Co-operative Bank spearheads new US$50m international investment

November 01, 2011

To mark the United Nations’ (UN) International Year of Co-operatives 2012, The Co-operative Bank is  spearheading a new global initiative designed to provide much needed finance to co-operatives in developing countries.

The  Global Development Co-operative (GDC) aims to support co-operative businesses  in  developing countries by raising US$50m to provide access to low cost loans for capital and infrastructure projects*. It will target those with an interest in international development and extending the reach and benefits of the co-operative model.

The GDC will be unveiled in New York later today as part of a special UN ceremony  being  held to launch the International Year and recognise the role the co-operative business model has played in improving social and economic development in communities across the world.

Co-operatives help social and economic progress in developing countries by creating and sustaining jobs and reducing poverty. However, funding is often scarce because traditional lenders are either not active in this market, or do not sufficiently understand the co-operative business model, or because businesses have limited collateral to put forward.

The Co-operative Bank has worked with the International Co-operative Alliance  (ICA) – which represents the global movement – to develop this new concept.

Amongst the early investors committed to the initiative are the All China Federation of Supply and Marketing  Co-operatives, Credit Cooperatif of France and IFFCO of India. Mid-Counties Co-operative as well as The Co-operative Bank from the UK have also pledged support.

Paul  Flowers, Chairman  at  The  Co-operative Bank**, said: “Against a backdrop of a financial crisis  exacerbated by corporate greed and speculation, the co-operative model has proved to be one of the most enduring and successful ways of running a business for the last 150 years.

“Despite the tough economic times, our six million UK members want us to maintain  support  for development both home and abroad. It’s important we use the influence of the co-operative movement to support communities across the developing world.

“The launch of the GDC symbolises everything that is great about the movement as the International Year approaches. With the UK being the birthplace of co-operation I am extremely proud to be involved.”

Dame Pauline Green, President of the ICA, said:“This initiative is a clear illustration of one of the founding principles of the movement - self help among co-operatives.

“It will ensure that a positive and long-lasting legacy will remain from the International Year, helping  thousands of co-operators in the developing world. It will also continue our work to develop sustainable member-owned enterprises, and embed civil society across the globe.

“We urge those with an interest in furthering social and economic development in developing countries to support the GDC.”

The Co-operative Bank has developed the initiative as part of its parent’s  –  The Co-operative Group - pioneering Ethical Plan, a three year  rolling programme that sets out goals and targets to drive its ethical  and  co-operative aspirations. It will provide administrative support to the GDC.

International Years are declared by the United Nations to draw attention to major issues and encourage  action. The International Year of Co-operatives will aim to raise awareness of co-operatives and seek ways to  leverage their contribution to socio-economic development and foster more supportive regulatory frameworks.

The sector is estimated to have around 800 million members in over 100 countries and account for more than 100 million jobs around the world. 

Additional Information:

  • *The GDC will make loans available primarily to experienced intermediaries, with the following indicative  spread across borrower categories:
    • Wholesale to established co–operative lenders (c50%)
    • Wholesale to existing secondary co–operatives/apex organisations, well–established but not necessarily currently lenders (c20%)
    • Direct to co–operative microfinance institutions and credit unions (c15%)
    • Direct to large, established co–operative businesses (c15%)

It will focus, not exclusively, on large  co–operative sectors: agriculture, where co–operatives represent 50% of the world’s agricultural produce,and finance, where Co–operatives serve 13% of the world’s population.

Target lending is US$50m at between 2% and 5% interest  pa, with terms up to seven years. The  interest will cover administration costs and a bad debt reserve. The key performance targets are social returns.

  •    **Paul Flowers is also chairman of the Global Co-operative
       Development
      
  •    A co-operative is defined as an autonomous voluntary association of
       people who unite to meet common economic, social and cultural needs and
       aspirations, through a jointly owned and democratically controlled
       enterprise.  The top 300 global co-operatives have a combined turnover
       of $1.6 trillion.

Short Global Development Co-operative launch film available to watch, embed and download copyright free.

To embed or download files you will need to register via www.videonewsagency.com, click ‘Journalist & Broadcaster Register’ and follow the on-screen instructions. Alternatively, a Youtube version is available on the following link: http://www.youtube.com/watch?v=rKtyhYke-f4

If registering follow http://www.videonewsagency.com/media.aspx?ID=10948 to access the story page for the GDC film.On the story page you will be able to watch and download the film in a selection of different file types ranging in size and resolution.

When you have reached the story page you’ll see:

  •       a previewable video which you can watch, simply click the
          play button
  •       The story’s URL
  •       An ‘Embed’ button allowing you to embed the video in your
          own site. To create an embed code simply click this button, enter
          your website address in the box as prompted and click ‘Generate
          Embedding Code’.
  •       All the downloadable files – to download a file simply
          click on the  file you want, you will be prompted to enter a
          password, enter the password you have been provided – in this case
          1GDC99 – once you have entered the password simply click ‘Download
          File’ and the story will begin to download (depending on the size of
          the file and your internet connection it may take a few moments
          before your browser’s download dialogue box opens). Once you’ve
          downloaded the file of your choice click ‘Back to Story’ to return to
          the story page.
  •       You will also see the full details on the film running down
          the side of the page.