Credit unions evolved from a simple idea - that people could pool their money and make loans to each other. That was over 160 years ago. Today the credit union philosophy of people helping people has spread to 97 countries with 46,000 credit unions serving 186 million people worldwide.
Member owned financial co-operatives have improved the lives of millions of people and have the potential to serve millions more. Australian credit unions are bringing credit union solutions to communities in need and Gateway is lending a hand.
We want to play our part in the global fight to end poverty and are doing this in partnership with the Credit Union Foundation of Australia (CUFA). CUFA is the development agency for the Australian credit union movement and supports people in the Asia Pacific region establish credit unions.
One of CUFA’s aid programs is the restructuring of the microfinance system in Cambodia to give the working class access to high-quality financial services through local credit unions. The term microfinance encompasses the delivery of financial services to poor families and entrepreneurs and includes small loans, usually less than $200, in the form of microcredit.
Microfinance gives poor people access to credit to build their assets/incomes or establish a small, self-sustaining business. For example, a peasant farmer may borrow $50 to buy chickens so he can sell eggs. As the chickens multiply, he will have more eggs to sell. Soon he can sell the chicks and each expansion pulls him further from the devastation of poverty.
Another example is of a woman in a remote village in Uganda who borrowed $25 which she used to buy a cow. The proceeds from the milk it produced enabled her to pay school fees for each of her children.
The Cambodian financial system was wiped out during the era of the Killing Fields. Recent bank failures again ruined people’s trust in the financial sector and has limited the amount they are willing to deposit. To counter this, local credit unions - supported by CUFA - are improving their image and strengthening their operations leading to increased savings levels by members.
Nobel Peace Laureate, Muhammad Yunus, is the father of micro financing. If you want to learn more about the wonders of microfinance, pick up a copy of Yunus’ book, Banker to the Poor - it’s well worth a read.
Regards
Paul J. Thomas
Podcast is available here 