Credit Union Movement – A success story

The history of the Credit Union Movement reveals that the credit union idea began almost 150 years ago in Europe. The idea has spread to many countries all over the world and reached the Caribbean nearly 100 years later. The basic philosophy of the Movement is founded upon the principle of open and voluntary membership, democratic control and non-discrimination.

The introduction of the movement in the Caribbean came at a time when the region was undergoing drastic social change with the disappearance of the plantation system and the movement towards political autonomy. {{more}} These two conditions helped to create a social consciousness that focussed on the plight of the landless, unemployed and the poor.

Throughout its evolution, the Credit Union Movement has been sustained by its concern for the relief of poverty by encouraging thrift and mobilizing of savings, as well as its concern with the development of the individual to manage his/her own affairs and the business of the credit union to which he/she belongs.

The major objectives of the Credit Union Movement have been to provide financial services to which the majority of the population had little or no access, provide some equity in the distribution of wealth or capital, and foster a measure of financial stability among its members. To achieve these objectives, the pioneers of the movement recognized the need for:

* developing the individual through a process of education in the credit union philosophy;

* co-operation at all levels, including between credit union groups;

* developing a strong sense of social responsibility.

At the beginning, the movement focussed on the welfare of the poorest groups. It encouraged the lowest income groups to save and borrow for providential purposes. Members’ savings were regarded as shares, which were to be maintained for mutual support in times of need. In this arrangement, members were encouraged to borrow whenever the need arose for providential support rather than draw down on their shares.

The business of the Credit Union Movement is controlled by the members themselves as owners and operators. Members are trained in leadership principles to work with others for their mutual benefit and to take up offices in the institution by democratic appointment. The key units, the board of directors, the credit committee and the supervisory committee, made up of members appointed by their peers in open ballot, control all aspects of the operation.

The regional Credit Union Movement is held together by the Caribbean Confederation of Credit Unions, a strong and functional apex body, which leads the way forward for a movement that is driven by shared values. A Credit Union League in each island collaborates with its affiliates to provide a variety of services, including the mobilization of surpluses for inter credit union lending and development, promoting the practice of co-operative principles, and providing advocacy for the national movements.

While initially, credit unions were regarded as welfare institutions that provided for the socio-economic demands of a segment of the community which was denied access to commercial bank credit, they have now developed into full fledged financial institutions that effectively mobilize savings and provide credit for both consumption and investment.

Credit Unions in the Caribbean have been able to mobilise substantial amounts of domestic savings and finance the diverse needs of their members. During the decade of the seventies, the regional Movement experienced rapid growth. This was further accelerated during the decade of the eighties. By the year 2004, the Movement in the Caribbean had assets totalling 2 billion US$ and was providing an increasingly broad range of services to its members.

There is no doubt that the movement has had a substantial impact on the social and economic well being of its members in the region. As at December 31, 2004, regional membership stood at 1.6 million. The Movement’s share of savings mobilized at that time was 1.5 billion US$. An analysis of the loan portfolios of credit unions over the last decade showed substantial investment in education, home ownership, and profitable enterprises. The Movement’s impact on poverty has evidently been significant.

The Movement has not only evolved from a poor man’s savings and loan facility into a universal financial service for all income levels, it has also been transformed into a major financial market offering transactions which rival those of other key players in the finance industry.

• Prepared and submitted by the SVG League Office.