MADISON, Wis. — The latest American export to hit Mexico: the recession.
As the United States' economy struggles, many immigrants are having difficulties finding work here, which means they are sending less money back home to their families still in Mexico, according to the World Council of Credit Unions.
"We are beginning to see signs of increasing delinquency as unemployment increases. We are applying some austerity measures to reduce costs and prepare for a difficult year," Ramon Imperial, executive director of the Caja Popular Mexicana, Mexico's largest CU, told Brian Branch, WOCCU EVP and chief operating officer.
Credit unions in Mexico — such as Caja Popular Mexicana, Caja Morelia Valladolid, and Caja Yanga — are receiving increasing demands for financial services from new or returning members, migrants returning from the U.S., Branch said. The Mexican government has reported a reduction of emigration to the U.S., and the return to Mexico of more than one-million emigrants, Branch noted. He added that Mexican unemployment remains well above U.S. figures, and that wages remain well below U.S. wages for similar work.
"Despite having acquired experience and improved skills, construction and manufacturing workers find new jobs and spiraling down construction sector employment," Branch said. "As a result, many returned emigrants engage in self-employment production and commerce. Mexican credit unions provide a stabilizing influence to assist them in re-integrating into their local communities."
Mexican CUs are seeing an increase in the number and volume of small business loans as these returnees engage in self-employment or start small family businesses for housing improvement, shoe and clothing production, vegetable and fruit commerce and handicraft production, according to Branch.
"Factories have downsized," he said. "You see people moving from formal employment to self-employment. And people are coming back to Mexico, and having a harder time finding jobs."
Mexican CUs are trying to help these members.
"Credit unions still have a fair amount of liquidity — as people saw a recession coming, they were less inclined to apply for loans," Branch said.
Now credit unions having a significant amount of liquidity and are looking to lend, he noted.
"Now they can make more smaller loans," Branch said. "They are looking at people coming back."
Branch noted some things that United States credit unions could learn from Mexican credit unions during this time, including micro-lending methodologies, and finding ways to measure risks of lending for self-employed members.
"Mexicans are very creative," Branch said, noting that credit unions in Mexico do not always do credit checks the way U.S. financial institutions do. "They sometimes start out with very small loans, then if those work out, they grant larger ones. It might be interesting for Mexican credit unions and U.S. credit unions to talk."
