One CEO's Postcard From A Whole Different (CU) World
Planning your summer vacation for 2008? Here's how one CEO spent his this year, and he offers some fodder for those longing for something more meaningful than a frozen margarita machine and a week next to the timeshare pool.
Bill Raker, CEO of US FCU in Burnsville, Minn., has long been active in international CU development, especially in Paraguay, the country with which the Minnesota CU Network has partnered. But as he will tell you, he hadn't ever seen anything quite like the "credit unions" of Cambodia until he toured that nation.
Raker had made vacation plans to visit Thailand, where his wife is from, when he decided that since he was in the "neighborhood" it would be an ideal time to visit with credit unions in Cambodia, where the World Council of CUs (WOCCU), the Credit Union Foundation of Australia (CUFA) and Canada's CUs have been active. Earlier he had been part of a task force of CU CEOs who had done some work in assisting Cambodia's CUs, but he had never before visited the country.
WOCCU's strategy in Cambodia has been a bit different than in other countries, where the focus is usually on building capital. Instead, Raker noted, in Cambodia (which has had capital and monetary assistance from Australia and other countries), the plan is to raise the credit union profile and to establish physical buildings affixed with the credit union name, instead of operating out of someone's house or another building. The first two of seven new credit union buildings are under construction in Cambodia as part of WOCCU's "Cambodian Building Trust Program."
The trip was on Raker's own Riel ($1 = 4,000R), but WOCCU helped line up a driver and interpreter who helped coordinate visits to the three rural CUs approximately 100 kilometers from the country's capital, Phnom Penh. The goal, said Raker, was to gather data and form assessments or impressions through discussion and observation that might be helpful to WOCCU. But the first gathering and assessing that occurred for Raker came shortly after landing at the airport. Driving over "terrible" roads Raker said he was struck by the trucks on which people were "packed like cattle" and were even hanging on the outside. Later, he saw the same vehicles heading the other way, with his driver explaining they were workers from Chinese-owned garment "sweatshops" putting in 12-to 16-hour workdays. The country, he observed, remains visibly scarred from the Vietnam war and the reign of Pol Pot and the Khmer Rouge in the 1970s. Approximately one-third of Cambodia's 14 million people live on about 50 cents per day, and the financial system is a shambles.
Among the first stops was the remote village of Krang Ampil, where Raker was told he was among the first foreigners to ever visit. The "credit union" has 47 members. Like other villages, livestock was everywhere, and cattle are often tethered inside homes.
"It took time to try to understand the credit union structure there, which is different from what we have here in the U.S.," said Raker, who in a report he wrote afterward, described that structure this way. "Associations" in each of certain number of villages link together to form the "credit union." Each of the village organizations operates independently with elected committees and a "CFO" (village treasurer) who actually oversees and runs the operation. They take in and account for their own deposits and approve and administer their own loans. Any surplus not needed to fund the village's loan requests is sent to the "credit union" for use by villages whose loan demands are greater than their deposits to fund them. Villages elect "directors" to oversee the "credit union."
It sounds like Cambodian Corporate. That's not the only difference. "There are no regulations," he continued. "The government is not involved in any way and they say that's the way they want it-they don't trust the government. The credit unions are very welcome and give access to credit to rural farmers who never had it. They make loans for $12 or $25 or $50. We were in the home of one woman who got a loan for a sewing machine."
Raker said he saw limited training (the Aussies have helped underwrite a training center), and no auditing of any kind. Disaster planning is apparently not a big issue, with Raker reporting that while records were clean and neat and available to any member who wants to see them, the "record" exists as a single sheet of paper with no backup.
Still, "I'm optimistic," he said. "There is a lot of work to do, but in the three credit unions I was in they were 100% committed. One credit union requires all of their members to be in attendance at the monthly meeting, or they are fined.
Trips to places like Cambodia and other developing countries where credit unions are working to put down roots aren't for every CEO, acknowledged Raker, but for other CU leaders, there can be rewards. "Some people are not suited to go and see these types of things and do this kind of work. It can be an eye-opener," he said. "But for someone who believes in the credit union values it is inspiring to see what credit unions can do for people who have no other recourse. You can see people who are really underserved and the impact a few dollars can have on their lives."
Frank Diekmann can be reached at fdiekmann