The benefits of credit union membership

Although some of us would like to deny it, the majority of the people that populate Barbados have their origins in poverty and struggle. Not a struggle for power of any kind, but for survival. The policies of Governments over the past 60 years have given some of us the opportunity to do a little better than our parents did. Lest we forget.

A few years ago I heard a man speaking of community life in Barbados prior to 1955 when hurricane Janet paid us a visit. He praised the willingness of people to live in fellowship with each other and share pretty much everything they had. The woman who did not have sufficient food in her house to feed her children could depend on a neighbour bringing some sweet potatoes or a yam or breadfruit. She would return the favour when the positions were reversed, which would not have been too far in the distance. In the absence of any Governmental support, people helped themselves and each other.

And then hurricane Janet struck. According to him, in the aftermath of the hurricane, people stole each other’s galvanise sheets and whatever else was not in someone’s immediate possession. The same people who shared their food the week before were now stealing from their friends. What happened? It seems that when there is a crisis the bonds of unity fall apart. This may also be true when some of us seem to escape the barrel.

One of the methods of self-help that people utilised when they had little was the sou-sou. This survives today in what we describe as meeting turns. People with a common interest, maybe a place of work, “throw” a small amount of money weekly or monthly to a common fund and the thrown sum is paid to a different participant at the end of each cycle.

In a more highly organised arrangement, in years gone by, people would deposit money to what was then called a lodge. The lodge was a society of members, but not a secret society. The practice then was to pay a small sum at regular intervals and at Christmas time the money saved would be available to buy one’s Christmas fare. I can still see Mr. Price with his valise collecting the little change that persons could afford and walking to Harpers to do his accounting. His was an unheralded service to his community.

The most highly evolved form of these self-help measures is the credit union. History is important, that is why it is a stroke of good fortune that the modern managers of these organisations have access to resources that can provide them with knowledge of the history of these entities and, in many cases, the institutional history of the very bodies that employ them.

At the heart of the credit union movement is the co-operative identity. This identity is “based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others”. While a transparent business model is important, business without empathy is not the major thrust of these entities.

The movement of managers from working in banks to the management of credit unions, has visited the restrictive policies of banks on credit unions in some cases. As a result, one of the fundamental strengths of the credit union, the ability to get help when in need because of the brotherly philosophy, has been voluntarily surrendered in the name of modern management, especially where the intimacy of small organisations no longer exists.

However, all is not lost. Maturity allows us to transcend our education, which was merely to regurgitate and mimic, and learn to think outside the box. Credit union managers are now all highly trained and possess the ability to figure out how to help their members without imposing on them the negative red-tape of banks that kept our parents out of the financial system, without running afoul of legal requirements.

One of the greater advantages of credit union membership is the fact of ownership. You put your money into a bank over which you have no control, but you literally own your credit union. Although most credit union members have heard this, one wonders whether they really fully appreciate what this means for them.

A few Saturdays ago, I visited the Lloyd Erskine Sandiford Centre and found there hundreds of members of the Barbados Public Workers Co-operative Credit Union Limited assembled to conduct the business of that credit union. An election process, as well organised as any national poll, was on the way and members were asking those who had been in management over the past year, questions about their stewardship. It was a wonderful sight.

Those fora are an effective medium of control and direction which the members should use to ensure that the credit union provides them with the services they want rather than to be a platform for vacuous speeches. This body is the highest decision-making body and it is from here that the direction of the
credit union, and, I dare say, the movement, must be set.

There are several other benefits of credit union membership. For one, all profits made by the credit union are the monies of the members of the credit union. Bank depositors do not share in the profits of their bank.

Also, credit unions do not charge their members a fee for keeping their money. This is one of the more negative features of banking in 2018. Bank fees are really an egregious imposition on customers for which there is no equivalent in the credit union movement. This great divide is grounded in the different objectives of the two bodies – banks for the profit of a small group of shareholders and credit unions not for profit, so any excess generated is passed on to the members.

Banks now pay almost no interest on savings. Credit unions pay interest as well as dividends. These are strong selling points for people with no history of institutional ownership, but with an appreciation of its importance.

The credit union loan approval process is a lot simpler than that for banks. Equal with the need to meet the qualification requirements is the underlying principle that the person sitting across the table applying for a loan is the owner of the enterprise to which he or she is applying and is a brother or sister to whom one owes an obligation to help. Unsecured loans are, therefore, a common feature of credit union lending.

When one weighs the pros and the cons, Barbadians are better served by their credit unions than by any bank. If it were not for the unfortunate restriction that forces the credit unions not to provide banking services for themselves, credit union members would benefit even more. It is an interesting phenomenon that credit unions must place their money in banks which pay them little interest on that money, but those credit unions can pay a better rate of interest to their members.

In the interest of openness and transparency, someone needs to explain to Barbadians why their credit unions continue to be prohibited from establishing a bank and providing a full range of banking services. Any guesses?

Barbados Advocate

Mailing Address:
Advocate Publishers (2000) Inc
Fontabelle, St. Michael, Barbados

Phone: (246) 467-2000
Fax: (246) 434-2020 / (246) 434-1000