FW Raiffeisen who holds the distinction of having organized the first ever credit union in Germany some time during the nineteenth century is reported to have said: “Credit Unions must not confine themselves to granting loans. Their main objectives should be to control the use of money, and to improve the moral and physical values of people, and also, their will to act by themselves.”
Those indeed are some of the founding pillars upon which the credit union was invented. It sought to create both environment and space in which people, through collective effort – the cooperative – could both accumulate money and control its use through an institution that they could call their own.
Credit unions are unique in the financial world for the reason that they are non-profit cooperatives which are owned and directed by their members, their principal function being to encourage savings and to provide credit at favourable interest rates. Quite apart from the sense of ownership which members feel, of course, credit unions provide an option to resorting to commercial banks which of course are for-profit institutions the rules of which take no account of such welfare-oriented considerations as are embraced by the credit union.
The United Nations having designated 2012 the Year of Cooperatives, this is perhaps as good a time as any to take a look at aspects of the cooperative credit union in Guyana in the context of Mr Raiffeisen’s pronouncement of so many years ago.
The notion of not confining itself to “granting loans” – which is the central thrust of Mr Raiffeisen’s pronouncement is of course entirely in keeping with what we understand to be the role of the credit union. It is first and foremost a repository for savings.
One doubts, however, that were he alive today, the founder of Germany’s first ever credit union would take issue with the view expressed by the General Manager of the Guyana Public Service Union Cooperative Credit Union who holds the view that the contemporary credit union must adapt to suit changing circumstances, which in the particular case of Guyana, means the ever increasing need for access to lending.
Benn, when asked about the role of the Guyana Public Service Cooperative Credit Union linked its role to the condition in which the country’s public servants find themselves. Low salary levels – a matter which has not been satisfactorily addressed by government over several decades, means that it is Mr Benn’s perspective, much more than Mr Raiffeisen’s that is applicable on today’s circumstances. Not that the matter of control of the use of money and improving people’s “moral and physical values” and encouraging them “to act for themselves” has been separated from the concept of the credit union. On the other hand Benn argues that we live in a real world and that the role of the Guyana Public Service Credit Union has to reflect that reality.
There used to be a time when the Guyana Public Service Credit Union was a resort in circumstances where loans were required for major acquisitions including, for public servants starting out in life – so to speak – or getting married – the acquisition of furniture. All that has changed. As Benn puts it the credit union has become “a salary subsidy” a haven for public servants in circumstances where they simply cannot make ends meet. These days, loans are acquired for everything ranging from the payment of utility bills to staving off the repossession of household items acquired on hire purchase terms. Members also approach the credit union for loans to help defray medical and funeral expenses.
In effect and while applauding the role that it continues to play, the Guyana Public Service Cooperative Credit Union serves as a sort of mirror to the condition of our public servants and really ought to send a message to their employer that restoring the credit union to its substantive role depends on the removal of the burden resulting from the salaries that they earn.
To its credit the Guyana Public Service Co-operative Credit Union has managed to maintain its obligation to its members in their changing circumstances while consolidating its own position through shares in local companies and fixed deposit investments though it has to be said that the ability of thousands of lowly-paid public servants to accumulate savings on a continual basis continues to be compromised by what is, out of necessity, frequent resort to the credit union in circumstances of emergency which have become routine to their existence.
