How does one address the perennial pecuniary insecurity of workers, which often places them at the mercy (and greed) of loan sharks? What options do workers have other than pleading for loans and advances from their employers whenever they are faced with financial problems? What can be done to provide some kind of social protection given that worker’s compensation and accident insurance rarely helps members in a crisis? How does one help workers manage their often meagre incomes and expenses prudently? What means are there to help workers realize their dreams of ever owning a house?

The Confederation of Ethiopian Trade Unions (CETU) in Addis Ababa had been preoccupied with these questions for some time, and in July 2010 it started a 10-month project, working with the Association of Ethiopian Microfinance Institutions (AEMFI) and the ILO Cooperative Facility for Africa, aimed at creating the necessary conditions for strengthening workers’ cooperatives, in particular savings and credit cooperative societies (SACCOs) and microinsurance, so that they can provide urgently needed financial services and social protection. It also aims at building cooperative awareness among workers so that they can make the best use of cooperatives to improve their living conditions.

“The number of cooperatives, microfinance and microinsurance services within CETU, as well as the size of membership and capacities, indicate that these services were provided to very few workers, and not very efficiently at that,” said Ato Fissehatsion Biyadlign, CETU’s head of social affairs. He said that the project’s workshops had “enlightened participants and opened their eyes to what is possible.” Now, he said, they are going back to their organizations and demanding improved services where SACCOs exist. “And where they do not exist, they will be able to create them. They also intend to initiate cooperative schemes that will provide microinsurance services for added social protection to workers.”

The project’s aim is to build the necessary awareness among workers that will eventually enable them to maximize earnings through the creation of additional or alternative opportunities for income and social protection for themselves and their families. To this end 92 members selected from among the 79 SACCOs have been trained in basic cooperative principles, values and practices, as well as in financial literacy and thrift. Special focus has been given to microfinance and microinsurance cooperatives, which can provide social safety nets for workers.

As a result of the awareness-raising programmes implemented by the project on cooperative principles, values, organization and practice, they are also more aware of the potential that microfinance cooperatives hold for their social protection. They know how to form SACCOs and other workplace cooperatives – including for microinsurance – and are ready to form them where none exist, or join existing ones.

Training is being provided to SACCOs to help them develop into strong financial institutions able to mitigate the financial woes of their members, enabling them to access affordable loans that they can invest in family income generating activities, housing, education for their children, and to stay clear of unscrupulous money lenders.

There is no doubt as to the potential for upscaling the existing SACCOs. With improved management and governance, and with support from members who are now aware of what their cooperative is all about, new members will join, shares and deposits will grow and more members will have access to loans at affordable rates.