Credit Unions Have Le.6.6 Billion Savings

The Minister of Trade and Industry, Dr. Edward Hinga Sandy on Friday 16th April 2021 at the Sierra Palms Resort on Lumley Beach Road in Freetown pledged the Ministry’s unflinching support to Credit Unions (CUs) in Sierra Leone enlightening that the country’s Medium Term National Development Plan factors CUs to foster economic empowerment and improve social services as well as access loans.

It was also revealed that Credit Unions have over Le.6.6 billion in savings.

He made the statement at the first Credit Union Conference in the presence of over 60 participants   drawn nationwide at the Sierra Palms Resort on Lumley Beach Road in Freetown on the theme ‘Inspiring Credit Unions for Financial Inclusion and Resilience’

According to the Minister, Credit Unions are part of the role out plan for financial inclusion in the country that would help change the lives of their members and families but observed that without strong regulations and other instruments to guarantee access to finance to protect the savings of members there would be high risks.

He further observed that the interest rates on loans of other financial institutions are very high but that people accept them because they have no alternative or other sources of finance, commended the Irish League of Credit Union Foundation (ILCUF) Ltd in Sierra Leone and the Irish Government for their invaluable support to CUs in Sierra Leone and called on other development partners to emulate the sterling example as CUs play an important role in the economic development of the country.

Dr. Edward Hinga Sandy also called for the resuscitation of the Cooperative Development Bank to among others guarantee risk management and assured that the Ministry would ensure growth in the sector.

The Minister of Trade and Industry Dr. Edward Hinga Sandy together with NaCCUA leaders and the General Manager of ILCU Foundation Limited officially lunch the NaCCUA Website www.naccua.org and Logo.

In her opening remarks, the chairperson of the National Cooperative Credit Union Association Sierra Leone (NaCCUA-SL) and Vice President of ILCUF Limited, Mrs. Lilian Songo revealed that NaCCUA-SL, together with the Irish League of Credit Union Foundation in Ireland, formed the Irish League of Credit Union Foundation (ILCUF) Ltd in Sierra Leone to promote and develop Credit Unions (CUs) in the country disclosing that the first Credit Union Conference in Sierra Leone is to showcase the achievements of CUs in the country which is an alternative model that is promoting financial inclusion in Sierra Leone and across the world.

She informed that together with their partners, NaCCUA is implementing a three-year project titled: financial inclusion for resilience Sierra Leone, which is targeting 12,000 members intimating that the project is funded by the Irish Aid and Credit Unions in Ireland and disclosed that their other partners include Saving Bank Foundation for International Cooperation (SBFIC) from Germany, Electric Aid and Savvi Credit Union from Ireland.

According to Mrs. Lilian Songo, in spite of the COVID pandemic, CUs remained in operation and that every member was able to be served, that they noticed a high increase in savings which shows that members have confidence in them underscoring that CUs operate with the philosophy of members helping members and that their operations are guided by the seven cooperative principles and values.

She went on to articulate that the CUs have over the years worked assiduously to create awareness and promote financial inclusion in the country, a move that has created dividends as more CUs are both community and employee based, mostly teachers adding that members have found CUs to be one of the answers to their wealth creation problems.

“It is therefore obvious that the ownership structure of CUs encourages long term and prudent management and greater focus on the needs of members. CU system delivers greater financial inclusion by giving alternatives to members who are not served by formal financial institutions,” she underlined.

She further revealed that there is a total of 24 CUs in 12 Districts in the country, membership of 10,529 with 60% women, Le.6.600,000,000 Billion savings, Le1.600,000,000 Billion share capital and total outstanding loans LeLe.7.700,000,000 Billion.

She informed that CU members were able to pay tuition fees for themselves and their children, build and renovate houses, buy motorbikes and pay medical bills using their savings and loans but lamented that their membership is still small, weak legislations that do not meet current trends and appealed to government to amend the outdated 1977 Cooperative Act.

The NaCCUA chairperson went on to state that lack of regulations results to some members taking advantage of the situation to benefit themselves at the detriment of their members, that loan delinquency is another major challenge and limited resources to make NaCCUA a vibrant institution concluding that the organization is still in its promising stage but hopes to grow to serve its members better observing that to engage the services of financial auditing firms is costly.

The guest speaker was Africa Confederation of Cooperatives Savings and Credit Association (ACCOSCA) Ambassador, Mr. Emmanuel O Darko from Ghana, who dilated on the topic: Financial Inclusion Using Credit Union Model,’ underscored that wealth creation has been one of the major concerns of African governments today-how can people create wealth and minimize the consequences of poverty.

He observed that in a country where the inhabitants consume all their income, there is little or no capital formation for local investment purposes stressing that people have not cultivated the habit of savings so they spend money as they get it underlining that the current financial system does not encourage or motivate people to save small amounts based on their daily, weekly or monthly income so they often rule the possibility of savings from their own way of lives. A credit union is formed when a group of people with the same interest agree to save together to create a financial pool, out of which they can credit among themselves in time of need for productive or provident purposes.

Darko informed participants that when people claim to be poor it does not mean all their expenditure will be small sums.  From time to time the poor may need to spend large sums for one or more of the following purposes: Health, Death, School Fees, Housing and Investments. The only reliable and sustainable way of raising lump sums of cash is to find a way of building them from one’s capacity to save small amounts from time to time in a credit union.

The Credit Union System is one of the sustainable non-banking financial institutions in the World.  They are service oriented and have low overhead costs.  They have no such constraints such as banks and play important role in mobilizing savings and providing loans to members with diverse back grounds because they can be established at any location and at any level be it in a church, a rural community, a workplace or even the remotest area. They are organized and managed by the people themselves and continue to live with them in the long-term. It is the only institutions that can serve the needs of this local people because it is community oriented

 Dignitaries who made statements at the well-attended and auspicious ceremony included the Registrar of Cooperatives in the Ministry of Trade and Industry, Mr. Newton R A Marlin, Ms. Daire Courtney from the Irish Embassy and Mrs. Esther Johnson, Deputy Director of Other Financial Institutions at the Bank of Sierra Leone. Other dignitaries that attended the ceremony were representatives from UNCDF, Representative from Ministry of planning and Economic Development, the President of Sierra Leone Market Women’s Association and a Representative of Dynalab

The General Manager of ILCUF Ltd Mr. Solomon Mwongyere gave out awards to four credit unions that performed well in the year 2020. Tonkolili District Teachers CU for the best study group that managed its loans portfolio well, Port Loko District Teachers CU as the best CU with the lowest portfolio at risk, Moyamba District Teachers were awarded as the biggest CU in the country having a Total Asset over 2.400,000,000 billion Leones and United Progressive Services CU (UPS) was awarded for the highest average member savings in the country.      The conference was climax with musical performance on the theme of the occasion.          

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