Oikocredit: A 25-year feat

Christian Century, Jan 17, 2001

TWENTY-FIVE YEARS after its launch, a church-sponsored international development bank is a "growing organization," according to the president of its board of directors, Zanele Mbeki, South Africa's first lady.

The Ecumenical Development Cooperative Society (EDCS) was set up by the World Council of Churches in 1975 to provide churches and church-related groups with an ethical investment instrument directed at the interests of the poor. Churches worldwide were urged to invest in EDCS to promote development projects, even if they gained lower financial returns than through mainstream investments.

Oikocredit, the society's name since 1999, today has 465 organizations--churches and church-related groups--as members, and more than 18,000 local church communities and individuals around the world who invest in Oikocredit via supporters' associations. Oikocredit supports about 300 groups and enterprises in developing countries.

Speaking to Ecumenical News International after a ceremony at the Ecumenical Centre in Geneva to mark the society's 25th anniversary late last year, Zanele Mbeki, who was elected as Oikocredit's president early in 2000, was full of praise for the WCC's initiative. Several years ago, when she was first invited to become a member of Oikocredit's board of directors, she readily accepted. She said she was "seized by the idea" that the churches had realized that "you can't always pray yourself out of poverty," and that not only must the poor take action, but the church must also take part in actions that "empower people economically."

Mbeki is well placed to understand the need for an agency like Oikocredit. Since 1991 she has been executive director of Women's Development Banking, a South African organization providing "microcredit"--financing for small-scale projects--and promoting development for women in rural areas. Before that she worked for 25 years in social welfare and related activities throughout Africa, and briefly in the United Kingdom.

Meanwhile, the World Faiths Development Dialogue (WFDD), a multifaith initiative launched three years ago by Archbishop of Canterbury George Carey and World Bank president James Wolfensohn, recently named its first chief executive. He is David Bryer, 56, the head of Oxfam UK, who will be based in London and begin in May. The WFDD has antipoverty goals similar to those of Oikocredit but looks for support and advice from a range of religions.

Oxfam has been among the chief critics of the policies of international lending institutions, including the World Bank, arguing that their loan conditions for developing countries are too severe and damage the poorest in society. But under the leadership of Wolfensohn, an Australian, the World Bank has sought to soften its lending policies and show greater understanding of the problems of developing countries.

The impetus to found EDCS came from the 1968 assembly of the World Council of Churches in Uppsala, Sweden, where young church activists criticized church investment policies, claiming that although churches were investing in industries linked to the Vietnam war or apartheid, there was no means by which they could invest in projects more closely linked to the Christian message.

Church treasurers were initially skeptical, fearing that the money lent might not be repaid. However, Oikocredit is proud that in 25 years no shareholders have lost "one penny" of their investment. Losses in project funding have been absorbed by a specially created fund.

According to Oikocredit's latest annual report, its share capital increased to nearly $106.7 million in 1999. Over the same period, project funding reached a level of $10.6 million, an increase of almost 50 percent over the previous 12 months.

Mbeki stressed that church support for Oikocredit extends beyond the WCC's member churches. One of the newest and biggest contributions came from a Roman Catholic organization, and after the 25th anniversary celebrations she went to Rome with Oikocredit's general manager, Gert van Maanen, where they met with Pope John Paul II and Vatican officials.

However, Oikocredit's president admitted that it is still challenging to provide an alternative model of banking and investment "without adopting the same kind of criteria and culture as the formal banking sector." Oikocredit tried to do this, she said, by "rescheduling, continuous rescheduling" when projects that it financed ran into difficulties, rather than saying: "We call in our loans, and we shut you down."

In spite of Oikocredit's expanding portfolio, Mbeki acknowledged that "there are also concerns." In recent years, a "significant number" of projects were affected by an "unusual combination of adverse circumstances"--the currency crisis in Asia, Hurricane Mitch in Central America, El Nino in South America, plus political and economic problems. Partly because of this, Oikocredit's directors decided to stop trying to serve partners all over the world, and to "concentrate our efforts on countries where we can be of effective assistance." So they drew up a list of 30 priority "focus countries."