New South African Bill to Strengthen Credit Unions

CAPE TOWN, South Africa – A bill that would create a government support organization to oversee Co-operative Banks and Savings and Credit Cooperatives (SACCOs) is working its way through the Parliament of South Africa. SACCOs are South African credit unions. The bill came about after a Financial Sector Summit was held in August 2002 which called attention to the need to reform the financial sector. An agreement was reached to “ensure access to basic financial services”. The National Treasury was instructed to draft a policy paper which resulted in the drafting of the bill. The proposed legislation is being strongly supported by the South African Credit Co-operative League (SACCOL). Comments have been sent to the government on the proposed bill, and they now being reviewed before the final legislation is approved. The bill states that it is needed because of the recognition of “historically disadvantaged communities and persons to have access to and to participate in financial services.” The purpose is the “promotion of equitable access to banking services for all South Africans.” The legislation would include the requirements to be licensed, which if followed, would provide a solid financial base for which co-operatives must operate to reduce failures. If passed, an office in the Reserve Bank would be created and would be called the Office for Co-operative Banks. A supervisor would be nominated by the Reserve Bank to be approved by the minister under whom the Reserve Bank falls. An association called the South African Co-operative Banks Support Organization would then be established under the bill to oversee new and existing co-operatives. Their duties will include licensing, training, accounting, and promoting the development of new co-operatives. SACCOL issued a statement saying that the bill “is the most significant recognition by Government of the role the Cooperative Bank Movement can play in providing a range of financial products and services to our communities in a non-exploitive manner. Cooperative Banks have an important role to play in `banking the un-banked’ and toward implementing mass based economic empowerment through democratically owned and controlled enterprises.” [email protected]