CHAMPASAK and VIETIANE, Laos – Even in communist countries, the credit union philosophy is taking hold. In Laos, a fledgling credit union movement is being nurtured by the Association of Asian Confederation of Credit Unions (ACCU) with government approval. However, the living conditions in the country would make any credit union activity almost unrecognizable by U.S .standards. The country's infrastructure remains primitive with no railroads, the most rudimentary of roads and few internal telephones. Electricity is limited to a few urban areas. No banks serve the countryside. ACCU CEO Ranjith Hettiarachchi, who has made at least 20 trips to Laos since the group started working there in 1992, said to reach the different credit unions he sometimes has traveled as many as 12 hours by riverboat or bounced over dirt roads or both. "The credit unions are very small with an average membership of 40 members," he said stressing that the smallness does not negate their importance in the lives of the members. He described what most credit union meetings were like: They take place once a month after dark when people have finished tending their fields and rice paddies. Members walk through their village to the leader's home to deposit their monthly savings, approximately US$.25, a huge amount where the average monthly family income is US$20, Hettiarachchi said – 80% of the 5.2 million Laotians earn their livelihoods from subsistence farming. At the same time people deposit money they act as the loan committee and decide which members will be given funds. The amounts are small, Hettiarachchi said, about US$7 as an average. Loans are used such things as fishing equipment or a stove to cook and sell cooked fish to neighbors. Laotian credit unions represent microfinance at the most basic both in terms of service and of the original credit union philosophy of people helping people, Hettiarachchi said. The credit union concept was introduced in Laos when ACCU, whose mission is to provide technical assistance on the preparation of bylaws, policies, accounting, training and education to the volunteer credit union leaders, conducted a National Workshop attended by government officers, the Central Bank of Laos and NGOs (Non Governmental Organizations) in 1992. This workshop provided input on the importance of credit unions. "As a result of this intervention, we were able to organize one credit union among the staff of the Central Bank of Laos. Currently, that credit union has 120 members," Hettiarachchi said. Then a NGO also organized a second credit union in the city of Vientiane. ACCU spent 1994-1996 promoting credit unions in Vientiane and Luang Prabhang in collaboration with different NGOs. They established 37 credit unions. By 1997, the evaluation meeting with the NGOs concluded that ACCU should continue the promotion of credit unions with the support of the central bank and Rural Development Department. The next step was for ACCU to sign a Memorandum of Understanding with the Central Bank of Laos and the Rural Development Department to promote credit unions in four provinces in Laos from 1997- 2001. The common bond for 171 credit unions is based on community. Only two employee credit unions exist and they are the two original credit unions both located in the capital. Laos has no law regulating credit unions, but ACCU is working with the provincial government of Luang Prabhang appointed coordinators and ACCU Rural Development Officers toward this goal. Their task is simplified somewhat because the Laotian government is pro-credit union, Hettiarachchi said. At the moment, credit unions rely on the honesty of their leaders who are members of their small communities. Without offices, funds are often guarded in people's homes. It is not ideal, but alternatives do not exist yet. "We are providing technical assistance to the regulatory body for credit unions to come up with a regulation for credit unions," Hettiarachchi said. Although the ACCU trainers are aware of the importance of good governance, the fledgling credit unions are too primitive to even implement a monitoring system such as the World Council of Credit Unions' PEARLS. However, the trainers work on training credit union leaders in good bookkeeping techniques. Everything is paper based. Without electricity, computers are unknown. Hettiarachchi said he would love to partner with American credit unions. He pointed out that as little as $100 would greatly advance a Laotian credit union's long-term success. -

[email protected]