VANCOUVER, BC — Vancouver’s financial cooperative, Vancity, recently pledged funds to Oikocredit, which is a global cooperative based in the Netherlands. The funds from the pledge will come from Vancity’s Shared World fixed term deposits.
These Shared World deposits are Vancity’s take on impact investing. Customers deposit money into their account. Vancity then uses that deposit to invest in groups like Oikocredit that provide affordable credit to people in poverty. These finances allow poor people to create opportunities for themselves and their families.
Vancity’s Shared World impact investing is part of a growing global trend. Some believe it is a byproduct of the increase in global communication by way of the Internet. People are more conscious of global problems than they ever were before.
“More and more people are looking for ways to use their investments to tackle big global challenges, said David Woods, managing director of Oikocredit.
Mr. Woods also said that the agreement between Vancity and Oikocredit is timely given this year’s climate conference in Paris and the U.N.’s adoption of the Sustainable Development Goals. People around the world are coming together to address serious issues that affect the planet.
Vancity only works with organizations that have expertise in microfinance, which is why it chose to partner with Oikocredit. The global financial cooperative started in 1975 and has since developed a financing portfolio of over 808 million Euros with investments across 64 countries.
Speaking about this partnership, Vancity President and CEO Tamara Vrooman said, “The benefit of investing with Oikocredit is two-fold, it provides the opportunity to achieve financial returns for our members while making a positive and social impact in developing countries.”
The positive and social impact Oikocredit makes is toward the reduction of poverty. Oikocredit invests in microfinance institutions that then give small loans to the working poor in developing nations. The loans are given to the working poor because they already have a steady stream of income.
In addition to loans, the microfinance institutions provide savings products, insurance and other means to achieve financial self-sufficiency. The benefit of loans from microfinance is that repayment is tied to the recipient’s cash flow, and there is no collateral attached. This allows repayment to be made in small amounts over a long period of time.
Oikocredit primarily provides loans to women because it makes a bigger impact on poverty reduction. According to Global Poverty InfoBank, women make up half of the population, but 70 percent of the world’s poor. They work two-thirds of the world’s total working hours and produce half the world’s food, yet they only earn 10 percent of the income and own less than one percent of the world’s property.
Women are more in need of assistance which is why they make up 80 percent of the microfinance client base. Microfinance institutions have a unique ability to reach women and provide the services they need.
Many women who are working poor have small shops or sell artisanal products. These women are more likely than men to reinvest in their businesses, which makes them a more reliable in terms of credit risk for microfinance institutions.
Also, women are more likely to reinvest their profit in their families’ healthcare and education. Statistically, women invest 90 percent of their income in their families according to The Girl Effect. This is compared to the 30 percent a man invests into his family.