In late 1999 Ecuador suffered a severe economic crisis with a near collapse of the banking sector, creating a sentiment of little faith in banks. As a result, local credit unions became increasingly popular for deposits while economic confidence recovered from the crisis and large remitances began entering the economy from abroad. Although banks saw a rejuvenation in the past few years, credit unions continue to play a significant role in holding much of the country's savings.
To add to the financial woes, Ecuador also has limited broadband connectivity because of its state controlled telecom duopoly and lags signficantly behind other Andean nations. There is very limited Internet availability beyond the main cities, with expensive satellite often being the only alternative in rural communties.
A USAID program with the World Council of Credit Unions (WOCUU) focused on institutional strengthening and deploying a shared branching network, which allows access to general financial services at any credit union (CU), not only at the CU where the account is held. Building on top of this, the Last Mile Initiative in Ecuador sought to leverage this network across CUs and deploy a high speed Internet connectivity in the serviced rural communities.
The project's structure was to provide service through a franchise of rural Micro-telcos. However, because the project worked closely with CU offices in rural areas, the model was varied in that service would be provided through a network of Tele-centers linked with five CU's throughout the country. Thus linking telecenters to the CU, which are often in adjacent storefronts to the Credit Union offices, and then extending connectivity wirelessly from the Telecenter location to schools, businesses and homes in the community. This offered two important sustainability elements. First, the telecenter and the connectivity service was linked to a community institution in good standing, which provided brand recognition. Secondly, because the Internet connection leveraged the existing backhaul capacity, making the most costly part of the investment a sunk cost resulting in greater sustainability for the project.
Because of Alexius' experience in developing and deploying the Micro-Telco model in other countries around the region, it partnered with USAID & WOCCU in the design and planning of this enterprising new service linked to its Credit Union strengthening program.
