WOCCU Assists Croatian Credit Unions Face Uncertain Future
Croatia's upcoming transition to Eurpean Union
(EU) status may put many credit unions in
jeopardy of closing. The EU Ministry of
Finance officials stated that, by 2008, credit
unions in Croatia must meet the minimum capital
requirement of EU$1 million (US$1.2 million). In
Croatia, where the largest credit unions have
less than 10,000 members, only 10-20 of the 118
credit unions will be permitted to continue
operating, according to the predictions of
World Council of Credit Unions, Inc. (WOCCU)
with Croatia with members of the European Bank
for Reconstruction and Development (EBRD) to
assess the readiness of Croatian credit unions
for Croatia's coming ascension into the European
Union (EU). Though many countries aspire to
enter the multinational economic power, the shift
to membership is often difficult—particularly for
Croatia is one of those small countries, with
only 4.5 million residing on its Balkan terrain.
It's a land of scenic rural villages nested among
wooded mountains and Adriatic coastline that
attracts tourists from all of Europe. It's also
a land in recovery, from the brutal war of the
early '90s. But more and more Croatia is putting
that trauma behind it. "We are looking to the
future and rebuilding for our children," explains
Josip Borzic, director of DEMOS Credit Union.
The credit union system in Croatia is one of
most important tools for accomplishing that
rebuilding. Today 118 credit unions and 260,000
members keep the cooperative spirit alive there.
Most Croatian credit unions are small and
community-based, located primarily in rural
areas. DEMOS and two other credit unions, Noa
and MikroPlus, arose in former conflict areas,
where they contribute directly to rebuilding
Marec Credit Union was started in Ivanicgrad
provide financing for rural farmers and local
artisans who had turned to self-employment
because of a poor job market. Zanatska Stedno
Zadruga Credit Union was started 120 years ago in
Zagreb, the capital city, by small shoe and
clothing makers. Artisans still come together in
such credit unions today because only large
manufacturing firms can access credit in the
commercial banking sector.
Other success stories are more recent.
Zagrebacka Credit Union opened up in a storefront
in Zagreb to help city residents with no other
access to financial services. "We had a gypsy
man come in last month," explains Zabrebacka
president Zvjezdana Bilic. "[He] had a low
[paying] job but wanted to take out a small loan,
just a hundred dollars. He would not qualify
anywhere else—we took the chance to support him.
He repaid [the loan] and was so grateful, but
this is what we're here for."
Unfortunately, Croatia's upcoming transition
EU status may put many of these credit unions in
jeopardy of closing. EU Ministry of Finance
officials stated that, by 2008, credit unions in
Croatia must meet the minimum capital requirement
of EU$1 million (US$1.2 million). In Croatia,
where the largest credit unions have less than
10,000 members, only 10-20 of the 118 credit
unions will be permitted to continue operating,
according to the predictions of government
officials—hence the WOCCU-EBRD intervention.
Brian Branch, WOCCU chief operating officer
noted, "World Council is looking for ways that
the credit unions can grow, merge and strengthen
themselves now to face this challenge that is
only two years away. We are also trying to
mobilize resources that can support these credit
unions as they tackle their challenge." In the
meantime, Croatian credit unions brace themselves
for the inevitable struggle. Mato Majstorovic,
manager of the Croatian Association of Credit
Unions shared "We see not just the winds of
change, but a hurricane coming."
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, 60,500 credit unions in 109 countries serve 223 million people. Learn more about World Council's impact around the world at www.woccu.org.
Organization: World Council of Credit Unions