unitex@rubbs.fidonet.org (unitex) (10/04/89)
ZAMBIA: Co-op Bank Will Re-finance Collective Production
Lusaka, September 20, 1989 (AIA/IPS/Sam Sikazwe) -- Zambia's
first co-operative bank becomes operational in October and is
expected to give a big boost to the country's fledgling co-
operative movement.
The bank, a subsidiary of the Zambia Co-operative Federation
(ZCF), plans to lend funds to co-operative societies unable
to meet the lending criteria of commercial banks.
About 1.3 billion Kwacha (CDN $7.5 million) has been
targetted for the bank's investment programmes.
These funds will "help co-operatives avoid the tight
conditions set by commercial banks where they have
accumulated huge savings," says ZCF vice-chair, Goodson
Willima.
By providing capital funds for its members, ZCF hopes to end
the co-operative movement's dependence on outside funding.
"Co-operatives have depended almost exclusively on the
government, AID agencies and friendly foreign governments for
their financial needs and the challenge is now on the sector
to break this dependence and stand on its own," Willima
adds.
The bank's shares are to be sold to the ZCF, the Credit Union
and Savings Association of Zambia (CUSA) and other
registered co-operative and district credit unions.
All members of the bank will maintain their banking accounts
and deposit their funds with the bank or its appointed
agents. The bank will also allow members to deposit crops or
livestock, but details of how this will work are yet to be
announced.
By December 1989, the bank hopes to raise CDN $5.6 million in
sale of shares. Already CUSA has invested CDN $1.8 million in
shares and more investments are expected from the nine
provincial co-operative unions.
Besides the bank, Zambia's co-operative movement received
another shot in the arm earlier this year when the
government dissolved the National Agricultural Marketing
Board (NAMBOARD) and transferred its functions to ZCF.
The Zambian government sees co-operatives as a means of
"taking economic power to the people", but producer co-
operatives got off to a shaky start in 1966 when the new
nation tried to end its agricultural dependence on a few
European commercial farmers and emergent African farmers.
Guaranteeing funds, Zambia's President Kenneth Kaunda first
called on the unemployed to form co-operatives in 1965.
A minimum of 10 members could form a co-operative and
automatically qualified for loans from government without
officials assessing chances for economic viability.
By 1969, these co-operatives had largely failed and were
unable to repay the loans.
The demise of the early producer co-operatives was attributed
to the groups' inability to utilise capital productively,
lack of managerial ability and the tendency of co-operatives
to treat loans as income rather than as investment funds.
Following the failure of these producer co-operatives, the
government has tended to encourage the emergence of marketing
and service co-operatives which are easier to run and
require minimal investment.
Zambia's new co-operative bank should spark a higher
production trend in agricultural co-operatives since more
capital will now be available.
But some economic analysts say the structure of the co-
operative movement needs to change, if the bank is to have
any impact on productivity.
* Origin: AlterNet Better World Communications (1:163/113)
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Patt Haring | United Nations | FAX: 212-787-1726
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