South Africa Passes Landmark Financial Cooperatives Law

March 13, 2008

Madison, Wis.-—The South African government recently passed the Cooperatives Banks Act, marking the first financial cooperative-specific legislation to be passed in English-speaking Africa. World Council of Credit Unions (WOCCU) assisted the Savings and Credit Co-operative League (SACCOL) of South Africa with drafting and reviewing the new legislation.

Musa Mbingo, general manager of SACCOL, sees the formal recognition of financial cooperatives as a way to deepen and strengthen outreach to South Africa's poor.

"In terms of poverty, South Africa's numbers are very high. There are many unbanked people that can't enter the mainstream banking system," Mbingo explained. "Cooperatives are the solution to provide financial services. In the fight for poverty alleviation, [the legislation] is a big step."

Savings and credit co-operatives (SACCOs, credit unions) had previously been regulated under an "exemption" to the Banking Act, which required deposit-taking cooperative financial institutions to join a self-regulatory organization. Most SACCOs and financial cooperatives affiliated with SACCOL, a WOCCU member.

After unsuccessful attempts to address regulatory problems within the system, WOCCU was invited to perform a legislative assessment in 2000. By October 2001, South Africa's people had launched a campaign to encourage banks to serve the poor. Due to the campaign's popular mass appeal, the Financial Sector Campaign Coalition (FSCC) was established. More than 50 community-based organizations rallied around FSCC to address mainstream financial exclusion of the poor.

"SACCOL became pivotal within the FSCC and in addressing the exclusion of financial cooperatives operating under an ‘exemption' rather than being brought into mainstream banking. One of the priority issues was a need to address the legislative and support environment for financial cooperatives," said David de Jong, former general manager of SACCOL and now regulator of cooperative banks for South African Microfinance Apex Fund, the new regulating authority for financial cooperatives.

Less than a year after FSCC's creation, government, business, labor and community constituencies organized and agreed to draft and enact legislation specifically for financial cooperatives. SACCOL and its affiliated SACCOs, South Africa's labor movement and WOCCU provided critical input for the Cooperatives Banks Act.

SACCOs are now allowed to provide their members a full range of financial services, all covered by a deposit insurance scheme. De Jong said that for the first time, this places financial cooperatives ahead of South Africa's mainstream banks, providing a unique window of opportunity for the movement.

"It's hard to emphasize the importance of this for African credit unions," said Dave Grace, WOCCU vice president of association services, who worked closely with SACCOL to draft the legislation. "We hope this is the first in a sea of changes enabling legislation for financial cooperatives in Africa."

World Council of Credit Unions is the global trade association and development platform for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.

World Council has implemented 300+ technical assistance programs in 89 countries. Worldwide, 89,026 credit unions in 117 countries serve 260 million people. Learn more about World Council's impact around the world at

Organization: World Council of Credit Unions
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