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CREDIT UNIONS- TOWARDS A BETTER TOMORROW |
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Salutations It is always with great pleasure that I seize opportunities to return home when my schedule allows. All the more so today when that opportunity involves contributing to the development of a people-based institution such as the credit union movement. The importance of bringing people together, particularly those that are not as economically advantaged or indeed as resource-filled as others, is one with which I am familiar since my childhood years in the village of Parlatuvier, on the north coast of Tobago. And as an adult, I have been involved for more than 30 years in attempting to build and sustain the economic and social capacity of less developed countries in the global community. My experience in that field has taught me that the most important factor in that struggle – and struggle it is – is the human factor – People. People – not just as an amorphous mass of humanity but as individuals, as mothers, as fathers, as children, as farmers, as fishermen, as businessmen and women, as taxi drivers and indeed as students. And that importance not only revolves around what is done in their name, but also what they do for themselves. And this message is one that the very nature of your enterprise tells me you have well received. For you have come together to co-operate in an institution dedicated to improving your life by your own actions thereby demonstrating belief in yourselves. It should never be forgotten that throughout our history, grassroots institutions such as yours have given us as a people, focus and strength to unite and overcome barriers to our progress and development. In that vein it is most fitting that among your honourees tonight are three exemplars – the Hon Prime Minister of Trinidad and Tobago, a former President of Trinidad and Tobago and a former Chief Justice of Trinidad and Tobago – all men who, through their own endeavours, have contributed so much to the improvement of life in our society. Their deep commitment to the country of their birth has seen them invest their intellectual might which, allied to hard work, ensured that they reached the highest offices in the land. But in so doing, they never forgot the modest circumstances from which they came. Indeed it can truly be said that though they walked with kings, they never lost the common touch. Tonight we say to them, not only congratulations but also well done, thou good and faithful servants! We also say hearty congratulations to all the other awardees tonight. Ladies and gentlemen, I see this evening’s proceedings as one in which you celebrate your achievements and acclaim your exemplars. It is therefore not my intention to detain you unduly – feature address or not. As regards the topic at hand, as you are aware, Credit Unions are an outgrowth of the cooperative movement that emerged in Europe in the mid-nineteenth century. Today, the beginning of the twenty-first century, the World Council of Credit Union boasts of having members and affiliates in 90 countries around the world. These members include regional and national credit union associations, cooperative associations and business service organizations. Research reveals that together they represent more than 37,000 credit unions serving as many as 112 million members. An examination of the situation in our Region on the basis of the latest data available from the Caribbean Confederation of Credit Unions revealed that at the end of December 2001, there were 316 credit unions in the Region. Of that number, 79 or 25 per cent were in Trinidad and Tobago with shares and deposits totalling just over US$355 million (355,020,879) or 30.33 per cent of the total regional credit union holding of shares and deposits. At the same time, membership in Trinidad and Tobago credit unions stood at 282,070 or 22.19 per cent of regional membership. This figure is important, as it means that in a population of approximately 1.2 million, some 23.50 percent are members of a credit union. As regards the operation of these credit unions, loans to the membership were just over US$307 million (307,158,781) or 32 per cent of total loans outstanding regionally. As regards assets, these amounted to just over US$440 million (440,230.3 million) or 30.62 per cent of the regional assets, held by credit unions – the largest held in any country of the Region. In the first quarter of 2001, twenty-two Credit Unions in Trinidad and Tobago paid out $56,670,665 in dividends to their stakeholders with an average dividend of 7 per cent. From these figures, it is clear then, that the movement, which began in Trinidad and Tobago in the mid-1940s, has evolved and matured into a significant non- bank financial institution that is increasingly able to challenge the dominance of other financial services providers. Also your institution, once considered home-grown, has graduated from being mere providers of simple savings and loan facilities to become a major source of sophisticated financial services and products. As you aware, historically there have been special reasons for the popularity of credit unions worldwide and Trinidad and Tobago is no exception. These include competitive rates on savings; lower transactions fees; lower loan rates than that offered by other financial institutions; easy access to loans; voluntary withdrawable savings that pay market rates of interest and fixed term deposits etc. One of the challenges now faced by the movement in ensuring a better tomorrow is how to ensure the retention of these traditional benefits while providing the new sophisticated financial services and products. This challenge faces our large credit unions such as Eastern, TECU and First National, as well as our smaller community-based ones such as that in Mount Pleasant, right here in Tobago. Apart from meeting the traditional personal needs of its members as shown by the frequency of loans for car repair, medical expenses; computer purchase; house repairs and debt consolidation and thus contributing significantly towards important human and social activities and the maximization of individual welfare, credit unions have helped to shape the very direction of our economies. This can be seen in the growing national and regional emphasis towards the development of small and micro enterprises, which often require modest quantities of working capital at discretionary rates. In addition, in our Region, a number of today’s large enterprises started as small or micro enterprises using credit union resources. Beyond doubt your institutions have helped to create today’s vibrant entrepreneurial class. Ladies and Gentlemen, despite the encouraging growth and performance of credit unions in the Region, however, the future still remains a very challenging one. These challenges include competition from the commercial banks, as the emergence of credit unions from their traditional role has changed significantly their relationship with commercial banks. Initially it was more a matter of the credit unions having to compete with the commercial banks, trying to capture markets and customers; now it is more the reverse and commercial banks are facing stiff competition from credit unions as both are now operating in virtually the same market, going after the same business. Competition is the order of the day! In addition, in the current economic environment where government spending, in many of our countries, is certain to be reduced in many areas including the social sector, the survival of a number of families will increasingly depend on institutions like the credit unions. An additional challenge for the credit union, in what is an increasingly globalised environment where customers are free to choose where they save, borrow, invest and otherwise freely move their funds, is the imperative to be properly managed, organised and regulated so as to take advantage of the opportunities created both as a result of globalisation itself, and in our region in particular, as a result of the imminent Single Market and Economy. There is an urgent need therefore, to improve efficiency and modernize operations in order to compete with other non-bank financial institutions and more importantly, with both national and foreign commercial banks. One important aspect of this need to improve competitiveness must involve the upgrading of managerial skills and the level of competencies of the staff. Happily, already there is a move by some of the larger credit unions towards this end by employing university graduates in key positions. This should be encouraged and emulated as far as possible by the smaller community-based credit unions. There is also, directly as a result of the evolution of credit unions, increased pressure on Central Banks to bring them under new forms of regulatory and prudential control similar to that of their competitors. This is paradoxically the downside of the greater dynamism and creativity that credit unions have been exhibiting in recent years. Ultimately, it appears that increasingly credit unions will be required to meet internationally accepted prudential standards for capital reserves, delinquency controls, loan loss provisions, liquidity management etc. (You can’t, as we say, “play mas and ‘fraid powder.”) In this process, however, the important issue of how best to organise the supervision of credit unions without causing them to be less accommodating of the demands of their members and of small and micro enterprises is one that must be carefully addressed. The trend towards Central Bank control has already begun and some countries in the Region, including Jamaica, have created institutions to oversee the prudential regulation of the credit unions. In Trinidad and Tobago since 1998 and particularly since October 2000, the Authorities have been considering amendments to the Co-operative Societies Act and Regulations. These legislative changes are also intended to improve both the operational soundness and long-term viability of the credit union system. It is difficult to deny that prudent measures in this regard are desirable as there has been increasing concern regarding the financial services sector in the Region. You in the credit union movement clearly have an important responsibility especially so for the small saver. I implore you therefore to be alert to and to take advantage of the opportunities created by globalisation and the Single Market and Economy in expanding your scope of operation. From a regional perspective, in keeping with the deepening of the economic integration movement, our credit unions will do well to strengthen their relationship with other credit unions in the other parts of the Region. This strengthening could take the form, not only of greater exchange of information and experiences among themselves as members of the Caribbean Confederation of Credit Unions, but also through cross border operational alliances and other support mechanisms, similar to the “inter bank system ” that obtains with respect to commercial banks. I would in conclusion humbly suggest that in order to ensure a better and brighter tomorrow and not only for credit unions, you must:
Following these steps should go some way towards ensuring the achievement of the theme you have so wisely ch osen for this year’s observance of Credit Union Week – Towards a Better Tomorrow. This is my earnest hope. I thank you and wish your movement a successful and profitable future. |
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