What cooperative membership tells us about credit risk

Cooperative membership tells you three things at once: that the borrower has a verifiable peer network, that they meet a recurring social financial obligation, and that the network itself has implicit information about their character that no formal source captures.

We have observed, across cohorts in Senegal and Côte d'Ivoire, that controlling for income and sector, active membership in a credit cooperative is associated with a substantial reduction in default rate. The signal does not come from the cooperative's records — those are often informal — but from the regularity of the borrower's contributions and the longevity of the membership.

This is the kind of feature classical scoring discards because it cannot be normalised against a Western dataset. It is also exactly the kind of feature a model designed for the African credit market should treat as first-class.