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HOW UNIQUE WE ARE

“It is worth mentioning that the first Co-operative Credit Union in Ghana and for that Africa was established at Jirapa in the Upper West Region in September, 1955. The idea was introduced by Rev. Father McNulty an Irish Canadian. However, the first Credit Unions in the World were established in Germany in 1952 and 1964 by Herman and Friedrich Raiffeisen”.
Co-operative Credit Union – How unique are they? Credit Unions are Co-operative financial institutions which provide financial services to their members. The financial services consist of savings mobilization, granting of loans, provisions of computerized banking services among others. To carry on a business of a Co-operative Credit Union, the Co-operative Credit Union should be registered and incorporated under section 5 and 6 of co-operative societies Act, 1968 (N.L.C.D. 252).
Moreover, the Co-operative Credit union should be licensed by the Bank of Ghana in accordance with the Non-Bank Financial Institutions Act 2008 (Act 774). Furthermore, the Co-operative Credit Union should be a member of CUA which is the umbrella body of all Co-operative Credit Union. The Co-operative Credit Unions Association (CUA) carry out routine supervision of Credit Unions in Ghana. Over the years CUA has been doing extremely well in its supervision activities and this has led to a resilient Co-operative Credit Union movement in Ghana even in the absence of legislation. On the 17th of December, 2015, parliament passed the Co-operative Credit Union legislative instrument (L.I. 2225) to regulate activities of all Credit Unions in Ghana. Per the Co-operative Credit Union Regulation 2015 (L.I. 2225) there is a body known as the Co-operative Credit Supervisory Agency in charge collaborating with the Bank of Ghana in the monitoring and supervision of Co-operative Credit Union.
Co-operative Credit Unions Supervisory Agency will issue financial standards to govern the activities of Co-operative Credit Unions. However, this will be done with the approval of the Bank of Ghana. It is worth mentioning that the first Co-operative Credit Union in Ghana and for that Africa was established at Jirapa in the Upper West Region in September, 1955. The idea was introduced by Rev. Father McNulty an Irish Canadian. However, the first Credit Unions in the World were established in Germany in 1952 and 1964 by Herman and friedrich raiffeisen. Records indicated that there were 560 registered Co-operative Credit Unions operating across the country as at June, 2015 with membership of 680,425. Some of these Co-operative Credit Unions have established branches with a view to extending their financial common bonds. For example, Berekum Area Teachers’ Co-operative Credit Union has 4 branches, Dormaa Area Teachers’ Co-operative Credit union has 8 branches. This has made it possible for more people to have access to financial services. As at June, 2015 deposit portfolio of registered credit unions was GH¢ 694,211,622 whiles total assets stood at GH¢1,046,347,463.
Like any other industry, the credit union movement of the financial services industry in Ghana has small and big players. Some of the big players are; Abosomankotere Credit Union, St. Peters Credit Union, SHACCU, ARCCU, Dormaa Area Teachers’ Credit Union, Berekum Area Teachers’ Credit Union, Dunkwa Area Teachers’ Credit Union among others. It is worth mentioning that Credit Union can take the form of the following; Work based, Parish and Community based. Credit Unions are unique in several ways and this article seeks to discuss that.

Why Credit Unions are unique

1. Unlike commercial banks and other financial institutions which primary objective is to maximize profit, Co-operative Credit Unions are not for because they operate to serve members. However, they make surplus to remain in existence so as to continue to serve members. Co-operative Credit Unions do not rely on donations like other non-profit organizations and therefore when a little surplus is generated will go a long way to ensure sustainability.
2. Credit Unions view their customers as members. These members are also owners because they have bought shares. To be a member of a credit union, the individual has to pay an entrance fees and also buy a minimum number of shares. The fact that members (customers) are owners, they have the privilege to enjoy dividend at the end of the financial year when surplus is made and dividend are declared. Customers of commercial banks and other financial institutions do not enjoy similar privileges since they might not be shareholders.
3. Members of Co-operative Credit Union being owners (shareholders) also have the privilege and right to vote during AGM to elect Board of Directors to represent them. Every member has one vote regardless of the number of shares purchased. Related to this point is the fact that members have voice in the management of the union. There is democratic member control. In contrast, customers of commercial banks do not have the right to vote to elect directors since are not shareholders.
4. Co-operative Credit Unions offer low interest rate on loans to members relative to other financial institutions. They use the reducing balance method as oppose to straight line method. This is in line with the philosophy of “people helping people” and “we create and share”.
5. Credit unions are member-owned financial co-operative and therefore only members deposit and borrow money.
6. Co-operative Credit Unions have their presence in rural areas where some major financial institutions are reluctant to go because those areas are not economically viable. For example, credit unions are found in most of the rural areas of Brong Ahafo. This has helped to promote financial inclusion to the poor and the marginalized. As already mentioned, there are over 500 registered Co-operative Credit Unions and other study groups which can be found in both urban and rural areas of Ghana. They can also be found in various communities, workplaces and churches.
7. Notwithstanding the fact that each credit union is autonomous and independent, the players co-operate with one another since they have realized that a solitary locust does not have great impact like swarm of locust. Therefore, they do their best to work together even though in my perspective as a marketing professional, they are direct competitors. The unity among players in the credit union movement is derived from one of the seven Rochdale principles of co-operative which is co-operation among co-operatives. All Co-operative Credit Union staff in Ghana have the same attire that they wear on certain such as biennial conference. The movement also has a song. Additionally, credit union members have the accolade “Happy Family”. These are indications that credit unions are harmoniously joined together and co-operating. Let me point out the fact that credit unions in Ghana have managers association at the regional and national level and they meet from time to time to share ideas about how to strengthen the movement. Above all, during credit union (ICU) day, members and staff of various credit unions come together to observe the occasion regardless of religion, political belief, cultural differences among others. Indeed, “it is a small world after all”.
8. The Ghana Co-operative Credit Union Association Limited (CUA) has a youth savings department which is responsible for inculcating into the youth in Ghana the habit of savings. The department has formed youth savings clubs in a number of Senior High Schools and post senior high schools. Additionally, the department has developed youth savings account which is marketed by individual credit unions in Ghana. This is very good initiative since the youth constitute a large percentage of the population in Ghana. Let me reiterate the fact that the youth savings department which focus is to target the youth to develop the habit of savings is unique because commercial banks do not have this department. As at 31st December, 2015 there was a total of 91 youth savings clubs with 26,078 members and mobilized a total of GH¢ 1,194,385 savings (source; CUA).
9. Co-operative Credit Union movement encourage its members to save regularly for a better future. In other words, credit unions emphasize more on savings than credit. In view of this, credit unions have a savings policy where every member is regularly required to save at least a minimum amount. Saving regularly either monthly or the like depending on the savings policy is one of requirements of a good member (member in good standing) of a credit union. This initiative has also helped members to cultivate savings habit. Furthermore, it has ensured thrifty on the part of members.
More importantly, a vast majority of credit union members have been able to access loans at a competitive interest rate.
10. The credit union movement in Ghana is affiliated to international organizations such as World Council of Credit Unions (WOCCU), Africa Confederation of Co-operative Savings and Credit Association (ACCOSCA) among others. This no doubt makes the movement credible and recognized internationally. Every credit union belongs to a global community of over 57,000 credit unions in 103 countries. As at 2013, credit union membership worldwide stood at 208 million (source; WOCCU Website).
11. Like any established financial institutions, registered credit unions in Ghana have structures such as the Board, Management in charge of the day to day operations, committees such as education committee, loans / credit committee, supervisory committee among others. According to records, in total, more than 70% of credit unions nationwide operate with bye-laws, policies and business plans. This was accomplished through the effort of CUA Operations Department backed by FOSTERING PROJECT support. It is touching to say that CUA has also put in place structures and systems to ensure vibrant credit union movement in Ghana. For example, every region has a manager who takes oversight responsibility of credit unions in that catchment area. The regions also have auditors who audit the accounts of various credit unions. This is done in collaboration with department of co-operatives.
12. Credit unions operate in accordance with the following co-operative principles; voluntary and open membership, democratic member control, member economic participation, autonomy and independence, education, training and information, co-operation among co-operatives and concern for community.
13. Deposit Guarantee Scheme. This is an arrangement introduced by CUA to credit unions with a view to ensure that members savings / deposits are secured, protected and safeguarded without any member incurring financial losses in the event of the credit union ceasing to do business. This implies that individuals who want to belong to registered and licensed credit union should not have fears of losing their funds in case of collapsed. Let me take this opportunity to commend Management of CUA for this arrangement since the Bank of Ghana has also initiated similar move known as the Deposit Protection Bill. Let me point out the fact that CUA Risk Management Department has introduced unique products to support members (customers) of credit unions in case of unforeseen occurrences. Among the products are; loan protection plan (LPP), life savings plan (LSP) and co-operative future plan (CFP).

Conclusion
So far, we have discussed the uniqueness of the credit union movement in Ghana. Credit unions should use the unique features as value proposition to attract more members so as to contribute towards the vision of WOCCU of attracting 50 million new members by 2020.

The Author is the CEO
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