Financial services for poor South Africans : an analysis of financial serivices cooperatives

[摘要] ENGLISH ABSTRACT: South Africans earning less than Rl 440 per month (18 million adults) and less than R2 880 permonth (29 million adults) are regarded as poor and relatively poor respectively. Of the relativelypoor, 78% are unbanked, i.e. do not have access to a formal bank account, while 86% of the poorare unbanked.These figures show clearly that commercial banks do not meet the financial needs of many people,especially the poor for savings, credit, transmission and insurance services. Therefore theimportance of those institutions that do not form part of the formal financial sector and providemicro savings and micro credit services, generally referred to as micro finance, to the poor at thelocal level on a sustainable basis.The objective of this research is twofold.Firstly, a review of the literature on micro finance in general to establish the financial needs of thepoor, the constraints formal financial institutions face in providing micro financial services and toidentify best practice regarding the provision of financial services to the poor in order to be in theposition to form an opinion on institutional success.Secondly, to analyse a specific South African micro finance initiative, Financial ServicesCooperatives (FSCs), to identify how FSCs relate to the international best practice and to establishwhether they are successful in addressing the financial needs of the poor.A FSC is a financial institution through which micro finance services (savings, credit, transmissionand insurance) are extended to unbanked households in a rural village. It utilises a community'srules, customs, relationships, knowledge, solidarity and resources combined with formal financialmethods and concepts. The FSC is initiated, owned, financed and managed by the villagers themselves. FSCs are registered cooperatives under the Cooperative Act of 1981 and may acceptdeposits from their members in terms of an exemption from the Bank Act of 1990. Currently, FSCsexperience problems in providing credit, transmission and insurance services, preventing them fromintermediating between borrowers and savers.After reviewing the above-mentioned international best practice the conclusion reached with regardto FSCs includes the following:FSCs only provide savings services and therefore do not intermediate between borrowers and saversas required for a financial institution. This in tum prevents them from being sustainable. FSCs'failure can be ascribed to the restrictive legislation, unsuccessful regulation and supervision. Newlegislation is currently under review that will change the landscape for micro finance andspecifically for FSCs.

[发布机构] Stellenbosch University