Credit unions have always been the right financial solution in times of economic and social crisis for common men and women, helping members sustain their income, protect their assets and strengthen their communities. At World Council of Credit Unions (WOCCU), we have seen credit unions provide working people all over the world with a source of economic empowerment and hope, often under uncommon circumstances.
People in the United States and many countries are facing unprecedented economic crises. While credit unions and their members face the same economic problems as everyone else, credit unions, by their member-service nature, continue to provide a safe haven for member savings and a source of credit to meet member borrowing demands. Historically, credit unions around the world have faced serious economic and social storms and come through in support of their members with flying colors. We draw lessons from what these countries have accomplished through cooperative commitment, democratic determination and plain old hard work.
The Lesson From Poland
At the end of the 1980s, Poland's Solidarity movement led Poland and much of Eastern Europe out from under the veil of Soviet rule. Having inherited a broken economy characterized by a large, failed state economic enterprise, low productivity, rising unemployment and the absence of consumer financial services, Poland's leaders turned to the credit union model as the most logical solution to their problems.
WOCCU provided initial support to the Polish movement in the early 1990s, and credit unions emerged as a place for common people to pool savings and access loans. They also provided community-level exercises in democracy for the first time since before World War II.
Today, the credit unions' common touch and democratic rule have attracted more than 15% of the Polish population into membership, making it one of the world's fastest-growing and most successful credit union systems. The Poles have proved that determination to control one's own destiny, coupled with the cooperative effort of a shared vision can lead to political and economic liberation.
The crisis was more traumatic in the African nation of Rwanda, a country ravaged by a genocidal civil war in the mid-1990s. When the killing was over, the Rwandan government turned to credit unions to help restart economic activity in the country's towns and rural areas. In fact, it was through credit union membership assemblies that the Hutus and Tutsis, bitter rivals during the war, were able to sit down and work through their differences at the local level.
WOCCU, with the help of the Maine Credit Union League, supported that effort. Now credit unions serve as the principle financial resource for Rwanda's agricultural system. Much of the Rwandan coffee you may enjoy at shops throughout the U.S. was produced by low-income farmers whose crops were collected by their processing cooperatives and financed by their credit unions. Rwandans were able to rebuild their lives when their credit unions brought them together and restarted their agricultural economy. These credit unions now serve 12% of Rwanda's total population.
The crisis that affected Ecuador in the 1990s was a financial one, with devastating impact on the people. Consumers lost their savings as the major banks failed. The country suffered a severe liquidity crisis and bank credit was simply not available to the common person.
The Lesson From Ecuador
WOCCU had been working in Ecuador since 1995, helping put sound financial management practices of delinquency and liquidity management to work in credit unions. When the crisis hit, not one credit union failed and none stopped lending to qualified borrowers. Savings deposits in credit unions actually grew during the crisis as people turned to their trusted local institution. Today, credit unions serve 16% of the Ecuadorian population thanks to the effectiveness of their efforts.
In all three countries, credit unions' tensile strength and member service orientation resulted in closer relationships with their members, as they made decisions and charted courses to help their members' improve their financial wellbeing. The economic stability and support provided by credit unions to their members during times of crisis proved in country after country the model's strength and value to those who depend on it most.
It is during and after crises that we see people flock to the safety and the stability of the credit unions to find economic empowerment, and, more importantly, a source of hope. This is a lesson WOCCU has been taught repeatedly from one context to another. And it is a lesson credit unions in developed countries, including the U.S., can learn from credit unions providing common people in Poland, Rwanda, Ecuador and elsewhere with uncommon levels of service.
Brian Branch is executive vice president and chief operating officer for World Council of Credit Unions. For info: www.woccu.org.