How can co-ops make the most of demographic changes?

With future demographic changes likely to affect the world economy, the International Summit of Co-operatives will be looking at how demographic trends in the years to come are likely to impact co-operatives.

World-renowned demographer Professor David Foot will be examining the challenges and opportunities brought by demographic changes.

He explains how young societies need to have borrowing instruments, student loans and mortgages. As people save for retirement, wealth management services become much more important.

Co-operatives have a role to play in this process, thinks Prof Foot. He believes the sector appeals more to older clients, who are also wealthier, because they engage in face-to-face interaction with their clients and are also more likely to donate money to charities and community endeavours.

If members over 50 represent a very viable market for co-operatives, younger members are also useful – not only because they provide money for the future, but also for the demand for loans.

“The 50+ market in the developed states such as England, China, Taiwan, South Korea and across North America is growing, and these are people who have money to spend. Concentrating on the 50+ market can be a profitable enterprise,” he says.

Meanwhile, countries such Brazil, Turkey and Vietnam, which have a younger population, are the ones that increasingly need to borrow money and are growing more rapidly because they have a younger, well-educated population, he adds.

“My point is – money can flow locally within a particular institution or within the co-operative movement, or can flow globally.”

Prof Foot argues that by looking at demographics it is possible to predict which countries are likely to succeed in the coming years. These include Brazil and Turkey, whose populations continue to grow.

Another demographic trend that can influence co-operative development is rural-to-urban migration. If big cities are like magnets for young people, those in their 40s tend to live in suburbs. In England, Germany and North America, people aged over 50 have created an anti-urbanisation trend. Those over 60 years old want more peace and quiet and are much more likely to purchase vacation properties. This, thinks Prof Foot, can lead to a renaissance in rural areas and small towns. People may also buy expensive houses in rural areas – and then local taxes based on housing values are likely to generate revenues.

Having an accessible good hospital in the region is a pre-condition to economic development in smaller towns and rural areas. With residents likely to be spread far apart, the cost of providing services is also more expensive.

According to Prof Foot, ageing populations grow more slowly, leading to slower economic growth. “That is why Japan, the oldest society, and Europe, the second oldest region in the world, have had so many challenges in the last 20 years.”

But slow growth does not necessarily have a negative impact, thinks Prof Foot. “There is nothing wrong with slow growth,” he says, adding that slow growth was good for the environment. In cases where the population is growing more slowly than the economy, the income per capita can increase.

As birth rates are falling and life expectancy is increasing in industrialised states, in the future a declining number of active citizens will have to provide social security for a growing number of senior citizens. In Africa, and some states in Asia and Latin America, the birth rate is still at high levels. A growing global population – projected to reach 9.6 billion people by 2050 – could put more pressure on the ecological system, the need for food, shelter and jobs.

Co-ops, as community-based enterprises, can help address this issue, by stepping in and providing those services needed by the local community, says Prof Foot. “Co-ops, if they understand their customers and their needs, have an opportunity.”