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Goals without means are like bread without flour, or so the Spanish proverb goes. Likewise, the credit union movement can't gain sufficient foothold in an emerging country if the government and people of that country aren't quite ready to move forward with the concept.

Through its Partners program, the World Council of Credit Unions in 2000 paired the Ohio Credit Union System with the credit union movement in Bulgaria in hopes of helping the former Soviet satellite emerge more fully into economic democracy. Some strides were made in providing hands-on service advice and direction but, after two years, it was clear credit union leaders in Sofia, Bulgaria's capital, weren't quite ready to grow as quickly as either organization would have liked.

The two-year initiative in the Balkan state was "moderately successful," said John Florian, chief operating officer for OCUS. Florian traveled to Bulgaria to participate in various meetings with the country's credit union leaders, but wasn't optimistic about the ability to raise the status of credit unions in the former totalitarian country.

A Film In Black and White

"I think WOCCU saw that the governmental support wasn't there and needed to redirect its resources to other countries where our efforts would make a greater difference," Florian said.

Bulgaria had suffered greatly under its previous Communist leadership and social scars from that suffering were still visible when Florian visited the country in 2000.

"The capital, Sofia, is almost like a city in a film shot in black-and-white," Florian said. "There's very little color evident anywhere."

The city also had those great open spaces, often desolate, that could easily support a rally of a half-million, similar to those found in other former Soviet states, he said.

As for credit unions, there were literally thousands of them. But most were small and many were combined with other retail-type businesses as simply one more service, said Kelly Schermerhorn, chief executive officer of Harvest Federal Credit Union, Heath, Ohio, who traveled to Bulgaria with Florian.

"You would find credit unions as part of mom-and-pop grocery stores," said Schermerhorn. Shoppers would withdraw enough currency from the shopkeeper to buy groceries, and then give the money right back to pay for purchases, he said.

The Bulgarian credit union model causes most of its institutions to fall below the country's regulatory radar, but it also creates a fractured environment that will keep credit unions form becoming more than the most rudimentary consumer convenience, said Schermerhorn.

"I don't see Bulgarian credit unions ever growing in any meaningful way," Schermerhorn said.

Looking Elsewhere To Help

Neither, apparently, did the World Council. After the international organization's limited-term Bulgarian project came to an end in 2001, WOCCU asked OCUS to partner with the much more mature credit union movement in Bolivia. Despite similarly isolated and primarily rural institutions separated by vast stretches of the Andes Mountains, WOCCU felt the Bolivian credit union movement was ready to make a giant leap forward. OCUS agreed, Florian said.

"Bolivian credit unions had been up and running for decades and clearly didn't need any 'how-to' assistance," said Florian.

The dangers of travel in Bolivia, a very mountainous country, was typical of what is often seen in films, said Schermerhorn. "Picture one-and-a-half-lane mountain roads for two-way traffic," Schermerhorn said. "The largest vehicle always has the right of way."

Such challenging terrain also isolated most Bolivian credit unions from each other. What the institutions really wanted to bridge that gap was their own corporate central credit union to support the institutions and provide primary transactional processing services for what are some surprisingly sophisticated institutions, said Florian.

At CUNA & Affiliates 2003 Governmental Affairs Conference in Washington, D.C., WOCCU, OCUS and Ohio-based Corporate One Federal Credit Union, signed an agreement with Bolivian credit unions to provide assistance in starting what South American credit union leaders call a "central financial facility," said Florian.

Schermerhorn and Kurt Lykins, Corporate One's chief technology officer, traveled to Bolivia last spring to measure the compatibility among existing credit union systems and their ability to support a centralized processing system. Yes, Lykins said, the systems have sufficient sophistication that such an effort can be done.

Last September, Julio Hernandez, the Bolivian project manager for the process, in turn visited Corporate One and several Columbus, Ohio-area credit unions linked to its system to better understand how the process works. Hernandez also spent time at OCUS studying trade association processes with the idea of creating a Bolivian league in the future, said Florian.

Shared Branching

One of the side projects to developing a centralized corporate will be shared branches, which Hernandez said was a primary goal for Bolivia's hundreds of small credit unions.

Like Bulgaria, however, there was some government skepticism about whether credit unions could effectively function as a larger part of the financial lives of Bolivian citizens. Unlike Bulgaria, however, the skepticism was born of concern for the success of its credit union system rather than fears of it, Florian said.

"Bolivia wants to do this right and they have a fighting chance for success, but governmental support is crucial," said Florian. WOCCU officials are providing assistance in that area, he said.

WOCCU has identified 14 Bolivian credit unions of larger size that could form the backbone of a more cohesive credit union movement, said Schermerhorn. These institutions will become the core members of the country's first corporate credit union system if all goes according to plan, he said.

A Two-Year Project

"The ancillary tasks to making this happen will be to set up a more supportive regulatory requirements and help the Bolivians build a secure electronic environment," Schermerhorn said.

The whole project should take about two years, Florian said, but credit union officials on both sides of the equator aren't waiting before taking the next steps.

Currently, a contingent of Bolivian credit union leaders and regulators are scheduled to visit the Ohio league, Corporate One and some of its user credit unions March 15-17 as part of the development process.

Ohio credit union leaders are hopeful the visit will reduce government resistance to the process and create an atmosphere of support rather than skepticism.

However, the rigors of international travel in the wake of the Sept. 11, 2001 terrorist attacks are such that visits by Bolivian officials are never guaranteed.

"We can never be certain until we see the Bolivians getting off the airplane in Columbus," said Schermerhorn.

If that happens in March, credit union and OCUS officials are ready to move to the next step in their joint plans, Florian said.

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