Case of Mixtlan Rural Cooperative, Mexico: Does Being Federated Help Remote Outreach?

This paper presents the case of Mixtlan, a rural cooperative within a largely urban federation in Mexico. Large cooperatives or cooperative federations with economies of scale and stable asset base could be a solution to concerns regarding cooperative performance.Cooperatives have been recognized for their ability to reach rural populations. However, they face problems in terms of low repayment rates, problematic governance linked to over-subsidization, and domination by local elites. For a relatively small rural savings and credit cooperative, Mixtlan has demonstrated:

• Strong growth in members and total assets;
• Focus on expanding to new and more remote communities;
• Reduction in per-member costs;
• Efficiency gains through product development and standardization through the federation;
• Ability to offer a range of savings and loan products at better rates than competitors;
• Capacity to offer remittance services.

Finally, while member ownership in the cooperative is important, it will not help in retaining members if service quality decreases. Most rural members do not attend meetings or question financials provided. They trust more educated representatives to make fair decisions on their behalf. For remote members, participation in meetings is costly and time-consuming.