ASUNCIÓN, Paraguay—Community commitment, a strong link to the
credit union philosophy and a microfinance lending program that
disburses funds and collects payments on a daily basis were the
highlights of a recent internship two Minnesota credit union executives
recently completed in Paraguay.
Heather Hernandez Viveros,
associate vice president of human resources at Anoka Hennepin Credit
Union in Coon Rapids, and Jaroslav "Jaro" Mendoza, assistant branch
manager and loan officer for City-County Federal Credit Union in
Brooklyn Center, visited eight credit unions during their 11-day
internship. The internship was made possible thanks to a partnership
facilitated by World Council of Credit Unions (WOCCU) between the
Minnesota Credit Union Network, Inc. and Central de Cooperativas del
Area Nacional Ltda. (CENCOPAN), Paraguay's credit union association.
"Our credit union recently implemented plans to serve the Hispanic
population in this area, and there are aspects we can improve upon,"
Hernandez Viveros said. "By going to Paraguay I was hoping to see how
Latin American credit unions reach out to members and build trust with
Mendoza said his visit was for much the same
purpose. "In Minnesota, very few credit unions are set up to serve
Hispanic communities," he explained. "But that's what credit unions
were set up to do - serve those who are underserved or not served at
Hernandez Viveros and Mendoza worked directly with
Paraguayan credit union staff to explore philosophical and operational
issues. Credit unions in the Latin American country emphasize community
and member commitment, including helping build and subsidize schools
Both participants spent time at Mercado 4
Credit Union, examining in depth the microfinance initiatives of the
credit union, located in the center of a busy market. The
member-merchants' operations required daily cash infusions in order to
operate, so the credit union designed a 60-day term with a daily
repayment structure compatible with the merchant's cash flow patterns.
The merchants borrow money in the morning to purchase goods to sell
from wholesalers, and then deposit their funds at the end of the work
day. Credit union loan officers circulate among the market stalls,
collecting daily loan payments from borrowers. The rates are favorable
to borrowers, who save more than $40 in interest per loan, or more than
$240 per year - the equivalent of a month's wages for the average
Paraguayan worker - compared to rates offered by local loan sharks for
the same type of service.
Merchant and credit union member
Lidio Guanes was able to leverage the loan program to expand what
started as a small herbal remedies concession, limited to a
three-foot-by-six-foot table, financed originally by a $100 credit
union loan. Today, he occupies a storefront at a busy market
intersection and has trademarked his products under the brand name Poha
Ñana, "natural remedies" in the Guarani language. He also warehouses
the products and serves as wholesaler to other vendors, again thanks to
Mercado 4's loan program.
The program also benefits the
credit union. Thanks to the new loan product, the formerly struggling
Mercado 4 had grown its loan portfolio to $2.3 million by the end of
2007 from $1.1 million in 2005, participants said. Credit union assets
also grew by 60% in 2006.
"It's so incredible how they have
been able to meet the needs of members rather than asking members to
meet the needs of the credit union," Hernandez Viveros said. "They are
living the people-helping-people philosophy. I returned home feeling
very good about being part of the credit union movement."
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