It’s All in the Family: A Conversation with One of the Netherland’s Leading Impact Investors
GS: The name Oikocredit emphasizes the heart of our mission. “Oiko” refers to the ancient Greek word Oikos, which as you mentioned, means house, community and world. “Credit” not only refers to the fact that we provide loans, but also to the Latin verb “credere”, to believe. We believe in the poor.
The roots of Oikocredit lie in the World Council of Churches. During the 1968 General Assembly in Uppsala, Sweden, young and politically engaged church members pointed out that churches invested without scruples in banks that may have been channelling their investments to Vietnam War industries and industries that support Apartheid. They wondered whether there was a better way to invest funds – a way that was more in line with the aim at a just, participatory and sustainable society.
In 1975, Oikocredit was established in the Netherlands to provide churches and others with an alternative investment instrument, directed at the interests of the poor. Today, Oikocredit supports and provides financial services to organizations to improve the quality of life of low-income people and communities in a sustainable way. Oikocredit’s story is therefore one of building a global “oikos” ‒ a community of lasting partnerships with a common inspiration: a vision of a just society where people have equitable access to resources and are able to live with dignity.
IDB: The IDB is seeking opportunities to engage with retail impact investors and we see partnerships as an ideal vehicle for doing so. How does Oikocredit’s cooperative structure work?
GS: Oikocredit is an international cooperative that brings together thousands of people who share the goal of improving financial inclusion and fostering positive development. Membership is open to churches and church-related organizations, including religious orders, and national and international congregations. Other organizations can become members upon invitation by the Board. Member organizations should have a mission and objective closely aligned to those of Oikocredit.
As a cooperative, Oikocredit allows its members to participate actively in policy matters concerning its mission and work. There are two ways in which the Oikocredit membership can influence the policies:
Through the election of Board members who guide and supervise the management of the cooperative; and
By using their votes in the annual general meeting (AGM), the highest ruling body of Oikocredit. Each member has one vote.
Most retail investors invest through Oikocredit Support Associations. An Oikocredit Support Association (SA) is an independent organization established to support the worldwide work of Oikocredit. In countries without an SA, individuals and organizations can invest via the Oikocredit International Share Foundation (OISF). Among its investors are individuals, banks, development agencies, fair trade organizations and trade unions.
IDB: Investments in Latin America make up the largest portion by region – 41% – of Oikocredit’s US$600 million portfolio. Oikocredit is a long-time co-investor with the IDB, including in Fedecrédito in El Salvador and the recently syndicated loan to the Mexican higher education financing company, Corporativo Laudex. Why Latin America?
GS: You could say that Oikocredit has grown along with the region. When Oikocredit issued its first loan of US$100,000 in Ecuador in 1978, Latin America was going through a relatively volatile period and foreign investors tended to shy away from the risk. This did not stop us from investing because we saw that there was a need and a demand from social enterprises for long-term debt and capital. In the decades that followed, the region gradually grew economically, and countries’ national institutions grew stronger. The relative stability over the past decade has also spurred further growth, particularly in microfinance and agriculture. Oikocredit has been able to provide growing enterprises with the funding they need to grow their businesses. We are happy, for example, to be able to say that we fund many of the fair trade coffee cooperatives in Peru.
Latin America is a large region, consisting of 22 countries with a total population of over 600 million, and we look forward to continuing to grow with and support the growth of the region.
This post originally appeared on Partnerships for Development.