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A group of young professionals are aiming to set up the country’s first female-led cooperative bank, and the only one in the country that is aimed at supporting black entrepreneurs.
According to the SA Reserve Bank, the only two cooperative banks in the country are the Ditsobotla Primary Savings and Credit Cooperative Bank, which was registered in 2014 and has R7.4 million in its coffers, and the OSK Koöperatiewe Bank, which was registered in 2011 and has R77 million in savings.
Established seven years ago, the Young Women in Business Network, which uses the stokvel model of rotating credit and a savings scheme, took nine months to register as a cooperative financial institution – with 252 members and more than R2 million in its coffers – to become the 31st cooperative financial institution in the country in December.
Nthabeleng Likotsi, Young Women in Business Network executive chair, said the network had set its sights on registering 1 000 more members by February next year, which is required under the Reserve Bank’s guidelines to become a cooperative bank.
Each member of the Young Women in Business Network cooperative financial institution pays R1 000 a month and has access to business loans of up to R100 000, which are only given to members of the institution.
To join the cooperative financial institution, each member has to pay a deposit of R10 000 as a share capital fee, and must then pay an annual R550 membership fee.
In 2012, Likotsi (31) led the stokvel group in acquiring its first stake in Namlog, a Johannesburg-based logistics company.
Since then, she’s led the creation of Young Women in Business Network Holdings, a broad-based investment company.
“When the opportunity came along to start a cooperative bank, I told myself that I’ve done this before when I said to women let’s save R1 000 a month that we’re already doing via a stokvel.
I said let’s save R1 000 to exploit the Broad-Based Black Economic Empowerment Act, as it talks about black ownership,” said Likotsi, who is a board member of JSE-listed Bonatla Property Holdings.
“We don’t exclude men as members, but our focus is on women.
“We will not be a cooperative financial institution for long because that is not our main aim. According to the requirements, a cooperative financial institution needs R1 million in savings and needs to be trading before you graduate to a corporative bank stage,” she explained.
“Of the 31 cooperative financial institutions, we are the only one that is purely designed for entrepreneurs. We are focused on having professionals join up with businesspeople and entrepreneurs – these are the people we’re asking to join us because the current situation in commercial banks doesn’t talk to our needs as black entrepreneurs.
“Most of us don’t have collateral or all those things they require in commercial banks – there’s too much red tape, and we will not get anywhere unless we come together and start funding each other. That’s the only solution to including black entrepreneurs.
This becomes another solution for job creation; for us to cooperate instead of working individually,” said Likotsi, who is a Wits Business School graduate with a master’s degree in entrepreneurship.
The cooperative financial institution membership includes the likes of Kia Motors CEO Ray Levin and Aspen Holdings CEO Noel Guliwe.
To minimise the risk of default, the group only lends to its members, and carefully assesses each loan application and the applicant’s business idea, as well as payment options.
Phindile Khumalo, head of Young Women in Business Network Cooperative Bank’s credit committee, said the reason they had low interest rates on loans – 5% for six-month loans and 2.5% for 12-month loans – was to make credit affordable for their members.
Olaotse Matshane, managing director of the Cooperative Banks Development Agency at National Treasury, said meeting regulatory approval to register a cooperative bank was not easy.
The risks associated with running a cooperative bank were lower than at commercial banks, but she noted that most cooperative financial institutions lacked the skills required to graduate to cooperative banks.
“Since cooperative banks are wholly owned by the members, if more people venture into cooperative banking, it could address issues of economic transformation in the banking sector. They are often able to assist members with financial services where commercial banks can’t because a bank is far away, a client is blacklisted or because of prohibitive charges,” said Matshane.
The risk of defaulting on loans was also lower because all cooperative banks and cooperative financial institutions had a “common bond”, often referred to as the “chain of trust”, she said.
