discussions featured the data requirements and the importance of consumer education as well as the role of different stakeholders in the above.

Building trust on insurance and more broadly financial services in general is of critical importance and the relevance of involvement of local social organisations, including cooperatives, associations, and a broad range of finance services providers formed an essential part of the session.