MADISON, Wis.–The World Council of Credit Unions is now readying for the next step in helping to launch credit unions in Cuba following an introductory trip by its president and CEO, Brian Branch.
WOCCU CEO Brian Branch, center, meets with a group of trainers for entrepreneurs in Cuba called Cuba Emprende.
With the United States now normalizing relations with Cuba, Branch travelled to the island nation in early July where he met with economists from the University of Cuba and others in order to get a broad understanding of what will be needed to plant the seeds for credit unions.
Until 2012 all businesses in Cuba were state-owned and controlled, but in the last three years the still communist country has begun to spin off some sectors and employees, including agricultural cooperatives. Cuba has no financial cooperatives of any kind, said Branch. The country’s goal is to get to 45% of all businesses out from control of the state and into private hands. It is currently at 35%, Branch told CUToday.info.
The Cuban government has described its plan to move 45% of its economy into the private sector as “an experiment,” and Branch said he told officials one way to meet that target would be to use credit unions to help grow the non-state cooperatives and other small businesses.
“I told them this would be one way to help them to meet their policy objectives,” Branch said.
One Big Challenge
Because Cuba’s economy still mainly operates under the old communist central planning model, it can be a challenge for non-state enterprises to buy and sell products or services, noted Branch, although with cruise ships and flights from the U.S. on their way there has been much activity in tourist-related enterprises.
“To me that is an obvious opportunity for credit unions,” said Branch. “The state is looking for private and foreign money to invest, with a priority in upgrading technology” and tourist-related enterprises. “We say ‘Give credit unions the opportunity to allow people to reinvest savings and capital into communities’ The economists said, ‘That’s interesting, but it’s not a priority.’”
Another issue is that those small businesses that are growing are doing so using funds being remitted by family members in the United States. Branch said he pressed the point that for those who do not have access to such remittances, credit unions can again be a means of providing capital and investment.
Branch said the “egalitarian” nature of credit unions do have appeal in a country that has been under communist rule for more than a half-century. But he noted that in his discussions with various Cuban officials, including government policy advisors, they acknowledged that in their planning they had not given any thought to the idea of financial cooperatives.
Cuba is known as a time warp for 1950s U.S. cars. Here, WOCCU CEO Brian Branch sits in a 1956 Buick.
'A Number of Things Must Come Together'
Over the past several decades the World Council has gone to work in a number of countries that have transitioned from communist governments to capitalism, and the challenges are many. The first is getting a good understanding of where that country’s economy stands, and then identifying the right people with whom to meet in order to make legitimate progress. So how did Branch know where to begin?
“A number of things have to come together,” he said. “I went to understand the economic framework in Cuba. The next step is to meet with the government.”
Other steps include identifying the groups that would be best suited for launching a credit union, according to Branch, such as private entrepreneurs. “We look for those who would bring the business demand.”
Among the groups that are prime for credit unions, he added, are teachers in Cuba who are typically not well paid, who need a place for their savings, and who are also interested in operating various businesses of their own, such as those that would cater to tourists.
Launching a credit union in any country can be a long-term endeavor, as it requires enabling legislation and a regulatory framework. WOCCU has experience in that kind of development, but any of that will need to follow the next step in the discussions, which will take place in October when representatives from the World Council and the League of Southeastern Credit Unions will be visiting.