Firm foundations
community outreach
When the Rabobank was formed over 100 years ago, farmers in the Netherlands
survived economie depression through the principles of cooperative banking. Now
the Rabobank Foundation is committed to the same cause - promoting the
development of disadvantaged persons, guided by collective responsibility.
Cooperative ideals
Grass roots
Manpower
Sustaining development
Early adoption
Mutual respect
What's NewS Issue 5 August/September 2000 I
The Rabobank Foundation was formed
in 1972, supporting projects related
to cooperative development in rural sav-
ings and credit. Funds go toward setting
up and strengthening agricultural cooper-
atives, credit unions and cooperative
banks, among others. For example, when
a disasterous flood hit the Madras region
of sourhern India in the early 1970s, a
group of women came to the Foundation
for assistance. They organized their own
credit union, which provided capital for
such activities as weaving baskets and
making food to sell on the streets. The
Foundation's small grant got the initiative
up and running, resulting in today's In-
dian Cooperative Network for Women,
470,000 members strong.
The Foundation's funding comes on a vol-
untary basis from local Dutch member
banks. Their average contribution of
0.5% of net annual profit is matched by
Rabobank Nederland. While 25% of the
fund is earmarked to help out at home in
the Netherlands, the remaining sum goes
abroad to regions of Asia, Africa and
Latin America, and recently Eastern Eu-
rope. Charitable? Idealistic? Yes, but ac-
cording to Frank Bakx, program manager,
it's also more. 'As a cooperative financial
institution, we have a responsibility to-
wards similar initiatives. It's part of the
same principle, and the reason we work
through larger organizations such as
World Council of Credit Unions, and In
ternational Cooperative Alliance.'
Several factors determine which projects
to fund - initiatives must arise locally, be
autonomous from government, and have
potential for sustainability. 'We're not ini-
tiating new institutions or networks,' says
Bakx, 'but supporting actions taken by
the local private sector that meet our cri
teria.' Small grants pay for initial expenses
for farmers to an earlier stage in coffee
production. Traditionally, commercial
loans were tied to sales contracts, but
came too late for such necessities as
equipment or labour. For two years, the
Rabobank Foundation has been filling the
gaps through short-term loans. The cur-
rent initiative moves toward building a
lasting savings and credit institution, so
members can partially fund themselves for
core production. Pending September ap-
proval by the Foundation's
Board, the new credit
union will help 11 agri-
coops, with 1,000 coffee
producers in the depart-
ntent of La Paz.
Cooperation in Cameroon: left, P.B. Ngabir, Vice Chairman,
UBC; Gert Van Os, acting GM; G.l. Njoh, Chairman, UBC
and staff training. Larger amounts are in
the form of soft loans, supplemental credit
funds for credit cooperatives, or invest-
ment in equipment, and will include ven
ture capital participation in the future.
One way the Rabobank Foundation can
help is with technical assistance or advice.
In Cameroon, that is just what's offered.
In the western part of the country, a solid
network of agri-credit unions founded 40
years ago, faced a surplus of funds. Local
financial markets were too shaky for in-
vestment, yet legal regulations prohibited
investing abroad. The solution was to cre-
ate their own bank, lending to local enter-
prises in the agri sector, trade, and SMEs.
They requested managing expertise, and
in stepped Gert van Os, former GM of
Rabobank Betuweland. Since December
1999, Van Os has been busy building the
Union Bank of Cameroon from scratch -
setting up a home office and two
branches, training staff, collecting funds
and assessing central bank reporting re-
quirements. A local manager will under-
study, taking over in two years time.
In Honduras, the situation is different.
The Honduras-Central Federation of Cof
fee Cooperatives needed to shift financing
Special about the undertak-
ing is the involvement of
local Rabohanks in and
around Leiden, in the ini
tial stages of planning the
project. This so-called Rijn
land group had contacts in
South America and suggested the Hon
duras project to the Foundation. 'It is not
uncommon for local banks to earmark
contributions for specific projects,' ex-
plains Bakx, 'but usually they come in at
the moment of implementation. Rijnlands
early involvement has been unique. They
gain a closer connection to a project
which, for them, exemplifies the spirit of
the cooperative.'
Seeing projects grow and becorne self-
sufficient is one reward of the Founda
tion's work. What lessons have been
learned? Among other services, Rabobank
Foundation provides technical advice on
modern banking techniques to Sanasa, a
cooperative bank in Sri Lanka. 'While our
advice was appreciated, and in most cases
implemented, it was often done slowly or
inefficiently,' says Bakx. 'Finding the bal-
ance between our desire to manage funds
properly, while respecting local control is
often a delicate issue.' But respect for the
human aspects is what the Rabobank
Foundation is all about. Cooperation is
already an essential part of daily life in
rural communities. Add to that the sound
economie principles and organizational
policies that the Foundation can offer, and
you have a model for a cooperative lend
ing system - one which can help raise liv
ing standards worldwide.
