Credit unions, co-operatives and economic empowerment in the African world

For the past four hundred years and more peoples of the African World have been fighting to resist the European military, spiritual, psychological, political and economic onslaughts. In the process, a range of strategies have been devised, adopted and developed. In the area of economic empowerment collective effort for both individual and collective enterprise have been enlisted into service. Below, we review some of these strategies and argue that collectivist strategies for socio-economic advancement hold out better prospects for greater, more sustainable and equitable progress. 
 

A history of economic disempowerment

By stealing human beings, trans-Atlantic slave trade directly weakened African societies, taking away their producers, consumers and reproducers. It also by the means it was conducted disrupted the social fabric. The slave trade set into train dangerous and disruptive forces that inflicted long-term economic (not to mention, political, social, and psychological) damage to the people and societies that had to endure this, not for decades, but for centuries.

As colonialism came to an end the anti-democratic allocation of voting power in the World Bank, and IMF, and development emasculating conventions of the WTO, reinforced the colonial distortions in Africa’s economic structure. During the same period a new and third layer of value extraction has been added to the systemic or structural systems of extraction in the form of so called ‘illicit financial flows’, estimated by the High Level Panel chaired by former South African President Thabo Mbeki to be in the region of $50 billion per year.

But in addition to loss of people, land, resources, and labour, which are relatively easy to measure, are the psychological traumas and their effects which are not so easily measured, but in a sense are more debilitating in their effects. One example is the fact that the official position of many African governments is that those whose actions designed and imposed such systems of disempowerment and exploitation and who, through their trade, finance, and investment conditionalities which simultaneously reinforce their supremacy while they systematically resist attempts to dismantle what they have created, are seen not only as Africa’s ‘development partners’ but as ‘donors’ to African development.

In the slave colonist societies of the Americas and Caribbean, the slaves were denied their basic human rights, including the fruits of their labour, knowledge of their language, culture, philosophy, and history; in short their identity. But throughout the centuries they resisted with the means at their disposal, sometimes successfully: Haiti, and the Maroons come to mind. Sometimes not so successfully, but always keeping the flames of hope alive. Recent estimates of the possible amount owned to African Americans have been put at between $5.9 and $14.2 trillion.

Mutual aid and African culture

One of the stronger strands in African culture is that of mutual aid. Today we see examples of this reliance on mutual aid being practiced all around the world where Africans and communities of African descent may be found. The commonest form is that of collective saving to meet individual need or enterprise. The term Susu describes a process that would be easily recognised in Accra, Lagos, Nairobi, New York, Brasilia, Kingston-Jamaica, or London. It involves the periodic pooling of money contributed by individuals that form a group, which is then handed over to individual members of the group on a rotating basis, thereby allowing each member to finance a transaction that they would otherwise not be able to make, or that would take too long to bring about.  Its uses have included payment for school fees, hospital bills, weddings, cars and houses. Its most formal manifestation is as the credit union and in that form has made the Caribbean the part of the world with the highest per capita density of credit unions.

Histories of mutual aid and self–empowerment

In many parts of Africa, the first formal cooperatives were formed by colonisers as a way of harnessing the creativity of African people. Nowhere is this truer than in East Africa. The colonial cooperatives were usually producer cooperatives which encouraged farmers to collaborate to purchase inputs and/or market their produce. In Kenya for example the first cooperative society was formed as a dairy cooperative in 1908. Soon after new forms of cooperative organisation began to emerge in the form of credit unions. After colonialism these have grown in size and power and today have strategic significance for the economy. Today the Kenyan credit union cooperative movement is considered to be the primary such sector in Africa, and the 7^th largest in the world. In 2013 the World Council of Credit Unions (WOCCU) estimated that Kenya’s Savings and Credit Cooperative Organisations (SACCOs) are mobilizing savings at the fastest rate anywhere in the world and achieving a growth in savings of 30% per year. By the end of December 2012 Kenya’s SACCOs had managed to mobilise savings estimated at Ksh.380 billion ($4.47bn) with an asset base of Ksh.493 billion ($5.8bn). In addition, Kenya has developed an impressive number of National Cooperative Organisations (NACOs), responsible for cooperative banking, coffee exports, insurance, creameries, rural credit unions, housing, internet communication, and cooperative development. Today Kenya is engaged in providing advice on how to set up and manage cooperatives to a number of countries on the continent. 

African-Americans began early to use the principles of mutual aid to achieve survival and empowerment. The history of such efforts is told by Professor Jessica Gordon Nembhard in her book Collective Courage. In it we learn that the first official African American mutual aid society was formed in 1780 in Newport Rhode Island, and that by 1830 there were more than 100 such societies. There were many instances of mutual aid in the agricultural sector. Among them was the Colored Farmers National Alliance and Cooperative Union (CFNACU), which existed from 1886 to 1896. It forged a number of organisations such as the Colored Agricultural Wheels, The Knights of Labour, Cooperative Workers of America, and the Florida Farmers Union, into a regional coalition in the Southern States. By 1891 it had a membership of over one million. It was a mutual aid society focusing on self-help. It raised funds for black schools and academies, adopted improved farming techniques among members, and promoted the ownership of land by African Americans, and the setting up of cooperative stores. In 1891 the leaders called for a strike of the cotton pickers, which produced a violent reaction from the white farmers. Eventually the movement was violently suppressed in a massacre where, by various accounts, between 20 and 100 African Americans were killed by local vigilantes in Leflore county. By 1896, however, it had collapsed.

In the 1930s during the period of the ‘Great Depression’ more African-American cooperatives formed than at any other time in American history. Many started with study groups and from small amounts of money. A major problem was how to raise the funds the cooperative needed. Most cooperatives started as grocery stores or credit unions. They were supported and promoted by black educational institutions, churches, community organisations and housewives. Many employed one or two people from the community, and were able to offer dividends. These organisations focused on people who the market left behind, or were discriminated against by society at large. They were able to band together to create their own means of survival.

An example of mutual aid in urban areas between 1930 and 1933 were the African American co-operative ventures that were started in New York and especially in Harlem as a way for African-Americans to survive the depression. The list of such cooperatives included Harlem's Pure Food Cooperative Grocery Stores, Harlem Consumer Co-operative Council, Modern consumer Association Harlem, and Harlem River Consumers Co-operative. The Negro Co-operative Stores Association and its offspring the Consumers Cooperative Trading Company which was formed in 1932 are a good example of this. It began with a study group focusing on the one hand on history and philosophy of the cooperative movement, and on the other hand the organisation and management of cooperatives. The study period lasted for 18 months before the cooperative started operating. About 20 African American families with annual incomes ranging from $500 to $1000 started the process. Initially the sum of $24 was raised.  In December 1932 a cooperative grocery and meat market were opened. A five-year plan was published outlining future projects.

These initiatives continued in the decades that followed. Examples include the Freedom Quilting Bee which was formed in 1967 and survived for forty years until 2007. It was established in Alberta, Alabama, by African American Sharecropper Women who needed to supplement their income from share cropping by producing and selling quilts. In 1968 they were able to purchase 23 acres of land and build a sewing plant. It also provided day care and after school services to members and the community. They broadened the range of products to include placemats, pot holders, napkins and sold their wares in more outlets, some far away from their base. By 1990 they were also producing conference bags. The United Methodist women's Conference ordered 13,000 silk-screened canvas bags in 1994. As a result, 7 to 12 full time workers were employed. By 1992 they owned outright the land and factory. At its largest it had 150 members. They went out of business in 2007 because the coperative could not find enough members to make it profitable.

However, the most common form of organisation was the credit union. In the rural South this was often linked to efforts to support farmers. An example of such initiatives still active today is The Federation of Southern Cooperatives. This was formed in 1967 to support and sustain black farmer ownership and control over land, and the economic viability of family and independent farm businesses, specifically within a cooperative framework. It grew out of the Southwest Alabama Farmers Cooperative Association (SWAFCA) which was formed in 1967 by African American farmers who wanted to keep the land that they and their ancestors had farmed for three generations or more. The federal Office of Economic Opportunity (OEO) provided support to their efforts.  In 1967 the OEO provided support in the form of a grant of $399,967. In 1968 another grant of $595,751 came from the OEO. The Economic Development Administration provided $87,000 in the same year.  In 1985 it became the Federation of Southern Cooperatives/Land Assistance Fund (FSC/LAF), a network of rural cooperatives, credit unions, and state associations of cooperatives and cooperative development centres. In its first 25 years it created more than 200 credit unions and producer/farmer cooperatives.

According to its 40^th annual report, FSC/LAF has been able to help members save $26m in credit union accounts, and also funded, more than 73,000 loans, totalling about $211m to low income families. It has also been able to save an estimated $200m worth of land from leaving the African American community. Its cooperative marketing activities have achieved sales of $80m to producer/farmer cooperatives. Finally, it has been able to construct or rehabilitate $26m worth of housing, mobilised $60m worth of resources to support member cooperatives and credit unions. It has offices in seven Southern States: Alabama, Mississippi, South Carolina, Georgia, Louisiana, Florida, runs a number of rural research and training centres, and engages in cooperative development in Africa and the Caribbean.

Consumer and worker cooperatives have played an important part in the movement of African Americans towards improved economic empowerment especially in the urban centres.  For many decades W.E.B. Du Bois as the editor of The Crisis, the official organ of the National Association for the Advancement of Coloured Peopled (NAACP), campaigned for the establishment of cooperatives. Among the more successful worker cooperatives has been Co-operative Home Care Associates, which was formed in 1985 by African American and Latina women. It provides home health care, mainly to the elderly and is a thriving business located in the South Bronx of New York City and is the largest worker cooperative in the United States with around 2,000 members. From living precarious working lives, on low pay, and few social benefits, members have earned, since 1987, annual dividends of between 25 and 50 percent. The cooperative provides paid vacation, and health insurance. The workers are also unionised. There is training, and career advancement. The co-op has spun off two other co-ops: a training and development Institute (Paraprofessional Healthcare Institute) and an entity to provide specialised care for the disabled (Independence Care System) in 2000. Wages are above the industry average, and it also has lower than industry average turnover, and members receive a $10,000 life insurance benefit.

In the Caribbean, having transported from Africa the practice of Susu, the credit union cooperative movement has penetrated deeply into the society, so much so that the Caribbean has the highest density of credit unions anywhere in the world. In 2014 the combined assets of credit unions in the Caribbean were estimated by the Caribbean Credit Union Movement to be $4.6bn. This credit union movement is largely focussed on individual savings for individual benefit.

According to the Association of British Credit Union Ltd (ABCUL) the first credit unions in the UK were set up in London independently of one another in 1964. The first to register was the Wimbledon Credit Union, led by Ted Sammons and incorporated
under The Companies Act on 1 April. The second being the Hornsey Co-operative Credit Union, led by B. Lewis, which was registered under the Industrial and Provident Societies Act on 7 April. Sammons and Lewis had both come from Jamaica, but had not been previously involved in a credit union. However, they had brought with them familiarity with the concept of saving according to what they termed the “Penny Bank” or “Partner” savings scheme approaches. The members of the Wimbledon Credit Union had got together first in 1961 to begin to study the principles and philosophy of credit unions, collecting information from around the world including the USA, Rhodesia (as it then was), Canada, South Africa, Australia, and Philippines among others.

The Hornsey Credit Union was formed by 12 people who, like the members of the Wimbledon group, had spent the period since 1962 studying and discussing the credit union model. They began by holding their savings at the local Baptist church, and managed eventually to purchase a property which became an office, community centre, bar, and meeting place, as well as the usual purchases financed by credit union loans such as trips to the Caribbean, school fees, and purchases of domestic appliances. By the time of its first annual general meeting it was able to attract 100 people to the event as members, and an estimated 200 to its second. The movement continued to grow and in October 1967 the Credit Union League of Great Britain was formed by Hornsey Co-operative Credit Union and other Caribbean credit unions. Soon after,
a meeting took place between the League and the National Federation so as to create one national organisation. A draft constitution for a single national credit union organisation was agreed in November 1967, but such a body did not ever materialise. The Hornsey Credit Union became the longest lasting credit union in the country in 2013 when it merged with the London Capital Credit Union, and ceased to exist as a separate entity.

The national credit union movement that had been started in 1964 by Ted Sammons and B. Lewis grew steadily over the years. In 1980 there were only 57 such unions, but by 2014 that number had risen to 390, and had an estimated membership of over 1 million. At the end of 2015 UK credit unions had total assets of £1.37bn, and made annual loans totalling £769mn.

Lessons and challenges

What these short reviews of historical practice have shown is that cooperative principles and strategies have long been used among African communities to help empower themselves.  These cooperative strategies have traditionally centred on credit union cooperatives, however the credit unions have ben used mainly as a platform to support individual endeavour and enterprise. In a number of relatively rare instances, credit unions have been used to support collective endeavour and enterprise. When that has happened the contribution in terms of economic empowerment has been inclusive, and long-lived.

Other forms of cooperatives, especially worker cooperatives such as the 2,000-member Cooperative Home Care Associates in the USA, started, owned and managed by African America and Latina women is an exemplar in collective economic empowerment of people of the African World. Worker cooperatives represent a step up in cooperative organisation. Whereas in credit unions savers and borrowers in effect have their own bank, and in consumer cooperatives shoppers own their store, in worker cooperatives, workers own and manage their own business. When successful, such cooperatives can strengthen and liberate both individuals and communities in the most fundamental ways. History shows that the benefits that greater use of cooperative endeavour can provide people of African descent around the world include economic empowerment, employment, skill acquisition, community agency, self-confidence, and cultural revival. All these will contribute to the progression from disempowerment to empowerment and full self-determination.

This has been demonstrated in other parts of the world and by other communities such as in the Basque country in Northern Spain, the home of the world’s largest cooperative, the Mondragon Cooperative Corporation which turned over €12bn in 2013. Another example is the Emilia Romagna region of North-Eastern Italy which with a population of around 3 mn people and 9,000 cooperatives is among the five richest regions of the European Union, and characterised by high levels of employment, innovation, economic prosperity, social cohesion and equality.

The challenge is whether or not African countries and communities around the world will use to a greater extent than has been the case to date, credit unions and other forms of cooperatives to try to achieve economic empowerment. Sticking to the dominant strategies of the moment, based as they are on individual effort leaves, people still operating under the hegemony of those who construct, run, and benefit from the current economic system. Is it not time that people of African descent included this form of economic organising in their armoury to help build collective institutions and wellbeing?

* Adotey Bing-Pappoe is a development economist and lecturer at the University of Greenwich, Department of International Business and Economics, in South East England.

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