TRIPOLI, Libya-Credit unions may expand into Libya following a four-day visit by World Council of Credit Unions CEO Brian Branch as part of a fact-finding mission focused on establishing credit union services there.

Speaking by phone from Tripoli, Branch told Credit Union Journal that the Central Bank of Libya-along with a few different NGOs-approached WOCCU in late summer about starting credit unions. The process was delayed after the terrorist attacks in Benghazi, but several Libyans visited WOCCU's offices in Madison, Wis. during the fall where the group did some training to introduce the CU concept.

"It's a new concept-it takes some training," said Branch. "The idea of a cooperative financial institution fits very well into their Islamic framework."

The nation's banking laws are currently being reformed, in part to allow for Islamic banking, which does not allow interest payments on loans or deposits, among other things (see sidebar). The country's government is also in flux as it rebuilds after the rule of Muammar Gaddafi.

Branch is traveling with Lara Thomas, founder and executive director of the MILLA Project, a group focused on empowering women around the globe; Allaeddin Ghadyi, project development technical engineer manager for the MILLA Project; and Steven Stapp, president and CEO of San Francisco FCU.


Discussions Begin

Branch still had three more days ahead of him in Libya when he spoke to Credit Union Journal, but his first day entailed meetings with the nation's Central Bank to discuss the legislative framework, the credit union structure and how the two fit together.

The two groups also discussed how to best incorporate Islamic banking into the CU structure. Branch said WOCCU has found that it's important to address the legislative and regulatory framework up front in each country, because if that isn't sorted out properly, all the other work involving CUs can easily be undone.

Despite the turbulent situation in Libya during the past two years, Branch said that the group he is traveling with has been out and about and hasn't had any trouble. But the group was also being very cautious about where they go, "just like we would in any large city." The delegation does not plan to travel to Benghazi and is checking with security personnel before traveling to different cities to ensure that the route is safe.

"People have been very warm, very friendly. I have no complaints."


Other Meetings Planned

Branch was scheduled to travel to another city to meet with a business group interested in starting credit unions for its employees, as well as discussions with NGOs and civil society groups interested in how financial cooperatives work with their members. A meeting with a Libyan democracy group was also planned to discuss the work CUs do to support local grassroots community democracy.

"It's an introductory trip for us to introduce the concept of credit unions, and it's exploratory for us in terms of finding out whether the legislative framework would support it and whether there is strong enough popular interest to support a credit union system," said Branch.

At the time he spoke to the Journal, he had only met with the Central Bank and so could not gauge the level of popular interest, but "the Central Bank is very interested and they say there is popular interest-especially in Islamic banking products, and that's a set of products and services that the banking sector hasn't provided here."

Assuming the trip's findings are positive, Branch said WOCCU will look into doing a pilot program once he returns home. "If there's a group that wants to start a credit union or if there are a few groups, that's where we'd start and provide some technical assistance and some training for them to get started. We would also be in discussions with donors looking for donor support to scale it up."


Large, Unserved Groups

About 20 different groups have applied for banking licenses since the revolution, said Branch, but most of those are foreign operations and have not yet opened. "So they may be on the cusp of beginning to expand," he said. "It doesn't sound as though the banking penetration to the population is very high, and I don't yet have the statistics on that, but there certainly seems to be a large unserved group."

Branch explained that because community-based cooperative banking institutions were not sanctioned during the previous regime, "now is a very good time for Libya in the sense that people are looking for new ways to do things."

"It's an opportunity for credit unions to help rebuild a society," said Branch. "We've done this in many countries after a period of conflict. We all focus so much on the need for credit unions to be competitive and offer the best kind of solutions for people's financial needs, but sometimes in situations like this a big part of what we hear from people in communities that are rebuilding is that they're very interested in the democratic nature of credit unions as well."

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