World Council Explores Credit Union Development in Libya
Transitional government seeks Shariah-compliant, democratic opportunities for financial sector development
San Francisco Federal Credit Union President and CEO Steven Stapp (far left), The MILLA Project's Lara Thomas (center) and World Council President and CEO Brian Branch (far right) met with a business group in Misrata to discuss Shariah-compliant financial products that credit unions may offer.
TRIPOLI, Libya — Rebuilding from a civil war and international attention following the Benghazi attacks, Libya's transitional government is beginning the road to economic recovery. Civil society groups in the country are looking for ways to strengthen a democratic base, and business groups are seeking ways to update and finance new industry and commerce. World Council of Credit Unions representatives traveled to Libya last week to discuss credit union development with central bank authorities, civil society groups and local business councils.
Brian Branch, World Council president and CEO, traveled to Libya with Steven Stapp, San Francisco Federal Credit Union president and CEO. Also with the group were Lara Thomas and Allaeddin Ghadyi from The MILLA Project, an international human rights organization working to bring democratic financial institutions to Libya. Thomas is a member and 2012 scholarship winner of World Council's Global Women's Leadership Network.
"We were approached to explain the credit union model," Stapp said. "As the country reconstructs, it is an opportunity for credit unions to participate in rebuilding the economy."
The group met with representatives from the Central Bank of Libya; the Libyan Business Council; a business group from the northwestern coastal town of Misrata; and a civic and human rights group called the Libyan Liberal Forum for Democracy. Libya's former regime did not support Islamic finance in the country, but new leadership passed an Islamic banking law in May, and public demand for Shariah-compliant services is high. Local groups asked World Council to explain such products and services available through credit unions and how they might be implemented in Libya.
Meeting with central bank authorities to discuss Islamic finance development in Libya through credit unions were (pictured left to right) Allaeddin Ghadyi, Thomas, Stapp and Branch (not pictured).
"The first priority for the government of Libya is writing a new constitution and establishing security," Branch said. "Moving from a centrally controlled economy requires business security and contract protection. Local business councils in Tripoli and Misrata are looking for solutions to finance large-scale business."
Access to financial services remains very limited in Libya. When civil war erupted in the country in 2011, Libya stopped producing and exporting oil, which accounted for about 70% of the country's GDP. The economy contracted 41.8%. Foreign investment and aid has since declined. Events soon after in Benghazi increased both international and local business concerns for security.
Branch said state officials and business councils are exploring ways to release central bank guarantees and financing for business.
"Most small and family businesses are self- or family-financed, and that will be the next wave," Branch said. "Consumer finance is still a new concept. Financial cooperation is still not well understood, but many are looking for an Islamic finance model. The credit union model fits."
World Council has implemented credit union development programs in 71 countries, including 18 African nations and a recently completed Islamic finance program in Afghanistan that established 34 Shariah-compliant financial cooperatives and points of service across the country. World Council has not yet had a credit union development program in Libya.
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, 57,000 credit unions in 103 countries serve 208 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