Competitive Edge through Cooperation: The Financial Cooperative System in Germany

As an individual, one is a nobody in today’s competitive economy, but grouped together in a cooperative effort there is a chance to be successful…

Mr. Ludwig Ehard is the DGRV’s Director Regional Program – Africa, he delivered an  appropriately  titled presentation that provided an enlightened perspective on the competitiveness of cooperation, especially as it was the Germans who pioneered and shaped the Credit Union/SACCO business model way back in the mid-1800s, they the Germans have perfected the model over the years and they continue to be a paragon of excellence of the same in the 21st century.

Mr. Ludwig Ehard illustrated of how small school of fish can be vulnerable, be terrorized and be victimised by a single predator if they continue to act individually in an uncoordinated manner.  He further demonstrated how that the same group of small fish can stand against and even defeat the big predator fish if acting in collaboration. TOGETHER the small fish can transform themselves into a legion and or a monster that turns the predator into a dwarf.

An important lesson in his own words was that “As an individual one is a nobody in today’s competitive economy, but grouped together in a cooperative effort there is a chance to be successful.” He went on to announce enthusiastically that cooperation among cooperatives is a fundamental principle of the International Cooperative Alliance and it was in the spirit of that principle that DGRV came to Zimbabwe and why it was actively participating at the inaugural Harare SACCOs Multi-Stakeholders conference.

A quick comparison between Zimbabwe and Germany indicated that at 391 square kilometres Zimbabwe was actually 10% bigger than Germany land area, which is 357 square kilometres in size. However at 81 million, Germany’s population was over 6 times larger than Zimbabwe yet the GDP per capita of Germany was 20 times larger than Zimbabwe at USD$43 742. It was impressive to note that 20% of Germany’s population were cooperators – a whooping over 20 million people and the cooperative movement together employed over 800 000 people. Germany has a well-organized cooperative movement that has a long history with a wealth of tradition that dates back 150 years and still counting.

The German cooperative movement was founded on the guiding principles of self-help, self-responsibility and self-administration espoused by the founding fathers in the name of Friedrich Wilhelm Raiffeisen and Herman Schulze Delitzsch. It was reported that DGRV is the national cooperative apex organization and the top level auditing association for cooperatives in the financial and other cooperative sector. It was shown that the German cooperative system was multilevel boasting of “top down” approaches of relations based on the principle of subsidiarity and“bottom up” approaches based on representation of interests.

Mr. Ludwig Ehard dwelt much on the issue of Cooperative Auditing as one of the prominent best practices of cooperatives in Germany, showing that in his country auditing focuses on the whole enterprise operations and not just on financial statements. He showed that the discipline has matured over the years since 1889 into three branches namely, the financial audit, secondly, the management and social audit looking and structure, policies and procedures and thirdly, other specialized audits that look into issues among others to do with safe custody, deposit guarantee and money laundering.

In his closing remarks Mr. Ludwig Ehard said cooperatives must individually see to it that they operate profitably, that they have professional management, that members and those in position of responsibility are aware of their duties, and that they are integrated into a strong cooperative apex organization to benefit from cooperation among cooperatives. He said only profitability, competitiveness and adaptability to ever changing environments can guarantee viability.