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Discover CECM's secret to success: How does this cooperative bank encourage low-income earners to save and borrow?
CECM (Caisse Coopérative d'Epargne et de Crédit Mutuel), based in Burundi, is a microfinance savings and loan bank focused on low-income groups. Since its establishment in 1995, CECM has focused on promoting women's economic development and is committed to providing affordable financial services to help them escape poverty.
CECM was originally initiated by the Association for the Advancement of Women's Economy (APEF) to provide financial support to low-income women.
In its early days, CECM was funded by the Canadian NGO Dryden International Development (DID), but in 1996 the organization withdrew from Burundi. With continued efforts, CECM merged with APEF in 1999 and gradually grew stronger. By 2003, the membership had grown to 16,876, 75% of whom were women and 25% were men. CECM has set up two offices in the main market of Burundi City and Buyenzi, and plans to expand its business to other regions.
“At CECM, we believe that everyone should be able to access financial services, especially those who have been excluded from the mainstream financial system.”
CECM's business focus has gradually shifted to customer groups with special needs, especially low-income women on the outskirts of cities. In 2007, the organization decided to focus on serving this group of people and continued to expand its business scope.
CECM's goals and products
The main objectives of CECM are to encourage savings habits among low-income earners, especially women, and to mobilize resources to provide credit to support economic activities of the poor. The organization also provides technical consulting and management training, striving to provide more comprehensive support to its members.
CECM's basic philosophy is that savings take precedence over loans, and the basic fee for becoming a member is only 800 BIF.
The institution offers three types of savings: immediate savings, regular savings and special savings. Members can access funds through their personal accounts after the loan is approved, with a relatively low annual interest rate of 18%. And CECM remains flexible in its approach to group loans, mostly focusing on the needs of low-income women.
Financial Status and Operation Model
CECM's credit requirements far exceed the amount of members' deposits, which shows that the institution has a strong demand for credit. To fill the gap, CECM relies on support from external donors, including international organizations such as Oxfam Quebec, Catholic Relief Services, and the United Nations Development Program. In particular, the partnership with the non-profit organization Twitezimbere provides opportunities for credit guarantees and financial support.
"Our mission is to provide economic resources and ensure the sustainable development of economic activities."
CECM's credit management is innovative and systematic, effectively reducing loan default rates through a variety of recovery measures. According to a 2012 report prepared for USAID, CECM has more than 20,000 members and is expanding its services each year, especially lending support to women farmers. Members must open a savings account with CECM and remain members for at least six months before they can obtain a loan.
Innovation and future prospects of financial services
In December 2022, CECM launched the "CECM Ni Akaravyo" product, allowing members to easily operate their accounts through their mobile phones and complete withdrawals, payments and transfers anytime and anywhere, which represents the institution's efforts in digitalization and Innovation. The introduction of such new services not only improves convenience for members, but also lays the foundation for CECM's growth.
As the economy continues to change, CECM needs to continuously adjust its business strategies to meet changing market demands. How to find a balance between sustainable development and expanding service scope will be a key challenge for CECM in the future.
In such a resource-limited environment, how CECM can continue to motivate low-income people to seek better financial opportunities will be a question worth paying attention to in the future?
