Cape Town - Co-operative Finance Institutions (CFIs) have been urged to "change their mindsets" if they want to see any significant growth.
Deputy Finance Minister Nhlanhla Nene made the call while addressing several CFI stakeholders in Cape Town on Thursday at an indaba organised by the Co-operative Banks Development Agency (CBDA).
He decried the fact that only Ditsobotla and OSK financial institutions had been registered as co-operative banks since the establishment of the Co-operative Banks Act of 2007.
The deputy minister said that currently, another 15 CFIs met minimum registration requirements of R1 million and 200 members and were "in various stages of the application process".
The two registered co-operatives and the 15 CFIs had over 85% of the total sector assets.
"We are also aware of an additional 100 CFIs which are smaller in size and make up the remaining 15% of the sector's total assets. The onus is on these institutions to grow towards registration as co-operative banks," said Nene.
He said it was a "futile exercise to continue to register financial co-operatives that will end up small, redundant, or worse, lose member savings due to operational and governance weaknesses".
He encouraged them to move away from the "small mindset" that contributed to the establishment of many weak, small financial co-operatives.
"We should rather have fewer, but larger and stable financial co-operatives. Financial co-operatives need to attract and retain large numbers of active clients to be self-sustained.
"You cannot say you are running a financial co-operative, let alone a co-operative bank if membership has remained stagnant at 100 members after 5 years with no discernable growth in savings."
He said CFIs needed skilled and trained people to lead and manage member savings.
"When board members of staff lack the necessary skills, it is the financial co-operatives' responsibility to ensure that these officials receive the necessary training.
"Directors and staff must be fit and proper to run their institutions. This is a legal requirement that supervisors will be strictly enforcing," he said.
On a positive note, the deputy minister announced the launch of the National Treasury's Financial Co-operative Retail Savings Bond specifically for CFIs.
"These one-year, two-year and three-year Co-operative Retail Bonds will provide financial co-operatives with a safe instrument to invest and to earn a competitive return on their members' investments with no charges," Nene said.
The bond announcement was well received, but some of the stakeholders responded to Nene's address by saying that poverty was hindering the growth of CFIs.
