The Flight of the Bumblebee

Ecumenical Review, The, July, 2000 by Rob van Drimmelen

25 Years of Oikocredit

If you asked an engineer of aerodynamics if a bumblebee could fly, he or she would tell you "no", because of its physical characteristics. Yet it does fly! If you had asked a conventional banker in the 1970s whether Oikocredit -- at that time called EDCS -- would be a viable business, he (most conventional bankers are men) would have replied: "Not a chance." Yet Oikocredit has taken off and, after 25 years of existence, is flying at a speed and an altitude which surprise even some of those who were enthusiastic about the original idea. With a rapidly growing share capital and an expanding loan portfolio, Oikocredit has still to reach its cruising altitude. The rising popularity of micro credit schemes gives it a strong tail wind.

The birth of the bee

The WCC assembly in Uppsala in 1968 laid down the basis for two new programmes of the Life and Work movement. In 1969, the Council established the Programme to Combat Racism (PCR), which gave rise to much discussion and controversy, among other things because it called for the withdrawal of foreign investments from apartheid-South Africa and for a halt to bank loans to the apartheid regime until legally enforced racism was abolished. The second initiative to emerge from Uppsala was the Commission on the Churches' Participation in Development (CCPD), founded in 1970, whose main task was to promote ecumenical reflection and action on development. Social justice, people's participation, self-reliance and economic growth aimed at fulfilling basic needs were identified as major ingredients of an ecumenical understanding of development. The Ecumenical Development Fund (EDF) was established as an important instrument for the promotion of CCPD's mission and churches were asked to donate 2% of their annual budget to the EDF.

Except for a brief period when some advocated a moratorium on economic and development relations between North and South, money and capital was always considered one of the instruments for development, and most of it was transferred from the North to the South in the form of grants. Yet the ecumenical movement also made use of loans. Already back in 1928 the International Protestant Loan Association (APIDEP) had been set up, a credit institution designed to provide short-term funding for the construction of churches, schools and hospitals. Individuals could buy shares in APIDEP and received nominal dividends. However, APIDEP could not cope with the urgent need for reconstruction after the second world war, and the Ecumenical Church Loan Fund (ECLOF) was founded in 1946 as a non-profit organization. Grants received by the ECLOF office in Geneva are made to national ECLOF committees (NECs) outside Switzerland, which use them for loans to projects in their own country. Part of the interest earnings are used for the operational expenses of the Geneva office (90% of the administrative costs are covered by income from interest, the remaining 10% comes from other sources), another part remains at the disposal of the NECs and is added to the national revolving fund.

At the end of the 1950s, ECLOF expanded its activities beyond the borders of Europe. By 1976, the share of loans made to Europe had fallen to 28%; and in 1997 it was down to 8%. At the same time a change in priorities led to a greater emphasis on social services, education and training, and a shift away from the building of churches. In 1971, ECLOF decided to establish a development capital fund designed to provide loans to "combat the root causes of underdevelopment and promote social justice and self-reliance". Development capital now represents over 80% of the value of total loans made by ECLOF. The average loan is US$ 1820. Most of the projects financed consist of income-generating activities such as small-scale industries, trading schemes, agricultural projects and health-care facilities. The major sectors receiving ECLOF loans in 1999 were agriculture (42%), micro enterprises (38%), education and training (5.8%), and church buildings (8.6%). ECLOF loans are made in local currency.

Both the EDF and ECLOF worked with grant money. In the case of the now defunct EDF, grant money was passed on as grants, whereas ECLOF receives grants which it passes on as loans on concessionary terms. Early in its existence, CCPD realized that, in addition to grant money, churches could also use their investment money to promote human development. After a four-year study process, the WCC central committee meeting in Berlin in 1974 decided to establish the Ecumenical Development Cooperative Society (EDCS) and agreed to become a founding member by using Sfr. 10,000 of the general reserve to buy share capital. CCPD provided another Sfr. 100,000, and member churches and their agencies were urged also to become founding members of the EDCS. It was agreed that the EDCS be incorporated if and when a minimum of thirty eligible groups (at least half of them from Asia, Africa and Latin America) became founding members, and a minimum of Sfr. 15 million in share capital was assured. Later, this was reduced to Sfr. 3 million.