Spotlight Interviews with Co-operators

Sung Ho Kim, International Cooperation Department, KFCC

“Spotlight Interviews with Co-operators” is a series of interviews with cooperative and wider social and solidarity economy (SSE) policy makers, researchers and practitioners from around the world with whom ILO officials have crossed paths during the course of their work. On this occasion, the ILO interviewed Sung Ho Kim from the International Cooperation Department at KFCC.

Article | 28 October 2021

Could you tell us about your background and how you got involved in working with cooperatives?

In the 1970s and 1980s, Korea had the highest savings rate in the world. The 'Savings Day' was established to raise people's savings awareness, which served as a driving force for Korea's rapid economic growth.

Even when I was in elementary school, there was a ‘Savings Day’ every month. My friends and I read Aesop's fable, 'The Ant and the Grasshopper', and learned that it is essential to save money for bad days.

A Saemaul Geumgo staff came to the school and made savings passbooks for the students and on Savings Day, my mother always put KRW 10,000 ($10) into my hand. On the day of graduation, I found that there was much more money with interest accrued in my Saemaul Geumgo account. The feeling of savings was happiness, and it seems that my mother nurtured economic ideas and habits in me.

It was 15 years afterwards that I joined the KFCC, which guides and supervises Saemaul Geumgo. Maybe because I had been saving money in Saemaul Geumgo since I was a child, my first job was not awkward at all. In a way, it's like it was scheduled from the time I opened my first passbook at Saemaul Geumgo.

My first role was to work at the inspection team, making use of my degrees in economics and accounting. It was to conduct regular inspections and provide consulting advice to prevent accidents that may occur at Saemaul Geumgo and promote transparent and sound development.

After a few years, I was transferred to the department that carries out international cooperation work. The main activities were to share know-how for sustainable growth with financial cooperatives around the world and to promote the value of the business model of financial cooperatives. One day, leaders from Thai savings and credit cooperatives visited the KFCC, and I thought I would be able to understand their cooperative model and culture better if I spoke Thai. From that day on, I started studying Thai. A few years later, I was able to communicate with ease in Thai and engage in conduct exchange activities without an interpreter.

There are constant requests from overseas to learn about Korea's Saemaul Geumgo model and economic development experience. At first, I was just sharing what I knew, but overseas trainees were really devoted and passionate. I reflected on myself, and I wanted to be able to think in more substantial terms about their development. I went ahead and got a Ph.D. in international development cooperation to make a more specific and systematic lecture plan. Now I am enjoying the joy of sharing.

Lately, I’ve been immersed in improving my understanding of the rich culture of Africa. I'm studying African dance every week. Lifelong learning is a driving force for me. I want to be a co-operator with a flexible mind who is always learning and embracing change.

Could you tell us about KFCC? (its origins, its members, its goals, activities, partnerships, collaborations)

Saemaul Geumgo is a community-based financial cooperative model that started in 1963 as part of the efforts to rebuild the nation in the aftermath of the Korean War. It is based on the ancient practices mutual help found in Korean villages. It started in the capital, with Koreans gathering by tying their belts together. It has now grown into Korea's representative financial cooperative for low-income people. Currently, close to 31 thousand employees are working in almost one thousand three hundred Saemaul Geumgos with more than three thousand branches. It serves 21 million customers, with 4 out of 10 Koreans engaged in Saemaul Geumgo.

The KFCC is the apex organization of Saemaul Geumgos. Since its establishment in 1973, KFCC has aimed to be a trusted partner for Saemaul Geumgo. Its purpose is to guide and supervise the management of Saemaul Geumgos nationwide for their sound development, thereby promoting common interests. It also manages depositor protection reserve funds in order to protect members’ deposits and savings and provides trainings to Saemaul Geumgo and their employees. KFCC also provides insurance products and services for Saemaul Geumgo and their members. Another important task for KFCC is to leverage its development experience in Korea to strengthen relationships with international cooperative organizations. Furthermore, it undertakes development projects that support the establishment of financial cooperatives in developing countries for their self-reliance.

Could you tell us about your engagement with EACB and your work with cooperative development in Africa?

KFCC joined the European Association of Co-operative Banks (EACB) as a representative of Korea’s financial cooperatives in 2020. The EACB is at the forefront of promoting the values and differences of cooperative banks and this is an area in which the KFCC is eager to contribute on the international stage. Sustainable finance, ESG, digital finance, etc. which are taking the most lead in Europe, are fields that we are also paying close attention to. Recently, a strategic meeting with the EACB team was held to deal with changes in the financial environment, and the scope of cooperation is gradually expanding.

In recent years we introduced the savings-based Saemaul Geumgo model in Uganda. Since 2017, the KFCC, together with the Ministry of the Interior and Safety, has implemented capacity-building programs for public officials and village leaders.. In May 2021, Saemaul Geumgo obtained a permanent registration from the Uganda government. As of the end of September 2021, Uganda Saemaul Geumgo, which started as a local financial institution with 30 members, has over 6,000 village members in a total of 15 offices, contributing to solving the problem of financial exclusion in rural areas.

How have financial cooperatives dealt with the COVID19 global pandemic and its impact in Korea? (new services, tools, etc.)

Financial cooperatives have loaned up to KRW 10 million of emergency funds to direct and indirect victims of COVID-19 at a low interest rate of 2 per cent since January 2020, right after the first cases of COVID-19 were reported in Korea. The principal and interest of the existing loan was deferred for six months, and the maturity was extended by one more year. We are still carrying out various support activities, such as fundraising for the common people affected by the COVID-19. We take part in finding solutions to the challenges our members and communities face and strive to overcome difficulties together. If there is trust, solidarity and mutual help, we can overcome any crisis.

What are the key challenges that the Korean financial cooperatives need to address to be better prepared for future crises and to build resilience?

I can answer with both external and internal tasks. Externally, Korean financial cooperatives play a limited role in the implementation of policy financing. Although it is represented as a model close to local community, it is operated in a policy environment where relationship banking is difficult to form. At the government level, it needs support to establish a lasting relationship with local small business owners and self-employed people through the execution of policy financing centered on the Apex organization (Federation), to establish itself as a central axis of relationship banking.

Internally, financial cooperatives are losing their initial purpose compared to the past. We must prove the value of cooperatives in a way that differentiates ourselves from profit-maximizing commercial banks that are not membership based. It is necessary to restore trust by focusing on local activities such as strengthening cooperation with members, local residents, and local governments.

What do you see as emerging sectors and opportunities for cooperatives and the wider social and solidarity economy in Korea in building back better?

With the prolonged COVID-19 situation, various social problems have emerged. Crisis has come from every corner of our daily lives, such as care deficits, social isolation and environmental challenges. As the global pandemic and the climate crisis show us there is a need for a major transformation in the economy and society. With the rise of inclusive growth that values quality of life, the role of the social economy is becoming more important in local communities.

The social economy is an alternative that can heal various ills and innovate society through the values of solidarity, sharing, and win-win cooperation. By providing social services by utilizing the niche market of the local community, which is not covered by the market and the public, the social economy is revitalizing our business and taking the lead in business innovation for sustainable growth. When social economy organizations provide integrated services through solidarity and cooperation, it is expected that various service needs in the region will be satisfied.