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International Day of Cooperatives 2005

11th UN International Day of Cooperatives, 2 July 2005

UN International Year of Microcredit -- www.yearofmicrocredit.org

"Microfinance is OUR business! Cooperating out of poverty"

"La microfinance est NOTRE affaire – Coopérons pour lutter contre la pauvreté"

"Las Micro-finanzas son parte de nuestra actividad empresarial: Cooperando para salir de la pobreza"

Messages from Members

Background

This year the theme of the International Day links to the United Nations International Year of Microcredit.

Access to finance and to financial services is essential to reduce poverty. Poor people need easily accessible, trustworthy, sustainable and economically viable institutions to which they can entrust their savings, which offer loans at affordable conditions, and which provide a safety net through basic insurance services.

Amongst the most successful micro-finance institutions worldwide are are member-owned institutions and in particular savings and credit cooperatives, insurance cooperative and cooperative banks. Savings and credit cooperatives (or credit unions) were pioneered by local leaders such as Friedrich Raiffeisen and Hermann Schulze-Delitzsch in the 19th century as a means to reduce poverty and overindebtedness among small farmers and craftsmen in urban and rural areas. Today, they exist and strive in every region of the world, and have been able to adapt to very different socio-economic environments. Some cooperative banks in the industrialized world have become powerful financial institutions. In fact in many high income countries cooperative banks are often the only banking type with a braod branch network ensuring proximity to clients. Despite their commercial success they managed to stay close and committed to their original client base. Cooperative banks are also involved in the promotion of credit unions in the South. Credit unions and similar financial cooperatives have demonstrated that micro-finance services can be delivered to the poor in a sustainable way. Being rooted in local communities and managed by local people, such cooperatives can take advantage of social capital in situations where financial capital is scarce. Capacity building for the poor in money management, saving approaches and enterprise planning have proven to be essential building blocks for effective and sustainable cooperatively managed microfinance.

Cooperatively managed micro-finance institutions enable the poor to pool their resources so that they can be used for productive investments and job creation. The social control and democratic management style that is proper to cooperatives generally secure savings and ensures repayment of loans. Cooperatives thus provide the poor with appropriate financial solutions that enable them to collectively work themselves out of poverty.

Information on Cooperatives and Microfinance

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