FOUNDERS of the Peoples Savings and Credit Cooperative Society (SACCOS) are mulling to upgrade into a cooperative bank that will target the needs of the unbanked population.
Through their less stringent access requirements as compared to the conventional financial institution, the People’s SACCOS hopes to be a reference point in serving the low-income population in ensuring they have access to financial services in an organisation whose operations they can influence.
Currently, Lesotho has four commercial banks, six micro finance institutions, 120 SACCOS, 70 formal money lenders and 10 licensed insurance companies on which it depends for driving the financial inclusion agenda.
While the initial plan was to operate a cooperative bank or a large financial cooperative from the onset, the People’s SACCOS is working its way towards meeting the minimum regulatory requirements to upgrade into a bank.
Established in April 2017, the People’s SACCOS is registered under the Cooperatives Act of 2000 as a financial cooperative. In order to convert to a bank, it needs to comply with provisions for the large financial cooperatives legislation, the Financial Institutions (Large Financial Cooperatives) Regulations of 2016.
According to the Chairman of People’s SACCOS Tieho Mahlo, the organisation is responding to a call by the government of ensuring financial inclusion for all sectors of the population.
He said the organisation wants to ensure that every Mosotho has access to affordable financial services no matter how little income he/she generates.
“Our target market is therefore those people at the bottom of the chain who ordinarily would not stand a chance at accessing the services of the conventional financial institution,” Mr Mahlo said.
While micro lenders can charge as high as 30 percent interest rate, the organisation’s interest rates are below five percent.
Through selling part of its shares, the organisation wants every Mosotho to have ownership in the operation of the financial cooperative.
The shares are available from as little as M100 up to M50 000 as a way of raising capital needed on the journey towards upgrading to a cooperative bank.
Mr Mahlo further indicated that upgrading to a cooperative bank status would allow the organization to also be able to serve members of the community how are not its members.
In its current state, the Peoples SACCOS is able to provide services to its members only, whereas when it becomes a cooperative bank it will also be able to serve all clients.
“We are therefore on a journey which will one day see us as a leading cooperative bank in Lesotho by 2021,” he added.
He said however, that the idea of establishing a cooperative bank will only become a success if Basotho come forward in masses to support the cooperative.
“We have opened our doors for every Mosotho to come and be part of this initiative which seeks to transform the way our people have been served by the conventional financial institution. So, we are inviting all and sundry to come register and buy shares in this organisation,” Mr Mahlo said.
He said they have observed that financial cooperatives become successful in other countries because of the huge membership.
He said the benefits of joining the cooperative society include getting a share of dividends when they have been declared, contributing towards management of the organisation, and getting loans at affordable interest rates among others.
Member of management committee and office administrator, Manoeli Ntholi, said the policy of the organisation is to lend money for business purposes so as to stimulate economic development in the country.
“That way, we will be able to contribute to the wider economic development of the country, where jobs will be created,” he said.
The organisation offers personal loans, emergency loans, educational loans, home improvement loans, bridging finance, small business loans, and debt consolidation.
The Cooperative Bank of Kenya, which was licensed in 1968, initially started a cooperative society. It is currently one of the five largest financial institutions in the country. It is one of Kenya’s fastest growing banks with over 4 million bank accounts in a population of 48 million. In South Africa two financial institutions Khanya Cooperative Bank and Eyesizwe Cooperative Bank have been established since 2011.