The following address is being posted for general information courtesy of the GIUM.

ADDRESS GIVEN BY PETER ADRIEN AT THE OPENING

OF THE ST PATRICK’S CREDIT UNION NEW BUILDING,

BRADES, MONTSERRAT

Madame Chairperson, His Excellency, Honourable Chief Ministers, Honourable Ministers of Government and Government officials, brothers and sisters.

Today marks a watershed in the development of Montserrat. This new structure reinforces the resilience of a small society. And when seen in the context of the changing financial landscape, and its wide-ranging implications for retail credit institutions, Credit Union House represents the passage of St Patrick’s Credit Union (a non-formal institution), from painful conception to towering maturity (a fully-fledged financial institution with a social mandate) in just one generation.

Credit Union House is a testimony of the growth and modernity of the domestic financial system; reflects the stability of the local economy; speaks to the entrepreneurial spirit of a people, who through faith in God, will subdue the natural habitat in the face of adversity; and reinforces the value of cooperation as a functional mechanism for social empowerment and economic democracy.

Developments like these suggest a re-thinking of the development paradigm. Does size matter where there is openness, social capital, and technology transfer? With access to the global marketplace, enterprises that are well positioned to benefit from the advantages unleashed by technology particularly telecommunications, computerization and real time payments and settlements applications, could be winners.

In this regard, the state has laid the platform for the market to mushroom. The open legislative framework that guide the business conduct and operation of St Patrick’s Credit Union, particularly the provision for its open bond, provide for an ideal playing field for taking advantages to be gains from membership, networks, strategic alliances and smart partnerships, and offers the bases for economies of scale and scope that it would never be achieved otherwise, if credit union operations were confined to the narrowly defined national markets. These business relationships could also strengthen management capacity as the institution benefits from technology transfer, increase marketing expertise, and give access to cheap investment capital.

The peculiar circumstance of Montserrat demands a paradigm shift, which is different in kind. The state has already accepted that the best practice of the past is not a panacea for the future. There is a special role for St Patrick’s Credit Union in the development strategy. In the last generation, the credit union has altered character of the intermediation process, and currently has a catalytic effect on economic activity.

St Patrick’s Credit Union has contributed significantly to the gross domestic product. As at December 2003, the credit union mobilized 17.7% of the domestic savings formation; distributed 18.3% of the credit disbursed to the households. That is significant in a financial environment where the other providers are two commercial banks. Today, your credit union stands on the same platform with the other financial institutions with respect to good governance, performance and value added. Congratulations to the management and staff.

St Patrick’s Credit Union is indeed one of the pillars of social and economic development in an environment that many with more diversified balance sheets would not even venture to tread. This is why development theorists like Bratman (1992); Pastor (1996); Putnam (1993); and Coleman (1988) contend that credit unions are best placed to tackle the problem of poverty and development because they are the only financial institutions, which are driven by such a mandate in philosophy and practice.

J. Pastor (1996:1) noted that credit unions are well able to address alienation in the market economy in two ways. First, by making members “responsible for doing for themselves in order to feel empowered in their lives regardless of circumstances” (he calls this personal empowerment); second, by making members “work with others to nurture their sense of self-esteem, autonomy and growth” (this he calls group empowerment).

Within this paradigm, this building which represents the movement from Church Hall to Credit Union House ideally speaks to the social capital that have powered the growth and development of the Caribbean society since colonialism.

“Patrick” is no longer a boy; he is an adult. And must accept adult role in the domestic economy. I have identified two areas of priority for him – employment creation and investment financing.

1. Employment creation: Constrained by fiscal pressures, and high cost of finance, governments can neither be an employer of last resort nor a major financier of economic activity. Credit unions must create employment. The management must transform its members from being mere savers to entrepreneurs.

2. Investment financing: The commercial banks, the major financers of economic activity in the local economy, tend to be somewhat risk-aversed to the those in the lower end of the income stream, and sometimes find it too costly to finance the “unbankable.” Credit unions have developed expertise in this area.

What should be the role of the state in the new paradigm? The challenge for the local state is to find a policy mix that would encourage domestic capital formation; nurture indigenous entrepreneurship; and attract capital investment.

The Government (the administrator of the State) must be commended for its significant role in creating the legislative and administrative platform for the growth and development of St Patrick’s Credit Union; and the $3 million grant funds that it provided for housing loans.

But Mr Chief Minister, the future calls for a deeper partnership between the “Patrick and the “State” – more ecstatic lovemaking relationship - perhaps a love affair that is WTO compatible.

And there are significant prospects for a happy marriage since St Patrick’s Credit Union is part of a sector (the credit union sector), which has been growing faster than the rest of the financial system since the 1970s. (MAY 8, 2004)

Congratulations and best wishes for a historic achievement.

Peter Adrien is an Adviser at the Eastern Caribbean Central Bank, and a Service Provider for ADRIENS ENTERPRISES (AE). He has been actively involved in credit union training and development since 1991. Visit his website at www.adrienenterprises.com to access the services offered by AE.

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