Oikocredit - investing in people

Uppsala, Sweden, 1968: during the fourth assembly of the World Council of Churches, young politically engaged church members protested against what they called the unethical investment policies of a number of churches. Referring to the Vietnam war and the apartheid regime in South Africa, they pointed out that churches were banking their capital with financial institutions that supported war industries and oppressive governments. They called for the creation of a socially responsible investment instrument for churches.

This was the beginning of the successful story of the international credit cooperative, Oikocredit. As an alternative investment institution on the one hand and an alternative development organization on the other, Oikocredit would use church investments to finance the enterprises of disadvantaged people in the third world.

Seven years later, in 1975, Oikocredit (initially called the Ecumenical Development Cooperative Society, EDCS) was a fact.

Some members of Oikocredit and the support associations at the annual general meeting in Indonesia in 2002. Together with the project partners, they make lending for development a success.

Oikocredit was founded in the Netherlands, because the Swiss banking authorities refused permission to base the organization in Geneva, fearing that the concept of "investing in the poor" might tarnish the reputation of solid Swiss banking. Soon it became clear that church treasurers also had their doubts whether the concept would work and were hesitant to invest. Eighty churches joined Oikocredit at the start, but made available only 1.5 million of the USD 10 million share capital that was required to start lending operations.

In development circles, many people also raised their eyebrows when they heard about the idea of lending to the poor. Traditionally, development organizations were accustomed to giving grants. Oikocredit is based on the belief that when it comes to achieving economic productivity and self-reliance, loans are often a better instrument. If a project is economically viable, loans will stimulate sustainable development, whereas grants often create dependency. In a loan relationship, lender and borrower are business partners and rely on each other in a relationship of mutual respect. Pride and dignity take over from gratitude and dependency. Loans, however, are a suitable instrument only for income generating activities; grants will always be needed for education, health care and relief.

Fortunately, from day one there were numerous individuals who did believe in the Oikocredit concept: church members in Canada, Germany, the Netherlands, Switzerland and other countries decided that if their churches were reluctant to invest, they would invest themselves. They suited the action to the word and started support associations. Hundreds of volunteers who wanted to work for a more just distribution of economic resources not only succeeded in bringing in most of the share capital but also tirelessly engaged in advocacy work, pointing out to others the unjust economic distribution that exists in the world.

Some 40% of Oikocredit's loans got to microcredit organizations. Thus Oikocredit can reach out to individuals at the grassroots, such as Vicenta Roa from the Philippines, who used a small loan to upgrade her sewing activities.

For many years, support associations existed only in Europe and North America, but currently there are also support associations in Japan, Mexico, the Philippines and Uruguay. At the beginning of 2002, the more than 20,000 members of the 32 support associations had brought in some 75% of Oikocredit's share capital, in total some 120 million euros!

The many sceptics in banking, church and development circles turned out to be mistaken: over the last 27 years, the vast majority of Oikocredit's project partners repaid their loans and thus proved that they are creditworthy. Normally, no bank would have financed these groups, and yet the money they repay has been repeatedly recycled: it goes from a group of market vendors in Côte d'Ivoire to a group of fishermen in the Philippines and thereafter to a coffee cooperative in Costa Rica. Money is used time and again by people of equal capacities and equal strength. The poor people that Oikocredit has served over the years would have experienced great difficulties to improve their situation, if they had not had the skills and the existential commitment to take their economic future and that of their children into their own hands.

Through the years, more and more churches and development organizations came to recognize that Oikocredit's loans are an effective instrument for sustainable development. A growing number of churches and church organizations realize that their investment portfolio should reflect the social message of the gospel they preach and recognize Oikocredit as their investment institution. Amongst development organizations, the use of loans has become generally accepted; some of them now extend loans themselves, sometimes in cooperation with Oikocredit. Some renowned banks, development agencies and fair trade organizations have expressed their appreciation of the organization's work by investing in Oikocredit.

Oikocredit was created to build bridges between the rich and poor throughout the world by mobilizing financial reserves and making these funds available to people who are willing to share their commitment, their skills and their will to improve their life and their future. All involved share their firm belief in a more human world.

Oikocredit has become a viable, socially responsible investment instrument. But there is still much work that needs to be done; further sharing of resources is needed to be effective in the struggle against poverty and injustice. Therefore, Oikocredit needs the active support of more churches, individuals and organizations. Oikocredit recognizes that it alone cannot change the world, but together with its strong worldwide network of members and alliances the organization is indeed capable of changing the world of its project partners.