ewart s williams : building individual and organisational capacity feature address by mr ewart s williams, governor of the central bank of trinidad and tobago, at the co - operative credit union league, launch of events calendar 2011, chaguanas, 26 january 2011. * * * i wish to thank the co - operative credit union league for the invitation and extend a happy new year to you and your organisations. it has been some time since i have met with the credit union movement, so i welcome this opportunity. you have suggested that i address the topic “ building individual and organisational capacity ”. i am not sure that i could tell you much about this, since your credit unions, in order to survive in this increasingly competitive environment, have had to expend considerable efforts in capacity building. i, however, welcome the opportunity to offer my variation on this theme since, in my view, the outlook both for the economy and for your sector will require you to intensify and, indeed, broaden your capacity building efforts, if you are to maximize your contribution to your membership and adhere to the new regulatory paradigm that is on the way. permit me to put my views against the background of the following recent developments : as you know, the decline in economic activity in 2009 was followed by another year of economic stagnation in 2010. the economic downturn was triggered by the sharp contraction of activity in non - energy sector ( most notably construction ) and was accompanied by a significant increase in unemployment. the official data show that unemployment rose from a low of 3. 9 per cent in the last quarter of 2008 to 6. 7 per cent in the first quarter of 2010. i guess, with your close day - to - day involvement in the community, you are in a better position to appreciate the real level of employment and underemployment in the country. the more challenging economic environment has led to a sharp rise in non - performing loans on the commercial banks ’ balance sheets – from 1 per cent to 5 per cent. the nonbanks, that cater to a somewhat different clientele have recorded an even more sizable increase in loan delinquency – from around 4 – 5 per cent to almost 12 per cent of total loans. fortunately, the banking system – both the banks and non - banks, have the resources to adequately provide for these bad loans. we, in the central bank, do not have up - to - date comprehensive data for the credit union sector.

credit union and on the movement, the obligation to educate their members. put another way, “ financial education or financial literacy ” must be at the top of your agenda. as the clico crisis underscores, the rapid pace of financial innovation requires that financial institutions contribute to providing more information and more financial education to the consumer public. credit union members consume other financial services – they have variable rate mortgages with commercial banks, they have mutual funds, they have bank loans, some participate in the stock market and they need to have the facts in order to make informed decisions and to understand their exposure. and because of the special relationship of trust between the credit union and its members, you are in a better position than most other people to provide that education. i know some credit unions ( and i believe, the league ) occasionally put on financial education sessions but this must become an integral, on - going component of your operations. perhaps it could be seen as a “ community ” service, available to members and non - members alike, in which case the entire country will benefit from your efforts. i would like to stress that the central bank stands ready to collaborate with the credit union movement or with individual credit unions to further the cause of financial education in trinidad and tobago. we would particularly welcome collaborating in “ train the trainer ” sessions which offer opportunities for reaching a wider membership. it is clear that going forward our economy will need to depend more on the non - energy sector and on job - creation in the small and micro - enterprise sector. the credit union movement has stood out as a major source of financing for this sector and could be expected to face even increasing demand over the next few years. to cater to this increasing demand, while protecting the resources of your shareholders, credit unions will be well - served by increasing their capacity to provide business services to the clients, to accompany the provision of finance. the combination of finance and business advice will redound to the benefit of your micro - enterprise borrowers and contribute to reducing loan delinquency. again, here is an area in which you could collaborate with other agencies – this time with nedco, bdc and other sme development institutions. i am not sure how much of this is being done at present. then there is the need for building organizational capacity to prepare for the new regulatory paradigm that is expected to be in place later this year. permit me to digress a bit about this new regulatory framework – particularly to clarify what it is and