The current global financial crisis reminds all of us of some of the fundamentals of good credit management, such as: knowing your customer, and working alongside them to ensure they are able to repay their loan.
So the money making mechanisms of the financial markets are beginning to be scrutinized a little more closely by us all. We have added many new and strange words to our vocabulary like: “sub-prime”, “securitisation”, “swops” and “short-selling”, to name just those that begin with “s”. And yes we like it when the markets use their magical financial instruments to make money for us, but we don’t like it when we see the downsides such as house repossessions and job loses.
We are then prompted by the simple truth that “What goes up, must come down”, and that where there are winners there will also be losers. When it comes to money, there cannot always be a clever “win-win” to be found, only a need to share.
Sharing is the basic principle of a small-scale initiative like Oikocredit (the Ecumenical Development Co-operative Society). Launched in 1975, this is an initiative of the World Council of Churches to provide a means for churches and individuals to invest in the productive enterprises of disadvantaged people.
Worldwide there are currently around 600 church members and more than 30,000 individual investors. Our investors trust in the people who they invest in, they expect to receive their money back together with a modest annual dividend.
Now would be a good time to present more churches and individuals with the opportunity to think about investment in Oikocredit. But why should we consider this in a time of global financial turmoil?
The challenge to invest in Oikocredit is to share some of your financial returns: to take a modest 2% return on part of your investments and thereby let others benefit, by giving them access to fair finance.
But the distinctive here is not just about taking less of a financial return, because that can also be achieved through charitable donations or working in other ways for the common good.
The real difference is made because the capital is available to be used to lend for the benefit of disadvantaged people, not just the interest earned. And this why I feel there is room for optimism. The current crisis reveals how credit is a commodity, which is currently in short supply and thereby rocking the markets. But for people who are poor, credit is always in short supply. Without collateral such as a house or savings to secure a loan, they are forever vulnerable to exploitation.
Through Oikocredit, people are enabled to get loans without collateral, loans which allow them to set-up or sustain their own small enterprise and work their way out of poverty. The credit crunch leads us to understand this problem in a new light, and hopefully to act, share and stand in solidarity with people who are poor.
Using your savings or investments and standing in solidarity with those who are poor sounds risky. But for investors who have already taken up this challenge, it has not in fact proved to be so costly. In over 33 years of operation all our investors have been repaid their investment when they needed repayment.
Today Oikocredit has £257 million pounds invested in microfinance, fairtrade and co-operative business in 67 countries – especially in enterprises where women are beneficiaries and they have control in their co-operative.
The credit crisis can serve to remind the ecumenical church family that Oikocredit was their initiative, which has now gained worldwide recognition as a successful and sustainable financial co-operative with a tremendous social impact.
I would therefore urge churches and church investment bodies to review their investment policies, take a look at what Oikocredit are doing, and join us by investing part of your portfolio. Just a 1% investment of a large portfolio could make a enormous difference to the world’s poor, and you would hardly notice the overall change in the financial return.
For individuals with money to invest, I hope that the credit crisis will strike a chord with them, that they can make a difference to the credit crunch that exists everyday for people who are working their way out of poverty. For those who can’t invest, I hope they may encourage their church to invest in Oikocredit, and that way more people will hear about what can be done to solve the misery of global poverty.
The world’s current financial crisis teaches us that sometimes we should keep things simple. Oikocredit is a simple, sustainable and effective means of enabling people to solve poverty for themselves. Oikocredit is currently financing 720,000 people through its microfinance initiatives alone. With increased investment we could help many more people work they way out of poverty, and you can be sure that your investment will immediately be invested in people.
At the heart of Oikocredit is a simple call for both values-based and faith-motivated investors alike. An uneven distribution of resources, wealth and power leads to a world of conflict. When people share what they have, respect each other and co-operate, justice and peace can be allowed to prosper.
Oikocredit provides a means to share the very opportunity of having money to invest. While our politicians and banks hurray to take action to stop the global credit turmoil escalating, please consider taking action today to change the way we think about investment.
For information about how to invest now in Oikocredit, please contact me at Oikocredit, PO Box 809 Garstang, Preston, PR3 1TU. Tel: 01995 602806 Email: phynesAToikocreditDOTorg Web: www.oikocredit.org.uk
(c) Patrick Hynes is Oikocredit’s representative based in the UK. Oikocredit is a worldwide ecumenical co-operative which invites churches and others to share their resources through socially responsible investments.