Barry Whiteside: The importance of credit unions
Closing remarks by Mr Barry Whiteside, Governor of the Reserve Bank of Fiji, at the
7th Pacific Credit Union Technical Congress, Suva, 7 November 2014.
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Salutations
The Chairman of the Oceania Confederation of Credit Union Leagues,
The President of the Fiji Savings and Credit Union League,
Members of the Board of the Oceania Confederation of Credit Union Leagues,
My fellow Governor, Loi Bakani, Bank PNG
Distinguished Guests, Ladies and Gentlemen.
A very good afternoon to you all!
Introductory remarks
At the outset I thank the organizers for inviting me to deliver this closing address to your
Congress. I am truly honoured.
I guess after four days of meetings, workshops and intense technical deliberations you must
all be more than ready to let your hair down and just relax! Please allow me a little more of
your time.
I note from the programme, that you have had an opportunity to delve into some very
pertinent and relevant topics. This capacity building forum affirms the important relationship
between appropriately resourcing your people and the quality of governance standards. I
congratulate the organizers for combining an excellent agenda with distinguished and
knowledgeable speakers and I am sure you have much to take away.
While I understand it has been a long week and I am standing between the Graduation and
the exciting cultural event, I would like to take just a little of your time to make a few remarks
as you chart the way forward for development, and growth.
Reassurance of the Importance of credit unions
Just like Prime Minister Bainimarama stated when he opened this Technical Congress, I
echo his sentiments on the critical role that credit unions play.
As intermediaries you serve a broad base of members from all walks of life and income
levels. The credit union movement continues to be a catalyst for greater financial inclusion.
You encourage a savings culture and provide access to financial services and products for
those who may face a number of barriers when dealing with financial institutions.
In Fiji, the large credit union membership accounts for approximately 5 percent of our labour
force and this further confirms your importance in the financial system and economy.
The key challenge for credit unions - corporate governance failure and absence of
internal controls
While we all agree on the importance of credit unions, tremendous constraints and
challenges to your growth persist. These include poor corporate governance practices,
ineffective regulatory oversight, archaic legislation, lack of internal controls and inadequate
assessment and monitoring of risks. Again the Prime Minister provided you with a hard-
hitting message as to what could happen with poor governance, poor controls, and not the
least, ineffective regulatory oversight.
I am sure that you would have deliberated on these subjects in your various technical
sessions and fully understand the repercussions for not setting the appropriate platforms.
Ladies and gentlemen, we live in a time where transactions and products are becoming more
complex, leaving institutions, both big and small, vulnerable to failure. Therefore, establishing
proper safety nets is critical.
I urge participants, as you return to your respective countries, to continuously review and
benchmark your operations against international principles and best practices. The World
Council of Credit Unions and International Credit Union Principles on Governance,
Operations and Safety and Soundness have much guidance to offer in these areas, as do
your facilitators.
The importance of innovation
Let me touch a little on innovation, something which is very important if credit unions are to
remain relevant and competitive in today's dynamic environment. I encourage participants to
put on your innovative thinking caps. Observe the products and services offered by credit
unions in other economies and identify those that could be tailored in yours to increase your
coverage.
For instance, technology now drives the efficient and economical delivery of financial
services and interaction with customers. Credit unions may wish to explore the use of Digital
Finance to facilitate transactions with members, particularly those in remote areas.
Also, inward remittances from our families overseas are a significant foreign exchange
earner; in Fiji remittances are the number two foreign exchange earner after Tourism and we
received in excess of $339 million last year and are expecting more than $370 million this
year - which will be a new record. You may wish to explore the feasibility of creating
remittance-linked products for your members - as currently practiced in Kenya and Latin
America, in partnership with the World Council of Credit Unions.
The Reserve Bank of Fiji's experience - support for credit unions
Ladies and gentlemen, I firmly believe that in order for credit unions to compete and grow in
a progressive and modern financial system, the support and guidance of the central bank is
critical. Therefore, before I conclude, I wish to share a few of our partnership initiatives in a
bid to develop this important industry.
In March this year we undertook a survey covering 21 credit unions with assets totalling
$125.1 million. This allowed us to understand the structure and coverage of credit unions and
will help us in developing an appropriate regulatory framework. Ministerial approval has been
sought for the Reserve Bank to supervise Fiji's credit unions and we envisage that this will
develop them into prudentially sound entities.
We have also sought technical assistance from the International Monetary Fund to review
the Fiji Credit Union Act. This will establish the requisite governance and policy framework.
We are hoping that this engagement will take place soon and we will work closely with all
credit union stakeholders in drafting a modern legislation.
Furthermore, a 10-year Financial Sector Development Plan for Fiji is currently being drafted
by the Reserve Bank after wide consultation. I am pleased to announce that the Plan
contains strategies aimed at removing barriers to development and growing non-bank
financial institutions, which includes credit unions. The Plan will be implemented from 2015.
In 2015, the Reserve Bank in partnership with the Government and relevant stakeholders will
formulate a new Financial Inclusion Strategy for Fiji. Credit Unions will be consulted and will
play an important role in this agenda given your role in providing access to affordable
financial products and services for Fijians.
This is an exciting time for the Pacific as we establish closer economic relations and have
seen positive growth for consecutive periods. The Reserve Bank believes that this is a
crucial time for our financial sector stakeholders to support the real sector in this journey.
Therefore, we are committed to strengthening our collaboration with credit unions and we
encourage our regional counterparts to consider the same.
Conclusion
Ladies and gentlemen, I trust that everyone has had an enjoyable and fruitful Congress. I
hope that your interaction does not end here and encourage you to forge close domestic and
regional collaboration amongst yourselves and with government ministries and regulators, to
accelerate growth.
I hope those of you who are visiting Fiji have had a wonderful stay and that our hospitality will
always be something to remember. We may be known as the "Flying Fijians" in the rugby
arena, but we pride ourselves in being the "Friendly Fijians" as well! In fact our Tourism
slogan is "Fiji, Where Happiness Finds You!"
In closing, I wish you all a safe trip back home. I also wish you all the success in your credit
union developments and hope to see you all back in Fiji in the near future.
Vinaka Vakalevu.