This article describes the benefits of starting or joining a CFI/Cooperative Bank in your community.
There are unbelievable advantages when large groups of people come together to save and invest money. Communities have been organising themselves together since ancient times to acquire assets and start businesses.
A case in point is people of Indian descent (Indian and Pakistani nationals). It is well known that they tend to stay together in large numbers in one home to consolidate their wealth and start businesses. When going to a new country, it is not unusual or uncommon to find a group of about 10 people staying in one house or apartment and saving their financial resources till they can start a business. The arrangement will continue until all of them have anchored themselves financially, ultimately resulting in economic domination in their chosen areas.
Another group that managed to self-organise successfully is the esteemed Afrikaner nation of South Africa. The Anglo Boer war, which started in 1899 and ended in 1902, completely devastated the Afrikaner nation. Many women and children died in terrible conditions in concentration camps set up by the British. To make matters worse, several were left financially vulnerable and outright poor by the war. To turn around their fate would require extraordinary discipline, tactical skill and moral purpose. It required strength in numbers to improve their financial fortunes. One of the leaders that emerged and played a key role is Joseph Jacobus Bosman. His visionary leadership led to the formation of the Volkskas Cooperative Bank circa 1934. The Bank started as a Cooperative Bank, but very soon evolved into one of the most trusted financial institutions until it was amalgamated into the Absa Group in the 90’s.
Cooperative/community banking is a form of banking where communities come together to pool their savings to strengthen their individual and collective financial standing. People who want to start a cooperative bank must share a common bond which could be geographical, work based or associational. Examples of a common bond are that members must either stay in the same area, or they must all be working for the same employer or be a part of the same association (i.e. unions, churches, sports bodies and so forth).
A cooperative bank differs from retail bank in many respects. Firstly, retail banks have a pure profit motive whereas a cooperative bank is run by members for the benefit of members. Secondly, there is a large element of trust between the members of a cooperative bank. When a member requires a loan, others would be able to vouch on his/her character. This is contrary to the large retail banks that only look at affordability and the records kept by the credit bureaux in order to grant you a loan. Interest rate charges against loans taken out from a well-run and resourced cooperative bank or CFI (Cooperative Financial Institution) are also far lower than that of retail banks or micro lenders. Anecdotal and empirical evidence abound of members of cooperative banks or CFIs obtaining loans at very competitive rates to buy land, equipment and cars compared to had they taken these loans from retail banks. A case in point is how a CFI in Centurion offered one of its members a loan to buy a vehicle. The interest rate was so low that the repayment to the CFI was only 3 years as opposed to 5 years that it would have taken through normal retail bank vehicle financing.
In addition to the easy way of getting credit and the very low interest rates that members pay back, other benefits include:
- Getting a higher interest rate from your savings compared to retail banks
- Knowing that your money is safe. The cooperative banking sector is regulated by credible entities such as the CBDA (Cooperative Bank Development Agency)
- Education and counselling on how cooperative banks work
The reasons consumers benefit immensely from progressive cooperatives are simple; firstly cooperatives are run by members for the benefit of members, secondly, they do not pay exorbitant salaries and bonuses to staff and lastly, cooperatives exist purely for the benefit of helping members.
It is unfortunate that there are currently only about 20 CFIs and only about 2 cooperative banks in South Africa. This shows that a large number of consumers are missing out on the benefits that only a cooperative bank/financial institution provide.
You are urged to visit these agencies websites to find out whether there is a CFI/cooperative bank in their local community and join or establish one immediately.
Very few South Africans are knowledgeable about the cooperative form of business.
Many young men and women under the age of 40 have never heard the term cooperative. This is not surprising considering our schooling system does not teach about this form of business. Yet, this is the only form of business that will create an order of magnitude change in the lives of millions of South Africans. On the contrary, the cooperative form of business has a very long history in developed countries.
I will not attempt to write an A to Z account of cooperatives. There are several reputable organisations that have produced excellent literature on cooperatives. One such organisation is the International Co-operative Alliance, whose content can be accessed on their website http://ica.coop/. There are also countless books, magazines and online publications available to the reader to gain further insights; a simple google search will expose a mountain of information.
The South African Co-operatives Act No 14 of 20051 defines a cooperative as ‘…an autonomous association of persons united voluntarily to meet their common economic and social needs and aspirations through a jointly owned and democratically controlled enterprise organised and operated on co-operative principles.’
It is a form of business where a number of people who either work for the same organisation, live in the same neighbourhood or belong to the same association come together to form an enterprise for their common economic, social and other needs. It is a form of business that is fully owned and controlled by its members. From funeral care to vehicle insurance, from grocery stores to property development, cooperatives come in all shapes and sizes and across different sectors. Worldwide, cooperatives are owned by workers, farmers, taxi drivers, residents, ordinary consumers and businesses.
Members of cooperatives believe in self-help, self-reliance, self-responsibility, democracy, equality and social responsibility. Cooperatives make up an economy that considers social justice to be just as important as the pursuit of profit. Contrary to a commercial enterprise, the cooperative enterprise does not maximise shareholder value or returns in proportion to capital contributed, but gives benefits to members in proportion to transactions done with the cooperative. It is an enterprise that gives its members ownership and control.
(Extract from chapter 3 of my book: A new vision for South Africa, Release date: 22 July 2017)
South Africa is plagued by problems of high inequality, unemployment and poverty.
Many have offered solutions on how these problems can be solved, very few voices have considered the dramatic impact that Cooperatives can have on our economic landscape. Many of our rural poor, township poor and peri urbanites will be pleasantly surprised at the transformative power of Cooperatives in their economies. Thousands of jobs and new wealth can be created once communities organise into cooperatives for food production, food processing, retail, funeral care, insurance and cooperative banking.
The South African government has various programs in place to assist communities with economic transformation through the cooperative. Agencies such as the NYDA, DTI and the GEP to name a few are playing a remarkable role in facilitating change. It is time our communities take advantage of these funding agencies to propel their economic programs.
(This picture was taken at the International Summit of Cooperatives in Quebec, 2016. I was invited as a panellist on discussing ‘Access to capital for Cooperatives’.)
Mobilizing, Aggregating and Organizing people living in the same community/area to pool their monies to collaborate and profit financially from opportunities that exist in their communities. Popular ideas are pooling monies locally to form co-operative/community banks for the benefit of the members, or pooling monies to buy/own local fuel stations or even grocery stores in the community. The opportunities for money making if people come together in their communities are endless.
Mobilizing, Aggregating and Organizing people locally, provincially and nationally to obtain real money-back from conventional medical aid, vehicle insurance, life insurance and funeral cover products. Consumers are spending a lot of money on these products and many consumers hardly claim. 1TWH brings South Africans together to form ‘cell captives’ for e.g. vehicle insurance. What many South Africans don’t know is that they can actually share in the insurance underwriting profits at the end of the year. Vehicle insurance is only one of several examples of how the ‘cell captive’ concept will benefit ordinary South Africans.
Mobilizing, Aggregating and Organizing people locally, provincially and nationally to start thinking of products/services like banking, medical aid, vehicle insurance, life insurance, funeral cover, food, data/communication and fuel from a more long term perspective. South Africans must think of the immense lifelong burden that these products/services will have on their pockets. 1TWH wants to sign-up ordinary South Africans, investigate the feasibility of starting national people-owned insurance companies, retail banks and national retail ventures. Once the feasibility implications have been determined, TWH members will be approached en-masse to initiate these companies. The benefit is that annual profits will no longer be enjoyed by a handful of individuals only; but rather by thousands of ordinary South Africans like YOU.
Sign up here: http://www.members.1twh.co.za/register
We are an online platform to mobilize, aggregate and organize South African consumers to awaken to their ‘strength in numbers’ and use this to their financial advantage, both now and over the long term. We believe that South Africans of all walks of life have a better future if they can collaborate more and do so in an equitable manner. We offer South Africans a 5 year membership to the 1TWH platform, where new members are required to pay a once off membership fee of R149 for the 5 years. This translates to less than R30 per year…or less than R2.50 a month.
Wealth for all
We believe that the time has come for a greater number of consumers to share in the wealth of the country.
We believe that all committed South Africans, black and white, must put their hands together to collectively profit.
We believe that it is the ordinary hardworking people of this country that must come up with lasting solutions.
We believe that there are alternatives to the current practice of always enriching a handful of people.
We believe that the ticking time bomb of unemployment, poverty and inequality can be addressed by the TWH movement.
If consumer spending drives the economy, then surely masses with more income guarantees a turnaround of the economy?
The Bad News…
Do you spend most of your monthly income on food, rent/bond, car instalments, fuel, medical aid, education, insurance (car, household, life, funeral) not forgeting cell phone charges (data and airtime)?
Do you know that an average household of 2 adults and 2 kids spend roughly R28 800 per year on car insurance, R40 000 on medical aid and R42 000 on groceries?
Think About It…
That’s a whopping R100 000 per year and almost R500 000 over 5 years (inflation excluded)! Now if you are one of those drivers who never claim from insurance, why doesn’t your insurer pay you back your premiums?
What Does The Constitution Say?
The preamble to the constitution states: ‘WE, the people of South Africa’…. Line 5 reads ‘SA belongs to all who live in it’, and the goal in line 9 is to ‘Improve the quality of life for all citizens’. But are you free?
What Can We Do?
You cannot do it alone! TWH connects South Africans to pool their monies to collaborate and prosper. Only once we’ve awakened to our strength in numbers will we all win.
What Can 1TWH Do For You
TWH brings together ordinary hardworking South Africans in their suburbs, towns and cities to look at alternatives to conventional insurance, banking, food, retail and fuel… in order to get more cash in our pockets…