Credit unions: contributing to economic and social development

Democratic Participation

Democratic participation is the foundation of successful, safe and sound credit unions. Shareholder participation helps to ensure accountability in the governance of the credit union. Elected officials and staff keep members informed about the services, performance and condition of the credit union by regular communications, transparent disclosure of its financial statements and key indicators. Members are assured of the accuracy of the financial disclosures by reports from external auditors and the internal audit performed by the Supervisory Committee.

Sustainability.

Equality. Choice.

Credit unions worldwide offer members much more than financial services. They provide members the opportunity to own their own financial institution and help them create opportunities such as starting small businesses, building family homes and educating their children. In some countries, members encounter their first taste of democratic decision making through their credit unions.

Credit unions are democratic, member-owned financial cooperatives. Each member, regardless of account size in the credit union, may run for the board and cast a vote in elections. As financial intermediaries, credit unions finance their loan portfolios by mobilizing member savings and shares rather than using outside capital, thus providing opportunities for generations of members.

Credit unions exist to serve their members and communities. As not-for-profit cooperative institutions, credit unions use surpluses to offer members more affordable loans, a higher return on savings and lower fees or new products and services. They serve members from all walks of life, especially the poor and disenfranchised.

Credit unions are safe, convenient places to access affordable financial services. Credit unions offer a relatively full range of financial services, giving members greater flexibility to meet their individual needs. In some countries, credit unions are known by different names to better express those services. In Afghanistan, for example, credit unions are called Islamic Investment and Finance Cooperatives (IIFCs) to comply with Islamic lending practices; in Africa, they are known as Savings and Credit Co-operative Societies (SACCOS) to emphasize savings before credit.

External Governance

All financial institutions, regardless of type, are expected to comply with the basic standards of transparency, accountability and financial reporting. Credit Unions should comply with the International Credit Union Safety and Soundness Principles and their national legal and regulatory frameworks.

Internal Governance

Unlike for-profit entities, credit unions exist to serve their members. Thus, credit unions must address this additional layer of governance related to their democratic, member-driven nature. This includes a commitment to “one member, one vote,” as well as adherence to the International Credit Union Operating Principles and other guidelines as developed by the World Council of Credit Unions and the International Co-operative Alliance.

Individual Governance

In order to perform their collective duties the individual board members and managers have an obligation to maintain ethical conduct and professionalism and to speak with a single voice in the interest of members. Board members are also expected to posses the skills and technical capacity necessary to fulfil their duties. Where any deficiencies are detected, the League provides the necessary developmental activities as part of its annual programme created for this purpose.

The Power of Continuous Training and Development

The League focuses heavily and encourages continuous training and development of credit unions’ officials, staff and members. The Directors and Managers Professional Development Conference to be held over the period September 30 – October 01, 2016 will treat with the above and other important matters. Scores of credit union officials are expected to graduate following an intensive period of study. The results of these training interventions are reflected in the continuous positive performance of credit unions, their ability to withstand the global economic challenges and the provision of quality services to the membership.

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