IN 1953, the new economic system of savings through credit union was thought of by Ratu Sir Lala Sukuna where he recognised “that thrift and initiative were necessary in any economy”.
Ratu Sukuna knew that its “own Fijian tradition almost made a sin of thrift which could by their own ingrained customs be misconstrued as miserliness.” (Carlos M Matos — VOCA, report on 8 June 1984).
Credit unions are a type of cooperative which provides a safe space for members to put away savings and borrow (within their savings balance) at a fair interest rate and operate in accordance with credit union operating principles and policies.
The objectives of a credit union are:
1. Promote savings among its members;
2. Receive savings of its members either as shares or deposits in credit union; and
3. Provide loans to members at reasonable interest rates exclusively for provident or productive purposes.
Once fully operational, it can lead to an improvement in the quality of life for individual members themselves and their families. Its main product is money.
The members of a credit union are owners — through their shares — and also borrowers of funds collected from members savings.
Only a natural person can become a member and not an entity or a corporation.
A member can only borrow up to 80 per cent to 90 per cent of shares (security) such that the credit union’s total asset has 10 per cent to 20 per cent of its total asset is in liquid form (cash).
As the credit union grows, 5 per cent of cash saved can be invested in Unit Trust and/or shares in companies listed on the stock exchange. Such a policy will depend on the decision of each credit union.
A saving of a member is the money left over from his/her weekly wages or proceeds from farm products after paying domestic dues taxes, farm expenses and commitments.
These savings are kept at the credit union either as shares or deposit in credit union.
Shares reflect ownership and attract dividend at the AGM whereas deposits (eg Christmas savings, school fees, religious and traditional soli etc) is a liability and it is paid out when it is due.
It attracts interest income and it is always added as part of the total income of the credit union. A credit union can be established as small as family, tokatoka, mataqali, religious group (tabacakacaka, parish), employees based of an institutions or company.
It runs on a democratic principle, one person one vote. It does not take into account your chiefly title, your position in the company or the institutions. The main thing here is the “common bond” on which credit union is established eg familybased credit union only members of the family can be members.
Mataqali Credit Union are for members of the mataqali only. Similarly for employees-based credit unions in that they are employees of the same employer.
The smooth running of a credit union will depend on trust, honesty, commitment, accountability and timely report of financial information and compliance of the laws.
In 1953, Reverend Father Marion Garney SJ, who had successfully implemented the credit union system in British Honduras, was invited to Fiji by Sir Ronald Garvey and Ratu Sir Lala Sukuna.
On July 15, 1954, the Legislative Council unanimously passed “The Credit Union System Ordinance” with a grant of £5000 ($F14,326). After Fiji’s independence in 1970, this ordinance was transformed into the Credit Union Act of 1978 (Cap 251), which remains the governing legislation to this day.
In 1983, the Fiji Credit Union League requested the assistance from VOCA, (Volunteers in Overseas Cooperative Assistance).
In 1984, Carlos M Matos from VOCA came and work with the League Planning Committee comprising of Fr Marion Ganey SJ (founder), Jone Naisara (co-founder) Agapito Nasese (MD), Daniele Burese (DMD) and Joseva Manaseitava (director training).
In his report “In Pursuit of Self Reliance — A Credit Union Programme for Fiji”, it was noted, among other things that the number of credit unions in Fiji was 114 with 23,475 members and its total assets $12,949,748.
Out of the 114, most of the credit unions were in Nadroga (30), Suva (26), Tailevu (19) and Cakaudrove (16). The rest covered other provinces. In 2022, the number of operating credit unions has significantly decreased.
Currently, it is estimated that there are less than 10 credit unions remaining. Out of this number, only four credit unions are members of the Fiji Credit Union League.
It is crucial to encourage all existing credit unions to become members of the Fiji Credit Union League and fully utilise the resources available at the Bergengren Credit Union Training Centre.
The training centre was established with the primary purpose of educating credit union members on fundamental credit union principles, basic accounting practices, financial statement preparation, financial analysis associated risks.
I recall that one of the longestserving credit unions, Sacred Heart Credit Union in the ‘70s, ‘80s, used to display in their office notice board monthly income and expenditure statements as well as balance sheets on a standardised form designed specifically for credit unions.
With the advent of modern technology such as computers along with modern accounting software, achieving this level of financial reporting should be easily attainable.
However, unfortunately, it appears that this practice is not being implemented. Why? I highly recommend that the Fiji Government actively participate in revitalising the savings system that was strongly supported by Ratu Sir Lala Sukuna.
This can be achieved through the following measures:
1) A comprehensive review of the Credit Union Act of 1978 Cap 251;
2) Allocate funding for the repairs of the Bergengren Training Centre;
3) Allocate funding for the procurement of accounting software specifically tailored for credit unions; and 4) Encourage iTaukei institutions to actively promote the establishment of credit union savings schemes.
•IOWANE NAIVELI is an Established Partner with a demonstrated recognition in the areas of commercial development and finance. Experienced in management, corporate governance, risk management, and external audit. Well versed as an entrepreneur with a firm that specialises in auditing, business advisory, taxation and consultancy. The views expressed in this article are his and do not necessarily reflect the views of this newspaper.
