What en­hanc­ing func­tion­ing can a co-op­er­a­tive cred­it union bank bring to an econ­o­my to stim­u­late eco­nom­ic ac­tiv­i­ty of a dif­fer­ent and more di­ver­si­fied kind in Trinidad and To­ba­go? Can such a bank fund new eco­nom­ic ac­tiv­i­ties which are not now spe­cial­ly catered for by the ex­ist­ing fi­nan­cial in­sti­tu­tions?

The over­ture to Fi­nance Min­is­ter Colm Im­bert by the Chief Op­er­at­ing Of­fi­cer (COO) of the Co-op­er­a­tive and Cred­it Union League, Di­anne Joseph, to al­low it to es­tab­lish a com­mer­cial bank is one which can­not be ig­nored. For sev­er­al years, the League has been ask­ing gov­ern­ments to al­low it to ex­pand its op­er­a­tions.

The co-op­er­a­tive and cred­it union sec­tor con­sists of 129 cred­it unions and co-op­er­a­tives in charge of $19 bil­lion with 700,000 mem­bers, the COO not­ed. The lat­ter da­ta on em­ploy­ment means that co-op­er­a­tive cred­it union mem­bers out­num­ber the work­ing pop­u­la­tion by ap­prox­i­mate­ly 150,000 peo­ple, ac­cord­ing to da­ta of the Cen­tral Sta­tis­ti­cal Of­fice.

Those sta­tis­tics mean the League and its mem­ber­ship can­not be ig­nored.

Ac­cord­ing to the League’s COO, such a bank can fi­nance the op­er­a­tions of the small- and medi­um-sized en­ter­prise sec­tor. Ms Joseph says a bank of the co-op­er­a­tive cred­it unions will have im­me­di­ate sources of fi­nance and in­vest­ment, as their mem­bers will place their cap­i­tal in what amounts to their own bank, ie, the one they are ask­ing per­mis­sion of the Gov­ern­ment to es­tab­lish.

World­wide, small- and medi­um-sized busi­ness op­er­a­tions are crit­i­cal to the largest of economies. “SMEs ac­count for the ma­jor­i­ty of busi­ness­es world­wide, and are im­por­tant to job cre­ation; they con­tribute up to 40 per cent of na­tion­al in­come in emerg­ing economies,” states the World Bank.

It is well-known that the co-op­er­a­tive and cred­it union sec­tor arose here to fa­cil­i­tate in­vest­ment and pur­chas­es by its mem­bers, of goods and ser­vices which may not be at­trac­tive to the com­mer­cial bank­ing and fi­nan­cial sec­tor.

Over the decades, co-op­er­a­tives and cred­it unions have fi­nanced the ed­u­ca­tion of their mem­bers’ chil­dren; have put food on the ta­ble for many a fam­i­ly in times of acute dis­tress; have al­lowed their mem­bers to pur­chase prop­er­ty, con­sumer ap­pli­ances, ve­hi­cles, and a range of prod­ucts and ser­vices in a man­ner not so read­i­ly avail­able at the large bank­ing and fi­nan­cial in­sti­tu­tions, and at more af­ford­able rates.

As the in­sti­tu­tions make yet an­oth­er push for the en­hance­ment and ex­pan­sion of their sta­tus and func­tion­ing abil­i­ty in the fi­nan­cial sec­tor, a num­ber of ques­tions will face the Gov­ern­ment and the su­per­vi­so­ry agency for the fi­nan­cial sec­tor, the Cen­tral Bank of T&T.

Will the League have the ca­pac­i­ty to ef­fec­tive­ly man­age, in a sta­ble and ben­e­fi­cial man­ner, the large bank­ing port­fo­lio which can be in­vest­ed and de­posit­ed with it?

Can the co-op­er­a­tive sec­tor re­cruit the kind of ex­pert and ex­pe­ri­enced staff to man­age a bank?

It sure­ly will not be suf­fi­cient for a co­op­er­a­tive cred­it union bank to sim­ply com­pete against the oth­er seg­ments of the fi­nan­cial sec­tor in the con­sumer port­fo­lio they have adopt­ed. It must be an in­sti­tu­tion di­rect­ed to fund­ing small- and medi­um-sized busi­ness­es with an ex­port port­fo­lio, and one that can pro­duce goods and ser­vices to re­place many of the im­ports in­to the econ­o­my?

These are ques­tions for the Fi­nance Min­is­ter to ru­mi­nate on.