MDDCCUA Delegates Provide Governance Support in Nicaragua

August 07, 2007

Organization: World Council of Credit Unions
Phone: (608) 395-2000

The group visited Moderna Credit Union in Estelí to learn more about credit union operations and governance in Nicaragua (l-r): John Link; Julio Silva, Credit Manager of Moderna Credit Union; Michael DiGennaro; Juan Altamirano; and Chris McHugh.

Washington, DC—As part of their international partnership through World Council of Credit Unions (WOCCU), two delegates from the Maryland and District of Columbia Credit Union Association (MDDCCUA) traveled to Nicaragua last month to assist the Central Service Organization of Nicaragua (CSO) in the area of governance. The trip was a follow-up to CSO’s visit to Washington, DC, in June.

The lack of regulation and supervision in Nicaragua makes governance a hard problem to tackle. Some Nicaraguan credit unions have struggled with maintaining financial disciplines, and overcoming these problems has been made more difficult by inadequate oversight mechanisms.

John Link, Treasurer of Agriculture Federal Credit Union, and Michael DiGennaro, a member of Federal Reserve Board Federal Credit Union’s nominating committee, spent three days visiting credit unions and working with CSO staff in Nicaragua to devise a system that would help credit union boards of directors recruit and nominate qualified candidates.

The group first worked with CSO to provide specific recommendations to credit unions for establishing, implementing and regulating the functions of the nominating committee, including election procedures for volunteers, recruitment and selection of board members and minimum qualification standards, all within the framework of credit union bylaws. The group then presented their findings and recommendations to Nicaraguan credit unions.

Chris McHugh, Chief Financial Officer of CSO, and Juan Altamirano, CEO of CSO, both played important roles in helping the team complete the objectives. They provided background of the Nicaraguan credit union movement and an assessment of the movement’s operating conditions. McHugh and Altamirano also shed light on the provisions of Nicaragua’s Cooperative Act, which have high quorum requirements and call for a number of pre- assemblies before annual meetings.

Link and DiGennaro gained first-hand experience of the system when they visited two credit unions in Estelí and Sébaco. Credit union staff at both locations explained that volunteers are traditionally nominated from the floor of the annual meetings, and the membership has little information about the candidates to make informed electoral decisions. “The idea of a nominating committee is new in Nicaragua, and, at first, it was somewhat misunderstood,” McHugh explained. “What we had to make clear in this process was that the nominating committees aren’t so much a filter as they are a means to generate interest among the membership to become volunteers and to enrich the electoral process by providing more information to the membership about the candidates.”

Link and DiGennaro presented their findings and suggestions to a group of Nicaraguan credit unions. Link spoke about “first principles” governance with the main message, “Boards govern, managers manage, and members own.” In his presentation, he covered credit union history and the evolving roles of volunteers and hired staff. DiGennaro discussed the basic functions of the nominating committee: determining candidate qualification criteria, recruiting, evaluating candidates and presenting candidates to the membership.

“Our Nicaraguan counterparts saw that a nominating committee could help their boards achieve the balanced representation and skill sets necessary for healthy, functional credit union governance without trampling on principles of egalitarianism in the committees' candidate recruitment,” DiGennaro said. He indicated that the next step will be for the Nicaraguan credit union system to adapt the concepts they shared into the cultural context of their country.

The MDDCCUA and CSO have been partners through WOCCU’s International Partnerships program since 2002. The partnership was developed to promote the exchange of experience, ideas, and knowledge in order to benefit all of the member credit unions and movements involved.

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