By: Anna Majavu
South Africa’s cooperative banks have barely grown in the past decade and only serve 30,000 people out of the 40 million adults in the country who need banking and loans. Sihle Ngubane of the SA Co-operative Banking Association (SACOBA) and National Secondary Co-operative Bank (NSCB) told Parliament’s Portfolio Committee on Small Business Development that co-op banks were key to financial inclusion. But he had found that in Richard’s Bay, Limpopo and Mpumalanga, people did not know that cooperative banks existed.
“It is sad that in nearly 15 years since the introduction of the Co-operative Banks Act and 13 years since the establishment of the CBDA (Co-operative Banks Development Agency), our co-operative banking sector is still in the first stage of developing,” he said. Ngubane added that the sector was “unable to offer good quality loans to its members” and could not even offer debit cards because of the high costs of setting this up.
Co-operative banks are financial organisations that are collectively owned and democratically controlled by a minimum of 200 members that exist to serve their members and not necessarily make a profit. The 29 co-op banks in South Africa have over R500 million in total assets. SACOBA is aiming for 400,000 members by 2030. Speaking at the same committee meeting, transport development strategist Ashley Paulse, a leader in the National Association for Co-operatives of SA complained that the Small Enterprise Amendment Bill, which will merge the CBDA, SEDA, and SEFA into a new Small Enterprise Development Finance Agency (SEDFA), was “putting co-operatives in the back corner” by depicting them as small enterprises.
He said the co-op umbrella bodies had spent three years working with the SA National Taxi Council (Santaco) to broker a deal to establish a new transport co-op bank. Paulse added that Parliament and the government must stop saying that co-ops were not unified. “That has been used as a tool to whip the co-operatives. We are working well together. We have brought on board one of the biggest industries in the country (Santaco) to be part of the co-op movement,” said Paulse.
The transport co-op bank aims to benefit taxi operators who Paulse said were often “sidelined by the mainstream banking sector as informal, risky, and, therefore, un-bankable in spite of the more than R90 billion circulating in the taxi economy annually”. Lawrence Bale of the SA National Apex Co-operative said the government was not implementing the Co-operatives Management Act in supporting co-operatives, because the Co-operatives Tribunal and Advisory Council was not running efficiently. “Where have you seen that? The department is not implementing its own Act,” said Bale.