Instead of hunting for the €42 million of the public offering, the Pancyprian Cooperative Company for Holdings and the Promotion of Cooperativism should be pushing in an entirely different direction: the creation of a specialised national legislative framework for microfinance. This is the only real way to channel European funds directly into social entrepreneurship, young farmers and vulnerable households. Otherwise, either the European Central Bank will finish off the new cooperative movement with summary procedures before it is even born, or we will inexorably be led into a new black hole. Either way, the current juncture is perhaps the last opportunity to provide access to borrowing for the financially excluded, and we must not squander it on the altar of romanticism.
Why I will not give the 100 euros
I do not know what you will do, but I am not going to give the 100 euros that constitute the minimum amount for the purchase of the new registered shares of the cooperative now taking shape. And this is not because I lack social sensitivity or because every trace of romanticism has dried up inside me. Quite the opposite. For some time now, both from this column and through the programme on "Politis 107.6 & 97.6" radio, I have been persistently pointing out the fact that a huge part of society has been excluded from basic financial products, left without support in difficult moments.
I often explain to our listeners that the real definition of financial poverty is not being able to borrow. Yes, the need for social credit institutions is pressing, but we do not need a new cooperative movement that will simply be an abused miniature of the previous one.
The merciless dilemma
No new cooperative movement is going to survive if it is forced to follow the same rigid and strict rules established to protect deposits in commercial banks. The dilemma for its management will be merciless: either it will be forced to exclude the vulnerable from its clientele in order to survive supervisory scrutiny, or it will have to make enormous provisions and tie up crushing capital for every euro it lends them, exactly as Frankfurt dictates. In other words, the €42 million in capital may prove insufficient, or may be frozen by the supervisors before the first loan is even granted.
At the same time, the savings they promise through the use of technology, and the philosophy that any profit will return to society, are all well and good, but they are not enough to compete with the commercial banks. The way it is heading as it opens, if it ultimately opens, it will close. And the worst part is that it will close having wasted time and one of this country's last opportunities to create credit institutions with a genuine social orientation. If the venture fails, the odds will turn so dramatically against us that decades will pass before anyone else dares attempt anything similar.
An autonomous microfinance body
It is precisely for this reason that, instead of new cooperatives modelled on commercial banks, the trade unionists and the remaining friends of cooperativism should be pushing for the creation of an autonomous microfinance organisation, operating outside the traditional banking system. The goal of such a scheme must be to secure access for micro-entrepreneurs and vulnerable households to European programmes, such as InvestEU, and to funds for microloans from the European Investment Fund. Such a thing, however, is impossible to achieve without the active participation and co-organisation of the state. Such a venture requires a serious strategic plan, special legislation and clear political will from the government. If it is left to run simply as a private initiative of trade unionists and former cooperativists, it is mathematically certain to fail.
Freeze the fundraising
It is time, therefore, to freeze any hasty moves to raise capital. The initiators of the effort must seek ways to have the institutionalisation of an autonomous, non-banking microfinance framework included immediately in the programmes of the political parties and candidates. And it would be well for everyone to remember that good intentions are not enough to support the economy. After all, the road to hell has always been paved with them.
