Minnesota CU Executives Learn Lending Lessons in Paraguay
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.
|CU executives from Minnesota visited Poha Ñana–"natural remedies" in the Guarani language–to learn how Mercado 4 Credit Union's innovative daily loan program helped storeowner Lidio Guanes grow his business. Pictured (left to right) are Mercado 4 operations manager Christian Tores; Heather Hernandez Viveros, associate vice president of human resources at Anoka Hennepin Credit Union in Coon Rapids, Minn.; Guanes; and Jaroslav "Jaro" Mendoza, assistant branch manager and loan officer for City-County Federal Credit Union in Brooklyn Center, Minn.
"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 their members."
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 all."
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 and pharmacies.
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."
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 56,000 credit unions in 101 countries serve 200 million people. Learn more about World Council's impact around the world at www.woccu.org.
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Contact: Rebecca Carpenter
Organization: World Council of Credit Unions