Investing in People: Oikocredit
Can the Christian concept of caritas (love) be applied to the economy, finance and business as well as what we normally think of as “charity”?
This question suggests that the economy, finance and business live in another world divorced from our everyday life, but of course they are not. These elements live right at the heart of God’s Kingdom, whether we choose to ignore or accept this sometimes awkward thought? Of course it may be difficult to discern what is building and what is diminishing the common good, especially when it comes to matters of the economy.
“Ethical financing” is being developed, especially through microcredit and, more generally, microfinance. These processes are praiseworthy and deserve much support. Their positive effects are also being felt in the less developed areas of the world. It would be advisable, however, to develop a sound criterion of discernment, since the adjective “ethical” can be abused. When the word is used generically, it can lend itself to any number of interpretations, even to the point where it includes decisions and choices contrary to justice and authentic human welfare. (Caritas in Veritate – “Charity in Truth” (2009), paragraph 45)
This article illustrates how one family in Bolvia is supported with microfinance from a community based initiative, which in turn is financed through Oikocredit, a global co-operative initiated by the World Council of Churches. This is Catholic Social Thinking (CST) in practice, making social justice work despite the many challenges along the road.
Microfinance: providing small loans to disadvantaged people
Nearly three billion people in the world lack access to basic financial services. Without credit or savings, they have little hope of improving their living conditions. That’s where microfinance can help. Access to credit empowers those in need to invest in themselves and create their own path out of poverty. With even the smallest of loans, they can create income-generating businesses and then: send their children to school, buy medicine and nutritious food, or fix a leaky roof.
The idea of borrowing from Microfinance Institutions (MFI) has grown into a worldwide industry itself. The Noble Peace Prize winner Muhammad Yunus is widely considered as the founding father of microfinance, but the wider roots of such development financing lie in the movement to provide solidarity through investment. This short article tells the story of one microfinance client family, their local MIF called FIE and the story of the development of Oikocredit where CST is active in the ecumenical body of the World Council of Churches.
Family ties: loans from generation to generation
Micro entrepreneurs don’t only stay loyal to an MFI for years; they stay loyal for generations. For more than a decade, Karina Cori and her family have turned to Bolivian microfinance institution FIE to help sustain and grow their business.
The connection began when Karina’s husband Leonardo was 15 and decided to start a bakery. Without a father, Leonardo had been an apprentice baker since he was eight but despite his seven years of experience, he was too young to take out a loan himself. To help Leonardo realise his dream, his mother Juana Mayta Wanka applied for the loan on his behalf. Today, both mother and son agree that the loan changed their lives.
When Leonardo turned 18, he received a FIE loan under his own name and stayed on as a client for a further 10 years until his wife Karina took over the business in 2002. Karina then became the third family member connected to FIE.
Leonardo now works as a chauffeur, and helps Karina distribute the bakery orders at the weekend. After years in the industry, the family name has brought Karina a broad network of clients. In addition to the bakery, the family also runs a small snack bar selling home-baked goods and filling orders for special occasions like weddings, birthdays and baptisms.
Karina now studies catering and one day wants to professionalise her business by preparing finer pastries and baked goods. She dreams of opening a gourmet bakery in the centre of La Paz.
The story of Juana, Karina and Leonardo is one of the many examples of how solidarity financing supports development and strengthens communities.
FIE Microfinance, Bolivia
FIE Microfinance is the result of the pioneering effort of FIE (Centre for the Development of Economic Initiatives), a private non-profit organisation, founded in 1985 to support small productive economic activities of families and groups living in poverty and with limited access to formal sources of credit and skills training. FIE is one of more than 790 project partners of Oikocredit in 71 countries around the world.
Oikocredit: investment from generation to generation
The roots of Oikocredit lie in CST, the “Social Gospel” of the Church and making an ecumenical response to promote global justice. In 1968, when the General Assembly of the World Council of Churches convened in Uppsala, Sweden, the Western world was experiencing unsettled times. The unease of that period was also felt within the churches. Young and politically engaged Church members cried out at the General Assembly:
‘We preach love in our Church, telling people to be good and not to fight. But why do Churches invest without scruples in banks that might channel their investments to industries that support Vietnam War and Apartheid? Can’t we invest our funds in a better way; something that is more in line with the social teaching of the Church?’
Even after this dramatic request, it still took seven years to establish such an organisation. It was only in 1975 that the Oikocredit Ecumenical Development Cooperative Society U.A. was established to provide churches and church-related organisations with an alternative investment instrument, to serve the interests of the poor. The aim was to encourage social justice by giving credit to productive enterprises run by disadvantaged people.
Subsidiarity: the roots of success
Oikocredit had an unexpectedly difficult start, since many church treasurers ultimately didn’t believe in this alternative investment instrument. Some felt it was unethical to lend instead of giving. Others simply didn’t have faith in the concept’s success and didn’t want to invest the Church’s money in what looked to be a risky investment. This initial setback turned into an opportunity, since Oikocredit needed to fall back on its founding principle of subsidiarity.
Many individual church members in Europe did believe in the concept and started volunteer Support Associations. Today 80% of Oikocredit’s member assets of €406 million comes from 35,000 individual investors forming a worldwide collation of investment solidarity with people who are poor. The Oikocredit co-operative is now stronger because of subsidiarity – uniquely its loans are made by local Oikocredit staff in 34 country offices and investment is raised largely thanks to its 31 local Support Associations.
Founded on the social teachings of the Church, Oikocredit has grown to become one of the world’s largest sources of private funding to the microfinance sector. Oikocredit also provides finance to co-operatives, fair trade organisations and small and medium sized enterprises who share its mission to empower the poor and create a more just society.
Solidarity: a journey, not an end point
Oikocredit is a journey: for the people who get involved as investors and volunteers, for project partners and their clients, but also as an organisation. Oikocredit has learnt that they must continually renew their understanding of what solidarity means, to defend against a sometimes cynical world of the financial economy and to strengthen the vision. For “Where there is no vision, the people perish”, (Proverbs 29:18). Since Oikocredit is fundamentally about investing in people, vision is important. But the co-operative also recognises that there are pitfalls and dangers in promoting ideas such as microfinance as a one-stop solution to poverty.
“In his Apostolic Letter Octogesima Adveniens of 1971, Paul VI reflected on the meaning of politics, and the danger constituted by utopian and ideological visions that place its ethical and human dimensions in jeopardy. These are matters closely connected with [human] development.” (Caritas in Veritate– “Charity in Truth” (2009) paragraph 14)
CST distances itself from specific programmes of activity in economic justice and does not strive to endorse policies and organisations. Maybe here lies the power to speak the truth and the voice to constantly challenge our thinking about justice, and create organisations that are truly responsive to the needs of people.
The story of Oikocredit therefore continues to develop. Oikocredit is about people, who not only reject the unfair distribution of wealth in the world, but also share the hope that something can be done about it. But “labels” such as: microfinance, fairtrade, green, organic or co-operative, do not guarantee positive social benefits. There can be no room for complacency or false assumptions. The mission of Oikocredit is also a challenge to tackle the new problems which emerge: of over-indebtedness, unethical collection practices, high interest rates and poor transparency by some microfinance practitioners. For Oikocredit this is not only about monitoring their own partners and practice, but promoting good practice in the development finance industry. It was encouraging to see this area of work being emphasised in Pope Benedict XVI latest Encyclical.
“The weakest members of society should be helped to defend themselves against usury, just as poor peoples should be helped to derive real benefit from microcredit…” (Caritas in Veritate – “Charity in Truth” (2009), paragraph 65)
In summary, I struggle to simply capture the idea of what solidarity means to the work of Oikocredit in a small number of words. But the words of Lila Watson, an Australian Aboriginal leader seem to reach to the heart of the idea: “If you have come to help me, you are wasting your time. But if you have come because your liberation is bound up with mine, then let us work together.”
So when we only invest for our own profit, as an individual or an organisation, do we miss the point of the life changing potential that our capital processes? This is the challenge of solidarity investment.
For information visit the website of Oikocredit.
Oikocredit is a worldwide ecumenical development cooperative, promoting global justice by challenging people, churches and others to share their resources through socially responsible investment and by empowering disadvantaged people with credit.
Photo: Karina Cori and Juana Mayta Wanka. [Photo credit: Oikocredit]