The scope of the training at this seminar embraces many topics of vital importance to the proper management and success of credit unions not only in Barbados but throughout the region and I am confident that directors, managers and regulators alike anxiously look forward to the exposure and interaction which this workshop will provide.
In the nineteen nineties when Barbados went through a period of recession, our credit unions experienced a downturn in business which was reflected in a reduction in the assets of the movement over a two year period. Credit unions are also sensitive to changes in the economy and widespread layoffs can have adverse effects on them, especially those whose members are drawn from the employment group which is affected.
Directors must therefore be able at all times to make appropriate decisions to keep their societies on an even keel. The kind of training that is being provided in this workshop is therefore quite relevant particularly in light of the importance of sound financial structures which has already become very evident. I am sure you will agree that sound financial structures are not built overnight, but by dint of prudent management and the accumulation of reserves.
There are a number of factors that contribute to the creation of a sound financial structure and these include:
· good quality loan portfolios;
· negligible rates of delinquency;
· low expense ratios; and
· low levels of non-earning assets.
The Government of Barbados has been following with keen interest the growth and other developments in the credit union sector and is committed to facilitating the sector in its quest for sustainable growth. To this end, this Government recently announced certain measures which will be introduced to ensure that credit unions in Barbados are placed on a sound financial footing. These measures include:
· the mandatory introduction of PEARLS;
· holding directors liable for actions that endanger the stability and viability of credit unions; and
· requiring that all directors obtain minimum levels of training acceptable to the Registrar of Co-operatives.
To the discerning person it would be obvious that, as the custodian of large sums of money every year, credit unions have an increasing impact on the financial landscape. It has therefore become imperative that the Government strengthen the regulatory framework for co-operatives in order to ensure that the hard earned money of the members is appropriately managed. It was also recognized that the management of financial institutions requires specialized skill, particularly financial institutions like credit unions which have their own peculiarities.
Although the co-operative movement has been in existence in Barbados for more than fifty years, it is largely the credit union sub-sector of the movement which has contributed significantly to the economic well being and the improved quality of life of our people. But although this sector has registered impressive growth in all its leading performance indicators, I believe that this success can, to some extent, be attributed to happenstance rather than to strategic planning.
As Minister responsible for Co-operatives, I am, therefore truly, pleased to note that among the issues to be discussed at this workshop are regional strategic planning as well as instruments and mechanisms to promote regional safety and soundness within the sector.
As we are confronted by the challenges of an Information Age, I applaud the vision of the organizers for also including as a topic - New IT-Based Credit Union Products as well as the subject - the Role and Expectations of the Model Credit Union Directors and Managers whose services are so critical in determining the success or demise of a credit union.
The concept of the Model Credit Union is also very attractive. It lets the member and the outsider know that credit unions have standards that are rational, attainable, objective and desirable; and it helps to build confidence in a credit union so designated.
These standards are rational because they reflect what is in the best interest of the credit union member; they are attainable because they were designed by persons with hands-on experience who have put them to the test; they are objective because they are based on measurable results; and they are desirable because they ensure safety and soundness.
Safety and soundness are not elusive concepts but at the same time they do not happen by accident. They require the careful and prudent management of resources, and this requires training and a serious application of those principles that have been imparted.
I note that the topics to be addressed at this workshop have a definite business focus. This is extremely important, because a co-operative is a business organization although that is not it’s only focus but unless sound business principles are observed success will not be achieved on an on-going basis. Other topics which I particularly wish to underscore relate to PEARLS, - a System so indispensable to the proper management of societies, - and to legislation and regulatory issues.
In this context, I am pleased to let you know that my Ministry will be submitting to the Cabinet in the near future proposals to amend the Co-operative Societies legislation in order to improve the regulatory framework for cooperatives. These proposals, in large measure, emanate from a study carried out by Maxwell Stamp plc on the Reform of the Supervision and Regulation of Financial Institutions in Barbados.
The recommendations include proposals that the staff of the Co-operatives Department be strengthened and trained to cope with the demands arising from the growth and increasing sophistication of credit unions. Recommendations are also being made for the better functioning of credit unions. And these include:
· ensuring that every credit union has a realistic and satisfactory capitalization ratio;
· the maintaining of a sufficiently high liquidity reserve by credit unions;
· controlling the level of non-earning assets
· dealing with loan delinquency and the overstating of assets;
· rationalising the instruments used for investments;
· setting standards for the registration of new credit unions;
· providing sanctions on directors, committee members and staff;
· Ensuring accountability and transparency;
· simplifying the process for liquidating or amalgamating poorly performing credit unions; and
· establishing a formalized monitoring system such as PEARLS.
With regard to self-regulation, a topic which this workshop will also address, the Consultants stated, inter alia:
“Operating their own organizations according to reasonable, established tenets is consistent with credit union self-help philosophy and practice…….To the degree that credit union leaders and members learn to actively monitor their own operations and behaviour on a daily basis according to under-stood and accepted norms and standards, their operations, members and ultimately the economy and society will benefit”.
This approach to the management of credit unions makes good sense and the operations of some credit unions attest to this fact. These are the ones whose examinations are completed in the shortest time; they pay no late filing fees; their members receive the best dividend rates; and their statutory reserves exceed the recommended ratio.
I must again congratulate and thank the Caribbean Confederation of Credit Unions for hosting this workshop, which affords directors, managers and other staff of societies the opportunity to improve their skills. I strongly commend you for the invaluable work you have being doing to advance the cause of the credit union movement across the region. You have set goals that are not only laudable, but also relevant to the challenges confronting credit unions. As credit unions continue to do business in the global village, they must seek to attain international standards rather than being satisfied with mediocrity and being second best.
However, the Confederation may wish to challenge its affiliates in relation to their mirror image in this new millennium by posing the following questions:
· Are you satisfied with what you see?
· Are you aspiring to provide a level of service that will be a joy to your members and the envy of the competition?
To the representatives of the World Council of Credit Unions, I applaud the role you have been playing in the development of credit unions in Barbados, in the Caribbean and worldwide. An important part of your constituency would be vulnerable groups who, but for the credit union, would have no access to finance for provident or productive purposes.
To the participants, I urge you to make full use of this training, which is designed to equip you with skills which will help you to direct, or redirect, the resources of your organizations in accordance with world standards and best practices.
Your attendance here today demonstrates your willingness to enhance your management skills. I urge you to share with your colleagues and members the knowledge acquired at this workshop for I firmly believe in the adage that an informed member is a better and more loyal member.
It is my hope that the goals of this workshop are attained and that the sessions will be instructive and enjoyable.
In concluding, Mr. Chairman, may I invite our visitors, especially first timers, to savour our hospitality and enjoy those unique characteristics that make Barbados a prime tourist destination. I also hope that you will return for a longer sojourn, to experience what you may have missed on this occasion, or to delight again, in what you have enjoyed.
I thank you.