MADISON, Wis. — South Africa recently passed the Cooperatives Banks Act, the first financial cooperative-specific legislation in English-speaking Africa.
Musa Mbingo, general manager of the Savings and Credit Co-operative League of South Africa (SACCOL), said he sees the formal recognition of financial cooperatives as a way to deepen and strengthen outreach to South Africa's poor.
"In terms of poverty, South Africa's numbers are very high," Mbingo said. "There are many unbanked people who can't enter the mainstream banking system. [The legislation] is a big step."
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Savings and credit co-cooperatives had previously been regulated under an exemption to the South African Banking Act. Attempts to address regulatory problems picked up steam after the creation of the Financial Sector Campaign Coalition in 2001, which combined government, business, labor and community groups to find solutions to the nation's poor and unbanked. The first step was to produce financial cooperative legislation and set up a separate cooperative regulatory agency. WOCCU and SACCOL worked closely with the coalition to draft legislation and establish regulations.
As a result of the act, cooperatives can now provide a full range of financial services and insure member deposits.
"It's hard to emphasize the importance of this for African credit unions," said Dave Grace, WOCCU vice president of association services. "We hope this is the first in a sea of changes enabling legislation for financial cooperatives in Africa."
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