TRIPOLI, Libya-The concept of Islamic banking may be unfamiliar to many Americans, but the World Council of Credit Unions is no stranger to it.
Among the tenets of Islamic banking-which is based on Sharia law-are that financial institutions cannot pay interest on savings or charge interest on a loan, explained WOCCU President and CEO Brian Branch.
"Financial services are seen as a community investment, so the methodology that we use is that members put savings into the credit union and they call it share savings, and the members then share in the profits of the credit union," said Branch.
Branch said that Libyan CUs-if and when they come to fruition-might vary across the country, with some offering exclusively Islamic banking products and others offering a mix of those along with traditional offerings.
"That's the richness of the credit union system; you can have different products and respond to different demands of different communities," he said.
By way of example, he pointed out that WOCCU has had information exchanges with CUs in Iran-which has a large credit union system, he said-where they use an Islamic banking model but apply fees. In Afghanistan, on the other hand, a strict application of Islamic banking is applied.
"Part of what we'll have to do is sort out how strict or how much of a mix of traditional to Sharia-compliant products they'll do here in Libya," said Branch.
WOCCU worked to set up credit unions in Afghanistan about a decade ago, and some of the groups from Libya that approached the World Council were aware of that work "and they were very interested in the methodology we used."
One difference from Afghanistan, he said, is that the general education level is higher in Libya, the infrastructure is better and more educated Libyans are returning from the United States and Europe and looking for ways to rebuild the country.