Credit co-operative explainedBy: Rob Parker
Founding member of the Namibia Consumer Protection Group (NCPG), a non profit consumer rights organisation), Milton Louw recently announced his intention to form a Namibian Savings and Credit Co-operative and The Namibian Consumer reported about it last week and now publishes an interview with Louw to explain how the co-operative will operate.
How will this bank work?
This is not a bank but a Savings and Credit Cooperative. The consistently increasing living cost has brought a big burden to Namibian as they never seem to earn enough to cover their daily needs. Many people tend to deal with this problem through the moneylenders such as banks and cash loans who charge them very high interest rates. By so doing their indebtedness is increased even more and the situation becomes more serious to them.
However, this money problem can be reduced if they join together under the co-operative principles of self-help and mutual help.
A cooperative is a business owned by its members for their mutual social economic and cultural benefit.
Who will make the profit?
The Namibia Consumer Protection Group is proposing the establishment of the Namibian Savings and Credit Co-operative. The S&C Cooperative will act as a financial institution, and have the specific objectives to encourage savings and provide loan services.
The Namibian S&C Co-operative shall:
a) promote the economic and social interest of its members by providing effective services to its members according to sound business principles;
b) have non-discriminatory voluntary membership;
c) be democratic and controlled by its members;
d) entitle every member to have one vote — regardless of the number of shares owned;
e) provide services be primarily to members;
f) limit the dividends so most profits are kept for the functioning of the cooperative; and
g) provide ongoing membership education.
What stops you from taking my cash and speculating on oil prices or derivatives?
In its essence, a co-operative belongs to its members. Effective and efficient management of the cooperative is ensured when members exercise their rights and responsibilities properly. The most important responsibility of the individual member is attendance at the annual general Meeting (AGM). The AGM gives him/her the opportunity to protect their membership rights, a fair sharing of benefits and monitor the management of the operations. It provides also a forum to determine general policies, elect committee members and assign tasks to further benefit all the members.
Within the framework of cooperative principles, laws and regulations and procedures, members must discuss problems together, share ideas and exercise the right to vote on committees and meeting resolutions.
In other words, the majority of the members have to agree on the use of funds. The funds are used for members services.
How does this benefit the Namibian consumer at the end of the day?
The primary purpose of the Co-operative is to reduce banks costs and use discounts, loyalty rewards or any other form of remuneration normally received by a banking institution for the lessening of members costs.
We aim to have ZERO bank transaction costs and include a discount system for purchases at participating retailers.
Why is this type of endeavour necessary?
The consistently increasing living cost has brought a big burden to Namibian as they never seem to earn enough to cover their daily needs. Many people tend to deal with this problem through the moneylenders such as banks and cash loans who charge them very high interest rates. By so doing their indebtedness is increased even more and the situation becomes more serious to them.
However, this money problem can be reduced if they join together under the cooperative principles of self-help and mutual help.