For hundreds of thousands of people in Trinidad and Tobago, the vehicle they drive, the home they live in, their children’s educational opportunities, and even the very clothes on their backs would not have been possible without the support of a credit union.
Without the help of a credit union, hundreds of small and micro entrepreneurs—particularly in the services sector—never would have had their dreams for economic independence and prosperity become reality.
And in a post-pandemic world, credit unions are even more important than ever before, as the families and businesses they helped grow in the past seek to rebuild now.
It is a fact that credit unions often step in where banks fear to tread. They take a chance on “the little guy” that banks—by their very design and fiduciary responsibilities to their shareholders—are unable to.
Indeed, the Credit Union Movement began with a simple idea—people could achieve a better standard of living for themselves and others by pooling their savings and making loans to each other as neighbours and co-workers. A group of “little guys” coming together and combining assets so they all can benefit.
History tells us that the first credit union or co-operative organisation was officially born in Rochdale, Manchester, in 1844. Robert Owen, an Englishman and a Chartist, is said to have inspired a few unemployed weavers of Rochdale to save some £28 out of their few pennies to start the first consumer co-operative.
Fast forward to 1942, when Thomas Malcolm Milne, a devout member of the local Catholic Church laity, introduced credit unions into Trinidad and Tobago. He believed strongly that the Credit Union Movement would lead to “the economic emancipation of the people”, and saw it as a solution to financial problems of the common man, and a protection against unscrupulous money lenders of the time. By December 29, 1945, legislation was enacted to allow for the creation of credit unions in this country—the Credit Union Society Ordinance (No 48 of 1945).
According to a World Bank report published in 2020, the Trinidad and Tobago credit union sector is concentrated and has a significant number of institutions. At that point in time, the number of institutions totalled 129, with total assets representing 4.5 per cent of total financial sector assets—worth TT$19.5 billion—and comprising some 600,000 to 700,000 members, or 45 per cent of the adult population.
This year, the Co-operative Credit Union League of Trinidad and Tobago (The League) renewed its decades-long call for the establishment of a co-operative bank for credit unions in this country. It is a more-than-reasonable request, given that credit unions have successfully managed to mobilise and administrate billions of dollars’ worth of funds from their membership.
We at TTCSI believe the time has come for this to be made reality, to allow T&T’s credit unions to evolve to an even higher level of service than that which they currently provide.
By its very design, the credit union is concerned primarily with financial investment in its membership and by its membership, in a continuous feedback loop. Members receive higher interest rates on savings, lower rates on loans, and pay lower fees for services offered. It is member-driven and not for profit, which means any additional earnings are distributed to the membership in the form of higher dividends.
One critical service provided by credit unions to their membership is access to affordable financing. Because loans and credit facilities are offered at competitive interest rates, thousands of service providers and small businesses are able to secure the necessary funds to expand their operations, invest in new equipment, or meet other financial obligations, without the burden of exorbitant interest rates, as may be the case with commercial banks.
Credit unions prioritise building strong relationships with their members and understanding their unique needs and challenges. This helps them design and provide guidance on personalised financial solutions for those members—a type of concierge service those who normally become credit union members may not receive in traditional banking institutions.
So, whether they are a small business or service provider, or a family seeking help to purchase a new car or even a new home, such clients view and experience their credit union as a valuable partner working alongside them towards their sustainable growth and prosperity.
There is no disputing that there is something to be said for an institution which is able to foster a sense of community and shared responsibility among its members, who are both clients and owners of that institution. They are invested in its success and prosperity in a way few other financial entities can understand. That is perhaps one of the most special characteristics of credit unions—the co-operative and collaborative environment in which they operate.
We at TTCSI endorse the renewed call for the establishment of a co-operative bank for credit unions. We encourage the Government to partner with the Credit Union Movement as it continues to evolve, so that it can be the best partner possible for supporting the indomitable spirit of SME entrepreneurs, families and communities in this country—all of whom are valuable economic actors.
HAPPY INTERNATIONAL CREDIT UNION MONTH, TRINIDAD AND TOBAGO!
—Author Mark Edghill is president of the Trinidad and Tobago Coalition of Services Industries (TTCSI).
