Cooperatives and unions are expected to play pivotal roles for rapid economic growth and societal developments with the necessary policies, strategies and modern operational systems provided by themselves and governments.
In addition to the agricultural and manufacturing sectors, cooperatives are taking significant steps towards gearing up the financial sector. The number of saving and credit cooperatives is growing from time to time. Taking the above realities into account, it was recently highlighted by the Addis Ababa Cooperatives Commission that Cooperatives must provide quality services for the public by implementing modern operational systems.
It was indicated that a great deal of experience was taken from the cooperatives' recent official visit to Netherland. The cooperatives were engaged in manufacturing, service delivery and supply of products for years. Thus, the commission stressed in order to play crucial role both in the economy and market, the cooperatives must develop a modern operating system and financial administration systems. It was also indicated that the City administration is implementing improved and enabling systems for cooperatives to realize the aforementioned issues of concern.
Molla Bazezew is a founding member and General Manager of Global Saving and Credit Cooperative. According to him, older financial trends in Ethiopia were conservative and discouraging to youths who come up with business ideas and no collaterals. Collateral issues and other bureaucracies in relation with loan access were major causes that several problem solving and lucrative business ideas of many youths were left on shelves, Molla noted.
In this case, the Global saving and Credit Cooperative was established to solve the above mentioned problems of the youths with business ideas without putting collateral issues on the table, according to the General Manager. "Our focus groups of people are youths who graduated from universities and colleges and those who are trying to find the values of their skills. Currently, we are financing for youths who are interested in transportation service particularly, with electric vehicles."
Molla stressed that the idea behind financing electric vehicles was a global initiative against carbon emission. "Climate change is still a global issue and helping good causes of society with financial access for profitable but healthy ways of lives is everyone's responsibility. Studies indicate that one individual spends 36,000 Birr per month for gas. Electric vehicles are expected to minimize this expenditure to a greater level. They are also solutions to reduce the time that people waste cued-up at gas stations."
Even though global economic and political as well as internal affairs have been affecting activities of cooperatives some few years before, there are several improvements on their current strides, according to him. Mentioning Global Saving and Credit Cooperative as an example, he said the Cooperative has improved its service in the past couple of years. More than fifty per cent of its 3000+ members received loans.
In this case, Molla also indicated that since there are some rules and agreements or procedural circumstances, it doesn't mean all members will get loans randomly. That is the reason why the number of loan receivers seems to be small. "However, our financial access is easier and convincing for we don't intend to ask for collaterals, when we provide loans. What they need to show up with is renewed identification cards, marriage status certificates and bank statements. As long as they are able to achieve a saving of thirty per cent, the Global Saving and Credit Cooperative will cover the remaining seventy per cent cost for their electric vehicles," Molla added.
The General Manager also hinted that even if the financing of electric vehicles came as major topic, for it's a global responsibility, the Cooperative is also financing different start-up projects and business ideas. "We finance educational, health and housing payments. The corridor development may have its own compensations, but if all members of our cooperative need financial access we will facilitate it for them. When it comes to education, let's say one of our members gained scholarship. Based on the scholarship letter he/she obtained, we will cover the necessary cost by providing a loan. Since education, health and housing issues are considered socially sensitive, we do not even focus on procedural things such as a member must save for three months before asking for loan."
When, loans are provided with lesser requirements, recollecting the money is challenging for financial institutions. However, Molla said that his cooperative was established not to achieve maximized profit every year like other financial institutions. "Our goal is not to collect some amount of profit but to deliver some amount of service. When, I'm saying this, I'm not referring that we work with losses. I am trying to stress where our focus lies. For instance our interest rate is lower than other financial institutions with prolonged loan returning period of time."
The Global Saving and Credit Cooperative says its doors are wide open for all members who believe in the cooperative's rules and regulations and gain financial access. The cooperative, which was established eight years before, started operating with 36 members and 36,000 Birr in stock capital. Currently, with 3000 active members, it has accommodated over 78 million Birr from shared stock.
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There are several financial institutions operating in different parts of the Country. However, it has been repeatedly indicated that most of them have lack of modern financial, systems and knowledge. The barriers in financial knowledge and modern systems are expected to be resolved with maximum efforts from both government and the financial sectors themselves. Ethiopia is one of the fastest developing Countries with large number of youth population. This population is expected to uplift the country from poverty to prosperity with the financial, good governance, and geopolitical and political incentives from government and private institutions.
There are so many youths who are misguided by social platform actors, who always degrade the positive developmental actions of the government and some positively established private institutions and cooperatives. However, there are cooperatives such as the Global Saving and Credit Cooperative who are still striving for the multifaceted developments of society. Achieving economic growth relies on society, particularly on the youth, and they always need committed institutions that would deliver service, counting on the future prosperity of their country.
