NAME OF FEATURE | THE GLEANER | FRIDAY, NOVEMBER 7, 2025 18 CREDIT UNION WEEK IN REVIEW FEATURE Bornette Donaldson/Contributor FINANCIAL SUSTAINABILITY CREDIT UNIONS play a vital role in enhancing economic development, promoting financial inclusion for underserved populations, supporting small businesses and contributing to systemic resilience and financial stability. Credit unions, which are member owned and not-for-profit financial co-operatives, have evolved into crucial institutions for fostering broader access to finance, economic empowerment, and sustainable development worldwide. In the contemporary global economy, issues of inequality, financial exclusion and systemic instability remain pressing. Credit unions represent a distinctive form of financial institution prioritising member ownership and democratic governance rather than profit maximisation. Originating in 19th-century Europe, credit unions have expanded globally to serve over 411 million members across 104 countries with assets exceeding US$3.7 trillion (WOCCU, 2025). Around the Caribbean credit unions collectively manage assets of over US$10.6 billion, as at December 2024 (CCCU, 2024). In Jamaica alone, credit unions serve more than one million members with assets growing to over J$200 billion, as at March 2025 (JCCUL, 2025). ECONOMIC EMPOWERMENT A fundamental value proposition of credit unions is their role in extending financial services to underserved and marginalized groups. Credit unions’ emphasis on community ownership creates strong trust relationships that encourage responsible financial behaviour and facilitate asset accumulation. Unlike commercial banks, credit unions prioritise access over profit, enabling low- income individuals, rural residents, and informal sector workers to save, borrow and invest prudently. Evidence from developing countries such as Kenya, the Philippines, Mexico, Ecuador and Poland demonstrate that credit unions reduce financial exclusion barriers, contributing significantly to poverty alleviation and human capital development (IMF, 2012). This way credit unions enhance access to financial services by reaching into communities and impacting populations who normally would have been excluded from traditional banking systems. In the Eastern Caribbean, credit unions hold substantial market shares, in Barbados and St Kitts and Nevis for example over 80% of the population are members of credit unions (CCCU, 2024). Credit unions in Jamaica have membership of over one million, which is more than one-third of the population. These institutions have been mobilising savings and creating accessible credit products that improve members’ socio-economic position, including facilitating higher education. The role of credit unions has been highlighted in low-income countries such as Kenya, Mexico and the Philippines, where they facilitate savings, lending, and asset building (IMF, 2012; Crear, 2009), by reducing barriers to credit and enhancing community savings, they enable members to improve human capital and transition from poverty to upward mobility. NATIONAL DEVELOPMENT Credit unions have a marked impact on national and local economies primarily through generating savings and channelling them into productive investments. They not only finance consumer type lending, but also foster social mobility, such as facilitating transitions from rental housing to home ownership (IMF, 2012). In many countries, credit unions constitute vital financial intermediaries supporting growth within the financial sector. The pooling of liquidity by credit union centrals provides economies of scale, enhances access to payment systems, and offers an alternative to commercial banks. This structural integration is particularly evident in Canada’s three-tiered system, where provincial centrals aggregate resources from individual credit unions and interface with national central. Small and medium-sized enterprises (SMEs) receive essential funding from credit unions, particularly when commercial banks tighten lending. For example, Community Development Credit Unions (CDCUs) in the US manage over US$327 billion, financing local businesses and job preservation. Savings and Credit Co-operatives (SACCOs) in Kenya are pivotal in agricultural and rural economic development, underscoring credit unions’ ability to catalyze local economic multipliers (Oxford Economics, 2021). In Jamaica, while credit unions cannot lend directly to businesses, small business owners are able to access well needed liquidity in times of need. STRUCTURES AND GOVERNANCE Credit unions operate under democratic governance, generally with a one-member, one-vote principle, ensuring equitable influence irrespective of capital contributions. However, the structures of credit union systems differ across jurisdictions. Canada features a three-tiered system linking credit unions to provincial centrals and a national central (national association), ensuring liquidity pooling and economies of scale (TPCU, 2021). The United States, in contrast, employs a model where federal credit unions are supported by corporate centrals (NCUA, 2022). Similar to the US, in countries such as Australia, South Korea and several European states, co- operative central institutions act as intermediaries to provide payment system access, shared services, compliance support, and market access. Other countries employ a hybrid or co-operative banking models where central institutions perform essential liquidity provisioning and payment facilitation roles, vital for small credit unions’ integration into broader financial markets. In Jamaica, the trade association is the Jamaica Co-operative Credit Union League (JCCUL) which provides the support services, advocacy, liquidity, payment services (through third-party arrangements), training and development that are essential to credit unions. The League, however, does not have a licence to offer payment services, remittances, or banking type services. Its interest in operating as a Specially Authorised Credit Union (SACU) is the subject of much discussion under the imminent Credit Unions (Special Provisions) Bill currently being reviewed by the Bank of Jamaica. Most credit unions in Jamaica are relatively small and would be challenged to offer the types of services members now require without a central organisation such as the League to provide the economies of scale necessary for viability. The debit card service, for example, offered by most credit unions through the League, would be prohibitive based on cost for the average credit union. To be competitive, credit unions in Jamaica need an efficient not-for-profit structure to support their seamless integration into the financial system. The model of operating through commercial banks is not only suboptimal, it would be unwise. Further, some credit unions may not have the wherewithal to deal directly with the central bank (and vice versa), should it choose to provide similar services as the credit union central. SUSTAINABILITY, RESILIENCE & MEMBER BENEFITS Credit unions are increasingly active in financing sustainable development. They support renewable energy adoption, housing efficiency upgrades and climate adaptation initiatives at community levels. Their member-centric approach enables them to distribute climate finance Role of credit unions in modern economies PLEASE SEE ROLE, 19 Bornette Donaldson
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