How to bank for liberation: A ground up approach to BEE

We believe that those who seek economic freedom should not seek borrowed opulence. 

The name KCB (Khanya Cooperative Bank) keeps popping up when the subject of financial inclusion and banking sector transformation is debated in South Africa. This is because of the remarkable, if controversial, positions taken by the organisation of mainly black professionals. Having asserted that the political calls for the establishment of the black bank are largely dishonest, KCB has now produced a ground breaking manifesto that stresses self-reliance and self-discipline along the lines of the protestant ethic. We caught up with KCB steering committee member, Moeketsi Nchoba, to gain deeper understanding of this initiative which runs with a provocative pay-off line: Banking for Liberation.

How a group of black professionals is building a new mutual insurance operation

So, what is KCB how does it work?

KCB is on course to establish a Corporative Financial Institution (CFI) which is more like a half way station towards a fully-fledged cooperative bank. We set off last year towards meeting the minimum CFI requirements, being 200 members and R100 000 in equity. Our target is to get to these key numbers before the end of 2018 and then commence with the process of applying for the CFI license.

We are starting with a membership fee of R2 500.00 (Two thousand five hundred rands). We have pitched the initial membership fee low because we are to a large extent educating the market. We have to beat the initial resistance, build trust and then soar with members towards true financial freedom.

How a group of black professionals is building a new mutual insurance operation

We are mainly (not exclusively) aiming to recruit black professionals as they are most likely to have the will, the drive, and the know how to run with this operation. Broadly speaking, we target people who understand and feel the need to transform the financial services sector ground up.

What is the origin of all this activity and vision?

It started small with a group of former Khanya College students, the class of 1994 to be precise. We met 20 years later for a reunion and resolved to collectivise our economic activism.

We had a great reunion -sumptuous meals, great whiskey, wine and beer while we danced. We reminisced but came out of it with some tensions. We were not where we should be, not as individuals but as a collective. We were groomed to become community development agents. Many of us have kept the community development promise in our small ways in our little individual corners.

But on assessing the status quo we recognised the fact that we needed to do more to keep the promise. More towards addressing the sustained economic exclusions of black people and their communities.

We resolved to go big. We needed a semi-organised movement to do this. It became Khanya Cooperative Movement (KCM). This would be an association of sort that we will use to network, empower one another and galvanise community development projects. KCB is just one of various initiatives we are pursuing as KCM.

We calculated that the one area where we can make a major contribution is in financial services. And so came the idea of establishing a cooperative bank that will be groomed into a formidable alternative financial institution.

Where are you at in your development phase?

We are still very much at foundation building phase. We are currently focused on gelling as a group and meeting the key minimum requirements to apply for a CFI license. We’ve had many approaches for partnerships that are promising heaven and earth but we are not looking at these. We are focused on building a self-sufficient financial system.

This is critical phase for a movement of this nature. We are a social values based movement before we are economic activists. And so we must build a very strong foundation and robust philosophical outlook.

We are carving and selling a special ethos.

While not overlooking the legacies of the repressive colonial system, we also think that a significant portion of economic challenges faced by black communities could be addressed by inward looking solutions that is a change in behavioural patterns. For example, we do preach financial prudence even austerity to our members. We believe that those who seek economic freedom should not seek borrowed opulence.

Many people, potential members, who come to enquire about what we are about tend to ask one common question: If I join how much will I realise in three years?

We tell them that we are not in the business of selling a short to medium term financial gain. Our medium term focus is establishing a foundation that will be used to anchor a richer financial institution of the future.

That’s not to say, monies placed with us will not generate a return in the short to medium term. By its nature the operation we are building, a financial cooperative that is licensed to take deposits and grant loans, yields a return. But our members are people who are looking beyond the short to medium term gain and far into the future. We are focused on building an institution that will make our children walk tall and say: Our parents did this. We believe that is the greatest gift a nation can offer to the future.

The ethos that we are carving is best captured in the document that captures our common bond, the KCM Manifesto. This document is designed to inculcate the culture of self-reliance, discipline, hard work and a can do attitude amongst our members.

Why do you think the cooperative banking path is the way go?

The post 1994 South Africa came with a promise to facilitate financial inclusion. But the exclusion of black people continues partly as a result of cultural dynamics and mainly the inability of institutions rooted on white privilege to connect with black people.

A couple of state sponsored transformation initiatives have failed to yield meaningful transformation. These will include the Financial Sector Charter which was launched in the early 2000s. The charter was developed alongside black economic empowerment equity deals which drew billions of rands.

Such initiatives were always going to be limited in their delivery of democratic ideal in that they stand against powerfully entrenched institutional cultures. On many occasions the transformation agenda end up getting subsumed by the old traditions, thus perpetuating historical inequalities.

A surface level view of the market will reveal a palpable feeling of alienation from black consumers and a resolve to establish their own financial institutions. This is reflected in the growing calls for the establishment of a “black controlled and operated bank.

Without dismissing the need to democratise financial institutions of old, there is an increased realisation that a ground up approach, the cooperative approach, could better serve the agenda of democratising the financial services sector. This is a widely held view which is supported by the endurance of financial cooperatives across the globe. KCB is emerging to stand behind this global movement.

What’s the next big thing on your calendar?

We are gearing up for the launching AGM .

We have a colourful AGM that is designed to set the national tone in the topic of financial inclusion and financial sector transformation.

Feeding from our motto, the AGM comes with an open public event titled Banking for Liberation Symposium. This portion is set for the first half of the day.

The symposium, open to all, is positioned to attract about 300 people, mainly black professionals who have been touched by the idea of self-empowerment. Pillared by high profile speakers, the event is billed to host dynamic debates on the subject of financial inclusion as connected to the ‘black bank’ discourses. As such it is set to become a media primed event.

Speakers are briefed to address the critical question of financial inclusion in a manner that dovetails on the growing demand for the establishment of a black owned and operated bank.

The key questions are:

  • How far has South Africa gone towards financial inclusion?
  • The talk of establishing a black bank is almost as old as South Africa’s democracy: What will it take to realise?
  • What is the role of informal financial intermediaries, Stokvels, in financial inclusion or the black bank course?

The KCB people are of the opinion that, the best chance of realising the black bank ambition does not live inside the big bang Black Economic Empowerment theories. The most efficient avenue is an organic growth path. The path starts with a Stokvel that develops into a Cooperative Financial Institution to become a Cooperative Bank and matures into a diverse community rooted financial institution. This is an incremental growth path which has proved to be the most effective tool to drive financial inclusion across the globe. The Banking for Liberation Symposium is designed to enrich this path.

It is a path which conjures up respectable names like Grameen Bank, the Bangladeshi village bank.

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