Expanding and developing the amazing power of financial cooperatives

In a recent report to the United Nations (UN) General Assembly, Secretary-General Ban Ki-moon highlighted the contribution of cooperatives to socio-economic development. The report, which illustrates the contributions of all cooperatives to the sustainable development of communities, also examines the impact of financial cooperatives worldwide. According to the report, cooperatives are present in all countries, an estimated 1 billion individuals are members of cooperatives worldwide, and cooperative activities account for between 3 and 10 per cent of national gross domestic product (GDP), depending on the country. Financial cooperative industry: 41% of worldwide cooperative economic activity Most cooperatives are located in developed countries, such as Germany, the United States, France, Japan, the Netherlands and Canada. They operate in a variety of sectors: 30% in agriculture and food 23% in retailing 22% in insurance (property and casualty, life and health) 19% in banking These numbers show that 41% of worldwide cooperative economic activity is carried out by the financial cooperative industry (the banking and insurance sectors combined). The UN report emphasizes the fact that financial cooperatives provide members with low-cost and readily accessible financial services, including reliable savings facilities tailored to members’ needs, credit or microfinance for small-scale start-up enterprises, and more affordable remittance networks. Financial cooperatives also offer financial services to populations underserved by the mainstream commercial sector and play an important role in achieving a more inclusive financial sector. Growth in the financial sector According to the report, “the recent financial crisis has generated renewed interest in alternative financial institutions, as financial cooperatives and credit unions have demonstrated a noteworthy resilience and even growth.” It goes on to say that some financial cooperatives and credit unions experienced an influx of deposit funds as members sought a safer location for their savings or lower fees, and these institutions sustained or increased their rates of lending when many other commercial institutions were retrenching. The report continues: “these outcomes indicate the importance of institutional diversity in the financial sector, demonstrate the advantages of alternative business models such as cooperatives, and point to how cooperatives can contribute to the stability of the broader financial system.” On a broader note, the report concludes: “institutionalized cooperation raised the scale of economic activity to a level that allowed for reduced operational cost and created enough pooled resources to accommodate technological expansion and shared marketing and quality control services (…). These cooperative networks provide an institutional response to increasing global competition and the need to accelerate the pace of innovation.” *************************** Did you know? Co-operatives represent 23% of the world’s insurance market. Source: The UK co-operative economy 2011 – Britain’s return to co-operation (Co-operative UK) ² *************************** Cooperatives in social development and implementation of the International Year of Cooperatives, Report of the Secretary-General, 66th session of the General Assembly, July 13, 2011 (PDF). The UK co-operative economy 2011 – Britain’s return to co-operation, Co-operatives UK, 2011 (PDF). Direct link (PDF): View