‘Ease restrictions on credit unions’

A cabinet minister has called on his own Government to rethink some of the restrictions that are currently placed on credit unions, in a bid to boost investing among Barbadians.

During parliamentary debate on the Securities (Amendment and Validation of Fees) Bill, Labour Minister Colin Jordan, the MP for St Peter also said Government needs to educate the people on investment opportunities, suggesting that the Stock Exchange “is no longer functioning in the way it was designed to function”.

But he backed away from criticising banks for conservative lending, declaring that the most conservative banks were the ones that were able to weather the storms of the 2007-2010 global financial crisis.

Jordan declared: “And so I balance my view that banks have to see themselves as participating in the development of a country with an understanding that they are also the holders of the funds of people in Indian Ground, Sand Street, Mile and a Quarter; they hold those people’s funds. My people’s funds. And so I want on behalf of my people for the banks to lend that money wisely and judiciously, after having done all of their due diligence.”

But he argued that while banks have certain fiduciary responsibilities, Government also has the responsibility to ensure that funding is available that ordinary people can invest, hence the call to remove some of the restrictions on credit unions.

“We have to make sure that we do not allow commercial banks to place us in a mindset where we agree with them to muzzle as it were the work of credit unions, because commercial banks often see credit unions as rivals to them, and so there are restrictions placed on credit unions that are not placed on banks in relation to some of the economic activity that they can engage in.

“But the credit union…  is the bank of the ordinary person. It is a bank that we own. I am a member for a long time, of the City of Bridgetown Cooperative Credit Union… and I want to say that as a Government, we have to make sure that banks do not put us in a position to hamstring the work of credit unions.”

He cautioned that credit unions, like banks, also have to be judicious in their lending and ensure that their credit committees are capable of assessing loan requests. But the credit unions should be allowed to be participants in “helping us to create wealth”, he said.

Jordan argued that the change is necessary, given the declining opportunities for ordinary people who may want to invest.

“Government has been, in the 13 months that we’ve been in office… trying to create those opportunities, trying to create in the minds of Barbadians a sense that all is not lost in terms of opportunities to invest.

“And so when as a Government we launched a programme like the Trust Loan Programme, we’re doing that because we recognise that ordinary people must have opportunities to invest. And if the investment opportunities on the stock exchange are declining, then we have to provide other opportunities for ordinary people to be able to invest.”

He also pointed to the need for financial literacy to be included in education reform efforts.

“The matter of education in money management and in financial literacy is important. Learning the different kinds of investment, whether they be a strictly commercial enterprise or now increasingly, in social enterprise.

“Social enterprise is an area that I think more people need to look into. There is much not just benefit but personal satisfaction to be gained from building the social capital of a country.

“The generation before us knew how to save. And many of us were sent to school by people who had very small incomes because they knew how to save, they knew the concept of deferred gratification.

“But … investments in the previous generation were very simple. If you had enough money you would buy a house spot, or if you couldn’t afford the house spot at least you could buy the house. So a house and land were the simple investments.”

Suggesting that the investment landscape had now changed, Jordan urged his administration to educate the public on such instruments as treasury bills, bonds, and shares.