Source and copyright: WWB Colombia Foundation.
*Thanks to IC Fundación for reading this document in depth and contributing key elements to the discussions that arise here.
Cooperatives have become increasingly significant within the solidarity economy in recent years, driven by the principles that guide them: self-management, mutual assistance for community rebuilding and strengthening, cooperation as the cornerstone of collective work, and solidarity. It is estimated that there are over 900,000 cooperatives with nearly 800 million members in more than 100 countries. In 2016, UNESCO recognized cooperatives as a cultural heritage of humanity, acknowledging their social and economic value in transmitting collective knowledge to social groups. Cooperatives play a crucial role in mobilizing resources to create innovative solutions for social issues, generating employment, promoting social, economic, and financial inclusion, and spearheading community projects in the medium and long term.
In Latin American contexts, cooperatives adhering to the principles of the solidarity economy have emerged as a viable solution for promoting financial inclusion in rural areas with dispersed populations. These cooperatives offer accessible microcredit facilities, primarily, and establish the necessary infrastructure for disbursing loans and gathering relevant information. For example, in Ecuador, the popular and solidarity economy is recognized as an integral part of the national financial system, alongside the private and public sectors. It promotes values such as the pursuit of good living and the common good or sumak kawsay, gender equity, respect for cultural identity, and self-management. It also offers opportunities to implement financial education programs that are community-oriented and foster collective solutions tailored to the specific needs of rural populations.
In Colombia, according to Law 454 of 1998 solidarity economy is defined as a socio-economic, cultural, and environmental system composed of a set of socially organized forces in associative forms. It is characterized by self-managed, solidarity-based, democratic, and non-profit practices. In other words, organizations within the solidarity economy propose a development paradigm centered around human well-being, social justice, and community sustainability. Cooperatives, as a key component of the solidarity economy, generate approximately 139,000 jobs, contributing significantly to the country’s economy and employment landscape.
According to the Banca de las Oportunidades (Bank of Opportunities), as of the end of 2018, nearly two million adults were connected to the financial system through solidarity sector entities. In 2019, the solidarity economy contributed 3% to the national GDP. In terms of the sector’s portfolio within the overall financial system, it amounted to 20.8 trillion Colombian pesos in 2020. Notably, the consumer segment accounted for 75.2% of the total in Savings and Credit Cooperatives, 89.4% in Employee Funds, and 94.1% in Mutual Associations. Mutual Associations have a particularly strong presence in dispersed rural territories, representing 24% compared to the traditional financial system’s 11%. These organizations have effectively adapted to the needs and contexts of individuals who lack access to digital mechanisms or the traditional financial system.
According to the latest report from Banca de las Oportunidades (2022), the presence of banking correspondents and postal remittance companies has expanded to include all municipalities in the country. These entities play a vital role in providing financial services and products to remote areas where traditional financial institutions are scarce. The report also highlights an interesting trend in the percentage of adults with financial products, which increased from 90.5 % at the end of 2021 to 92.3 % in 2022, representing a growth of 1.9 pp.
However, concerning the solidarity economy, the report reveals a decline in access to financial products by these entities, showing a decrease of 10 percentage points. Despite this, there was a slight increase of 0.1 percentage points in the use of financial products. This underscores the importance of the solidarity economy sector strengthening itself to drive transformative changes in rural areas of the country. It also emphasizes the need for accountability regarding the initiatives that have been implemented in the past five years as part of efforts towards development and inclusion:
- The National Plan for the Promotion of the Solidarity Economy and Rural Cooperative (PLANFES) which was designed between 2017 and 2018, was officially implemented through Resolution 2950 of 2020. This comprehensive plan is scheduled to be executed until 2032. Its main objective is to stimulate various forms of associative work based on solidarity and cooperation, with a particular focus on enhancing economic autonomy and organizational capacity for rural women, minority groups, and ethnic communities. The plan aims to achieve these goals by coordinating actions among multiple stakeholders, adopting a territorial development approach that prioritizes inclusion and rural financial education. The ultimate aim is to increase access to and proper utilization of financial instruments in these territories.
- The CONPES 4051 of 2021, with its action plan extending until 2025, is designed to maximize the impact of activities within the solidarity economy sector and expand its scope in terms of creation, integration, development, and protection of solidarity economy organizations. The plan is also intended to promote solidarity education and strengthen the supervision model through the implementation of 42 specific actions. These actions include the establishment of the Promotion and Development Fund for the Solidarity Economy, educational campaigns through media and digital platforms, and the introduction of special credit lines. The overall objective is to enhance the growth and sustainability of the solidarity economy sector.
In order to promote financial inclusion for solidarity economy enterprises, organizations interested in supporting the inclusion of popular and community economies can explore various actions. These actions are intended to address the challenges faced by such enterprises that have not been fully implemented due to reasons such as comprehensive rural reform, commitments made with the signing of peace agreements, and national plans addressing rural areas and their inclusion in social, economic, and financial policies of the country.
- Advocate and support the implementation of public policies that establish a comprehensive information and support system for financial inclusion. This system should go beyond the traditional financial sector and utilize Open Data principles within existing public policies for the solidarity economy (such as CONPES 4051 of 2021). The aim is to safeguard the rights of individuals engaged in the popular and community economy, as well as the solidarity economy, taking into account the important role played by Solidarity Associativity for Peace (ASPP) . Specifically, this initiative should prioritize the needs of women, individuals in the reintegration process, and young people, who can benefit from support programs and financial assistance through initiatives like Fondo Mujer Emprende . The fund will be renamed as Women Free and Productive following its approval in the Congress of the Republic as part of the National Development Plan.
- Acknowledge and engage with other relevant stakeholders to facilitate processes involving the solidarity economy sector, enabling the inclusion of social sectors that have historically faced challenges in accessing traditional banking services. This is particularly crucial in dispersed rural areas, where mutual funds and associations have a significant presence. Establishing partnerships with these stakeholders can serve as a promising starting point for achieving financial inclusion in these rural territories and advancing the recognition of popular and community economies as outlined in the National Development Plan 2022-2026.
- Design and implement training and capacity-building programs for the solidarity sector and financial inclusion, building upon successful initiatives implemented in other economic sectors. The objective of these programs is to address and reduce inequality gaps in terms of access, utilization, quality, and well-being of individuals with regard to financial services and products. By doing so, we aim to empower individuals to enhance their living conditions and foster regional development. Emphasizing gender equity and social impact, financial education will play a key role, while other strategies will contribute to increasing knowledge about financial management. It is essential to ensure that individuals in rural areas gain a comprehensive understanding of the financial system through these endeavors.
- Conduct research on the impact of the solidarity economy on the financial inclusion of individuals residing in rural territories, focusing specifically on gender and intersectional analysis. Special attention should be given to understanding the dynamics within these territories, where women and other vulnerable populations play crucial roles in rural and community contexts.
In this endeavor, it is essential to expand our knowledge about these economies and acknowledge the distinctions from the popular and community economies proposed by the current government. Identifying opportunities for collaboration is important to guarantee access to rights and public as well as private support services for rural enterprises. By doing so, we can develop mechanisms that ensure the long-term sustainability of these enterprises while promoting social, economic, and financial inclusion in the territories.
- Moreover, these endeavors seek to make significant contributions to the diagnosis at the local, departmental, regional, and national levels. Through this diagnostic process, we can gain insights into the shared and diverse dynamics among territories, while also identifying potential alternatives derived from the research to inform the design and implementation of public policies. The ultimate goal is to generate transformative changes and foster financial inclusion in rural areas where accessing financial services, products, and financial education continues to pose significant challenges. It is crucial to accompany these diagnostics with continuous monitoring and follow-up processes once the results are obtained, with a particular focus on prioritizing specific territories.
Within the Financial Inclusion Working Group, composed of different organizations , this point assumes critical importance in comprehending the dynamics and contexts of rural areas within the country, along with their distinct requirements. This understanding serves as a foundation for developing effective financial inclusion strategies that can adequately tackle these challenges. Therefore, collaborative efforts among organizations committed to financial inclusion from various economic sectors are indispensable. This collaboration should involve stakeholders from the traditional banking sector, microfinance institutions, as well as the social and solidarity sector. The latter can serve as a starting point to support the actions outlined in this column.