28th
January 2012
Power to The People &
The Credit Unions – Part 2
(Continued from
last
Weekend VOICE)
 Now
that the reader will have a full appreciation
of the relevance of the credit unions to the
potential growth of the internal economy of
St. Lucia, let us address the means by which
I believe that their involvement can be enhanced
even further by indentifying three steps that
could be taken by the Government that will fit
their budget plans and expansion aspirations
as follows:-
STEP
1
I do not believe in any interventionist intentions
of any Government into the activities of credit
unions other that the normal regulatory rules
that are a fixed part of all of our lives for
the protection of consumers and customers/members.
However, I believe that there should be some
style of partnership formed in order to work
together with the credit unions and Government
and in this regard a form of Government Liaison
Committee should be formed as an informal “bridge”
between Government and the top executives of
the credit unions which will be a perfect means
of passing information between them as a form
of “Social Financial Health Test”
to act as a barometer of exactly what is happening
at the grass roots of the economically active
members of the populace that represent the 67%
of members of the credit unions. This will be
an ideal means for the Government to have a
“heads up” accurate view of the
state of the economy from a membership perspective.
This will provide the Government with their
own “PEARLS” of information against
which to make decisions to rectify any problems
on the horizon and enable them to plan and budget
more effectively.
STEP
2
I believe that the penetration of the credit
unions into the society of St. Lucia is a perfect
means for them to open the aforementioned “MICROFINANCE
GATEWAY” by utilizing the credit unions
in injecting more available capital to the budding
entrepreneurs on the island who cannot raise
finance for their ideas by traditional means
of obtaining bank loans to develop a good idea.
Credit Unions, by definition, cannot subsidize
themselves by donations. They are not charities,
and they have a responsibility to their members
which must make them RISK AVERSE to protect
members’ deposits. We cannot tolerate
Cavalier attitudes to lending or the parameters
of the PEARLS will be lost to the bottom of
the sea! However, the Government could assist
the Credit Unions in their risk assessment parameters
by underwriting certain risks themselves, should
a micro loan to a budding entrepreneur fail,
by becoming involved in the underwriting and
credit scoring of a loan applicant by selection.
This will, naturally, mean that their own business
development departments will have to work hand
in hand with that of the risk assessors at the
credit union, but it is workable. They could
also become involved in the credit control of
such loans in order to keep the costs down for
the credit union which is there to serve their
members and allow a higher rate of interest
to be rebated to members, tax free, against
their deposits that are dedicated to higher
risk transactions. A lot to think about, but
it would be cheaper than having a new department
formed and training personnel in the principles
of risk management in lending transactions as
the credit union already has experts employed
in this field.
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