Address by Hon. Velon John
Minister of Labour Relations, Public Service and Co-operatives
on Credit Union Day October 21, 2004
To all members of the St. Lucia Co-operative fraternity and more specifically, Credit Union members:
It affords me a great pleasure to address you on this auspicious occasion as we celebrate Credit Union Day. This pleasure is augmented by the fact that besides being the Minister responsible for Cooperative, I am also a member of a Credit Union.
And so today provides me with the opportunity to share with you my reflections on a sector that continues to make invaluable contributions to the socio-economic development of our people.
The theme chosen for this occasion is Credit Union – Dream – Belong – Achieve. Thus Credit Union must manifest its realism in the philosophy principles and practice of co-operatives as was envisioned in its conceptional days of its genesis.
We must maintain its dreams because the co-operative concept was born out of a vision of hope for the working class. They belong to it and it belongs and is controlled by its members. And through its democratic and administrative processes it endeavours to achieve a quality of life that impacts positively on the poor, the marginalised and the working class.
What needs to be realized is that Credit Unions represent a more user friendly sector of the financial landscape: for it provides not only access to favourable credit facilities, but also allows for direct participation by members through democratic means in the conduct of its business.
The Credit Union and by extension co-operatives generally constitute the bedrock financial institution of the ordinary people in St. Lucia and throughout the Caribbean. Its ubi-quitousness translates its activities into a movement that has been enshrined in legislative enactments in the region.
At this time it is imperative that Credit Unions in particular must keep its mandate in promoting itself as a financial institution readily accessible to all segments of the society through its self-help ethos. It needs to enhance its functional integrity by mobilizing popular savings, and penetrating the widest cross-section of the society in providing financial and other services to the poor, to rural communities and to the working class.
Further it must continue to build an entrepreneurial culture by cultivating self-reliance among its members, and increasing domestic income, foreign exchange earning and employment, through higher levels of production and productivity.
In St. Lucia the Credit Union sector is alive and well with total assets over $190 million, savings over $135 millions and a membership base of over 43,000. The five leading Credit Union Societies in St. Lucia are (i) The St. Lucia Civil Service Co-operative Credit Union with total assets of approximately $82 million. (ii) the Laborie Co-operative Credit Union with total assets of approximately $21 million, (iii) the St. Lucia Teachers Co-operative Credit Union with total assets of approximately $17 million, (iv) the Royal St. Lucia Police Co-operative Credit union with total assets of approximately $17 million and lastly the Choiseul Co-operative Credit Union with total assets of approximately $15 million.
The sustained growth in the operation of Credit Unions in St. Lucia can be attributed to the growing awareness of the public of the intrinsic value and benefits of the co-op membership in our growing economy. Credit Unions continue to dominate the co-op sector both in total assets and membership.
Further it is to be noted that the existence of these financial co-operatives in the various communities has greatly enabled the creation of financial and social capital. And this has ultimately facilitated improvements in the overall standard of living of the lower and middle-income groups particularly in the rural area.
This indigenous institution with its indigenous management, due diligence and oversight has been a grand success. It has kept faith with its membership and has extolled the virtues of self-help, mutual self-reliance and thrift. It has been the engine of growth in many communities and has justified its indigenous genesis by sublimating its processes of administration and management to a level that has engaged the interest and concerns of regional and international financial agencies and powers.
In very recent times the Board of the Eastern Caribbean Central Bank endorsed the establishment of an integrated regulating framework for financial institutions in the ECCB member countries. Credit Unions fall within the financial sector.
The question that comes to the fore in light of this development is this:
Is the Integrated Regulatory Framework an opportunity or threat to Credit Unions?
Concerning the latter:
The further question that arises is how did all of this come about?
The concept of an Integrated Regulatory Framework refers to the consolidation under one agency (or a few closely linked agencies) of the various authorities for regulating and supervision facets of the financial services sector, viewed as a whole. Indeed, the member governments of the OECS are being strongly influenced to reorganize the fragmented state of their current oversight arrangements into a single national agency within their Ministries of Finance. This new entity would become the regulatory authority for deposit-taking institutions, insurance companies, trust companies, cambios or exchange houses, finance companies and credit unions.
Several major currents in the international and regional theatres of negotiation, are directly impacting on this development; some of them are:
I. The pressures by WTO, FTAA, GATS towards liberalization of trade in services sector in developing countries.
II. The assessments and ratings applied by the IMF on financial jurisdictions, anxious to improve their access to lower cost debt facilities form the World Bank, IDB etc.
and III the recommendations issued by the OECD and
the UN-FATF in respect of anti-money laundering controls, legislation and regulations.
The Board of Directors of the Eastern Caribbean Central Bank (ECCB) in March 2002, endorsed the establishment of an integrated regulatory framework for financial institutions in the Eastern Caribbean Central Bank (ECCB) member countries. In addition, the monetary council as its 45th meeting, agreed to recommend to members that the integrated regulatory framework be given the highest priority. In this regard, a feasibility study on an integrated financial supervisory unit for Saint Lucia was undertaken by Dr Bernard La Corbinière, in November and December, 2002. This study was commissioned by the Caribbean Regional Technical Assistance Centre (CARTAC) the Eastern Caribbean Central Bank (ECCB) and the government of Saint Lucia through the Ministry of Finance, International Financial Services and Economic Affairs.
The main aim of the study was to determine or not, whether the establishment of an integrated unit for supervising the financial sector is feasible in Saint Lucia. The consultancy was sponsored by CARTAC.
The study concluded that establishment of an integrated unit was feasible for Saint Lucia. Options of the unit was presented either as a unit within the ministry of Finance or a statutory body. Its focus would be the supervision/regulation of the financial sector in Saint Lucia.
At its 50th meeting of the Monetary Council endorsed an Integrated Regulatory Framework. The meting recommended:
Ø The early implementation of the integrated Regulatory Framework to provide for the establishment of a Single Regulatory Unit (SRU) with adequate legal authority funding and resources.
Ø The Eastern Caribbean Central Bank (ECCB) to provide assistance in establishing the framework.
Due to the sensitive nature of this undertaking and the need for firm guidance and control from its inception, the Ministry proposed a phased approach for the establishment of the Single Regulatory Unit (SRU). In the interim, the Unit would be established within the Ministry of Finance for a period not exceeding five (5) years. During this time, all the necessary procedures and processes will be established for a smooth transfer to a statutory body. Based on these specifications, it is estimated that the Single Regulatory Unit (SRU) should be formalized as a unit of the Ministry of Finance by April 2005.
On the 10th May 2004 the following conclusion emanated from Cabinet: and it reads
“Cabinet reviewed the Feasibility Study on the establishment of the Single Regulatory Unit (SRU) and agreed that the Unit will be established within the Ministry of Finance, Economic Affairs and International Financial Services. Cabinet rejected the recommendation that this Unit evolves into a Statutory Body.
Cabinet also agreed in principle to the organizational structure, but did not agree to the establishment of an Advisory Committee.
Cabinet further agreed:
(1) that the nomenclature of Supervisor General be replaced by Director of Financial Supervision:
(2) to request a study of the proposed organizational structure to determine:
(a) the cost of the proposed structure;
(b) the number of new positions that will be actually created and the cost of these new positions;
(c) the exact number of existing staff that will be absorbed into the new entity.”(unquote)
And so the former question arises will the Single Regulatory Unit be an opportunity for Credit Unions or a threat. Only time will tell.
One immediate and practical result will be the Department of Co-operatives will be reduced to non-financial cooperatives.
Today we are not here to recognise a loss but to celebrate Credit Union Day. And in this regard we would like to congratulate the St. Lucia Co-operative League for the role it has played in assisting the movement over the past year. It hosted the 2nd OECS Credit Union Summit and the first ever Caribbean Credit Union Youth Conference and now hosts the Credit Union Summit.
We also would like to congratulate all those in the various Credit Union throughout the Island who by their sacrifice, commitment and hard work have made Credit Unionism a singular success here in St. Lucia. Also at this time we would like to salute some vanguards or stalwarts who have made invaluable contributions to the sector.
They are Haden Williams of Dennery, Marcelina Hubson of the La Ressource Credit Union. Mr. Tomothey Regis of the Dennery Credit Union, Mr. Francis Nelson of the Police Credit Union, Mr. Watson Louis of the Laborie Credit Union and Mr. Cyril Matthews of the Civil Service Credit Union.
Let me at this time thank the leadership of this sector for the positive and collaborative relationship established between itself and the Department of Co-operatives. I am delighted to be associated with this Sector and in this regard give the assurance that this Ministry stands ready to support the movement in maintaining the vision encapsuled in the philosophy and Principle of Co-operatives.
So let us all enjoy a fruitful Credit Union Day as we transform Dream to Vision: Vision to a sense of Belonging and Belonging to a state of social-economic empowerment.
Credit Unions – Dream
Long live the Co-operative Sector in all of its aspects and metamorphoses.
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