The 'ins' and 'outs' of a financial services co-operative |

The term ‘co-operative’ is no foreign concept, however very few people, even in the business sector, are familiar with this unique business model. Johan Nel, CEO of Iemas Financial Services (Co-operative) Limited, answers a few questions to explain the ‘ins’ and ‘outs’ of what it means to be a co-operative.

Iemas Financial Services is South Africa’s largest financial services co-operative offering a comprehensive product range in financing and insurance.

1. What is a co-operative (in layman’s terms)?
A co-operative is a business where a group of people get together voluntary to address their common needs. Based on these needs, relevant services and/or products are then provided by the business to all the members in the group. Profits are shared among members based on the business that each member concluded with the co-operative during a specific time. For example: over the last 10 years Iemas allocated over R1 billion to its members in the form of rebates on interest paid for financing products and premiums paid for insurance products, as well as interest paid on individual member funds. In 2017 alone the member benefit allocation was R109 million. For a business to function and operate as a co-operative, it has to, inter alias:

• Give members democratic control: each member gets a vote when making decisions for their co-operative.
• Educate and train their members to develop their skills: Iemas provides free financial wellness training at the workplace of participating employers and trained 6 734 individuals during the 2017 financial year. Educational financial articles and tips are shared with members on a continuous basis.
• Demonstrate concern for the community and sustainable development.

2. How did Iemas come about adopting a co-operative business model?
It all started in 1937 when the Iscor Employees Mutual Aid Society (I.E.M.A.S.) was established within the former Iscor to assist employees in getting discount on purchases of general goods. The business went from strength to strength; additional financing products were added to the product portfolio and Iemas officially registered as a trade co-operative on 1 March 1996.

3. What differentiates Iemas, as a co-operative, from other financial services providers in South Africa?
At Iemas we focus on putting people, and not profit, at the heart of our business. As per the co-operatives act, members are the owners of the co-operative, similar to shareholders owning a company. They have a say in the business of the co-operative and also appoints the directors of the co-operative at the annual general meeting. Members also share in the profits through our annual member benefit allocation. Furthermore, Iemas perpetuated the initial Iscor business model whereby it enters into agreements with organisations and then renders financial products and services to employees employed at these organisations.

Iemas has contractual agreements with more than 600 employers in South Africa (e.g. Sasol; Kumba Iron Ore; ArcelorMittal; Exxaro Resources; Mediclinic; Sanlam; AVBOB – to only mention a few).

4. Is a co-operative business model only applies to the financial services industry or are there other industries that have also adopted this model?
Co-operatives overs a wide variety of services. The world’s 300 largest co-operatives operate in different sectors: insurance (41%), agriculture (30%), wholesale and retail trade (19%), banking and financial services (6%), industry and utilities (1%), health, education and social care (1%) and other services (1%).

5. What are the benefits of this business model for Iemas’ members?
In addition to our annual member benefit payment, which is based on the products our members used throughout the year, we offer a wide range of competitive financial products and services to our members. We also protect our members through responsible credit screening processes and make sure that they comply with minimum net salary requirements and affordability requirements.

6. What does the future hold for Iemas and other co-operatives in the current economic climate?
During SONA (State of the Nation Address) 2018, President Cyril Ramaphosa eluded to the important role that co-operatives play in the sustainable development of communities and said that “Government will honour its undertaking to set aside at least 30 percent of public procurement to SMMEs, co-operatives and township and rural enterprises”. Iemas celebrated its 80th anniversary in 2017, and thus remained sustainable during challenging and uncertain economic times. Our future is looking bright with more than 161,000 members; more than 600 participating employers (which grows everyday); an employee complement of 550; and a comprehensive product and services portfolio. We attribute our success to the resilience and sustainability of our unique and transparent business model of being a co-operative.

For more information on Iemas Financial Services (Co-operative) Ltd visit our website www.iemas.co.za or follow Iemas on social media.

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