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Best Practice in the development of cooperatives

By Helmut Pabst, DGRV, German Cooperative and Raiffeisen Confederation

This article came from Brian Gately and was shared among SACCO Development Educators in September 2017. Permission was granted by the author to re-publish it in The SACCONSTELLATION, a SACCO magazine DE project for Southern Africa.
From: Brian Gately
To: [SACCO] Development Educators Listserv
Date: Sun, 3 Sep 2017 05:14:12 -0400
Subject: Credit Unions/SACCOs in Vietnam
WOCCU’s German sister agency, DGRV, also works overseas to help develop credit unions (/ SACCOs).   A German friend at DGRV, Helmut Pabst, is now stationed in Vietnam, and I assist him at times with English translations.  My wife and I will be visiting him there later this year.   Here below is his latest missive which I thought DEs might find interesting.  (He and I also worked together with credit unions (/ SACCOs) in Bolivia and Costa Rica.)
Brian Gately
Brian Gately, CUDE
Brian Gately Credit Union Consulting Services

910 Park Place 6B
Brooklyn, NY 11216
Tel: 917 566 6357 (mobile), 718 778 9836 (office)
A Village SACCO in Germany – VR Bank Nuremberg. The office of VR Bank Nürnberg eG in the small village of Schwaig, It is a historical Bavarian timbered house, dating back to the 18th century.

In 1960, my parents made the decision to buy a house for our growing family. 15 years after  World War II`s end housing was scarce in Germany and many buildings in the adjacent town of Nuremberg still were uninhabitable due to bombing effects. My father submitted a loan application to several banks because the family´s savings were not sufficient to purchase a new accommodation. The local Raiffeisenbank, a small saving and loans cooperative, founded in 1893 and based in the 5,000-citizen village of Schwaig, located in Bavaria, one of the 16 states that constitute the Federal Republic of Germany, offered him the lowest interest rate and surprised him with individualized and gentle service.

Fifty-seven years later this formerly marginal financial cooperative has soared in both quantity (number of members and assets) and quality (service and capital) and no longer limits business to just simple credit and deposit. Meanwhile, having merged with seven neighbor cooperatives, the array of services for its more than 50.000 members and customers has been extended to include ATMs, internet banking, the issuance of bank and credit cards, national and international settlements, insurances, investment banking, backing SME members’ undertaking international commerce, etc.

In the 70s the annual general meeting of members elected my father to the board of directors.  He served on the cooperative´s governing body for 17 years as chairman. In 1973 I became a member as well, and then my wife, my brother and now our two daughters who run all banking transactions of their modest student budget with the now-called VR Bank Nuremberg. So three generations of our family have been benefited from our cooperative´s development.

World Bank FINDEX determines that more than 99% of the 81 million Germans and also its companies have permanent access to adequate financial services which is an indispensable condition for equal opportunities and progressing of all economical actors. The 972 financial cooperatives (Volks- and Raiffeisenbanken, VR Banken) constitute one of the main pillars of the highly competitive German finance market and serve more than 30 million members/customers via 10,815 branches mobilizing €637 billion of saving and deposits and accounting for €538 billion in outstanding loans.

When starting with successful financial inclusion policy the German cooperative´s important key drivers have been:

  • customers survey in order to determine services and products according to the members priority needs
  • high investment in computerization of accounting and business operations, with one unique core IT system connecting today all 10.815 offices on national and international levels
  • promoting comfortable cashless payment services
  • implementing sound risk management, based on effective internal controls
  • specialized financial and management auditing executed by efficient departments of federations
  • the federal and regional cooperative federations run modern academies, offering the board of directors, supervisory committee members, managers and staff a professional curricular training system. This modular training system is mandatory to join and graduate for all who perform as professionals in cooperatives.

Bui Thanh Son, Deputy Foreign Minister of Viet Nam and chair of the recently in HCMC hosted APEC Senior Officials Meeting claimed during this important event: “Economic growth will neither reach its full potential nor will it be sustainable, if it is not inclusive”. There is currently no holistic set of policies in APEC to promote economic, financial and social inclusion”.

The new model of Vietnamese cooperatives comprises all features of such a holistic and inclusive approach. But the transition has to be spurred by a master plan in order to implement in all Vietnamese cooperatives the six drivers, mentioned in the previous chapter, enabling cooperatives to become competitive and sustainable enterprises.

Therefore the new cooperative model has to apply this formula:

Good Corporate Governance + Professional and Commercial Business Approach + Cooperative Principles.

Once the three holistic components are successfully combined, implemented and applied, this will provide four principle benefits to the Vietnamese cooperatives’ members and customers:

–       Safeguard shares and deposits

–       Access to markets and financial inclusion

–       Adapted and quality products and services, capable of competing

–       Awareness of ownership

From a small start facing the population´s immediate housing and basic needs after the Second World War, the German financial cooperatives have achieved a universal banking level to meet the high standards that global competiveness today demands, without brushing aside the cooperative mission and principles.

During 57 years my father was a loyal member and leader of our local cooperative in Nuremberg and today his son proudly engages with DGRV, German Cooperative and Raiffeisen Confederation, to share the key drivers of Germany´s best experiences with Ministry of Planning and Investment, MPI, and other committed key players, in order to strengthen the new Vietnamese cooperative model.


DGRV Regionalprojekt

Südost Asien/South-East Asia

Wilson Wizalamu
B.Acc (Hons) UZ. MBA (ZOU). CIMA Dip. M.A || Certified Africa Development Educator (ADE) | SACCOs - ACCOSCA || Certified SACCO Trainer of Trainers (ToT) - DGRV || Certified Financial Educator (FE) - ILO || Certified SMEs Business Curriculum Trainer (Partners Worldwide)

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