Arnold: Multiple Factors Influencing CU Growth Worldwide

MADISON, Wis. – World Council of Credit Unions’ CEO Arthur Arnold had some exciting news to share with attendees at the organization’s recently held Leadership Conference: worldwide, more than five million people joined the ranks of credit union members last year. “Total savings, capital and assets all climbed more than 10%, with assets worldwide topping US$758 billion at year-end. For the past four years, membership grew in the range of 3% to 5% a year, while all other growth indicators more than doubled membership growth,” WOCCU reported. The reasons for the phenomenal success are many, not the least of which is the reaffirmation of the `people helping people’ concept, Arnold said. WOCCU works with development groups in 84 countries around the world promoting credit unions to the unbanked and those that Arnold described as the “have less” of the world. Many of WOCCU’s projects are funded by international aid groups, government agencies or banks such as United States Agency for International Development (USAID) Accion International and the Mexican Ministry of Agriculture, Livestock, Rural Development. Arnold expressed his pleasure that the number of projects with the World Bank are increasing. The more projects that are funded, the more outreach WOCCU can do and the more people will be brought into the credit union community. Developing economies are ripe for the credit union movement and account for much of the growth such as in Latin America. Arnold named high growth areas in Ecuador, Brazil and Mexico, where WOCCU has a number of projects with different aid organizations. He also cited Eastern Europe including both the maturing Polish movement and the younger Ukrainian movement. In Africa Kenya and Rwanda are growing rapidly. For growth to continue, enabling legislation must be enacted, Arnold said. In many countries, people are distrustful of financial institutions and therefore credit unions carry some of the taint, he said. He was optimistic because banking regulators from many developing countries attended the Leadership Conference – if credit unions are to continue to flourish, said Arnold, regulators need to know the difference between banks and credit unions. When discussing future development plans, Arnold said WOCCU is continuing with the credit union project in Afghanistan despite the fact that many aid agencies like Medicine Sans Frontiers have pulled out because they can’t guarantee the safety of their people. Arnold expressed concern about security issues, but mentioned that WOCCU is still considering an Iraq project. Another factor in the growth of credit union membership throughout the world, said Arnold, is the initiative WOCCU takes to find areas where help is needed. For example he spoke about the International Remittance Network (IRnet) which addresses the problems of immigrants sending money back home, especially to countries in Latin America and the Caribbean. As the number of migrant workers increases, remittances have become more important, said Arnold. “They connect families across borders, increase standards of living and contribute to the growth of country’s economies.” Inexpensive electronic transfer is especially needed for Latin America and the Caribbean, and WOCCU, its regional member affiliates and its money transfer partners are rapidly expanding the reach of remittance distribution. Ninety percent of the recipients of remittances are women whose husbands have gone to other countries to work, Arnold said. Although recipients don’t have to be credit union members, when they go into a credit union to pick up their money, they often wind up joining. He said about 30% of the money sent ends up in credit union savings accounts. “We aren’t competition for Western Union,” Arnold said. “But, each transaction saves $10, and last year they made over 400,000 transactions saving people over $4 million.” The first half of this year 350,000 transactions have already been made. WOCCU is expanding this service with new providers. Another factor explaining the credit union growth is the increasing number of partnerships between international CUs with those in the United States. Arnold points out with the constant battle to keep credit unions tax exempt, the nature of helping other credit unions in poor countries emphasizes another difference between credit unions and banks when presenting arguments on why credit unions should maintain their current status. The buzz word “micro-lending” is often used to describe what credit unions do in developing countries. Although aggregate numbers about loans tell a story, they are made up of hundreds of thousands of individual stories of people who want to live in dignity. A double digit loan allows a person to buy materials to make something that can be resold providing financial independence. “Credit unions are doing what they are supposed to do – benefiting members, enabling millions of people to grow,” Arnold said using one of his favourite phrases. But in helping people to grow, the international credit union movement is growing as well. -