VOINJAMA, Liberia–At its sixth annual General Meeting here, the Liberia Credit Union National Association (LCUNA) heard a message that borrowers need to be paying debts if they expect to receive any future loans, and that many of the credit unions in this country are not well-managed.
The executive governor of the Central Bank of Liberia told the credit union meeting that CUs must work with their members to honor their debt obligations to the CBL and other lending institutions in the country, according to FrontPageAfricaOnline.com.
Governor Milton A. Weeks said the Central Bank would continue to support the Loan Extension Availability Facility (LEAF) Program under a revised framework but cautioned that only loan applicants who have successfully met their obligations will be considered, the news service reported.
Governor Weeks added that he has concerns that while a few borrowers have honored their obligations under the LEAF loan program provided by the CBL, most borrowers have not paid back their loans with the bank, according to FrontPageAfricaOnline.com. Weeks said the non-payment of the loans by delinquent borrowers is making it difficult for CBL to even consider requesting any additional funding from the Board of Governors of the bank.
“How do I go to my board to say, please grant us some more money when the first money was not repaid,” Weeks asked, according to FrontPageAfricaOnline.com.
Separately, Weeks lauded the credit union sector in Liberia for its role in meeting the needs of an increasing number of unbanked and underserved segments of the Liberian population including the poor and low income households, according to the news service.
“The Governor, however, spoke of the need for credit unions to merge their unions to make them more efficient and stronger,” FrontPageAfricaOnline.com reported. “The Governor recalled that prior to the war, LCUNA had 68 affiliate credit unions serving a total of 24,000 members. Today, he said there are 260 primary credit unions and four regional credit unions with more than 50,000 members. Most of the credit unions, he noted, are very small and operate in remote locations where banks or Microfinance Institutions (MFIs) are unable to serve.”
“While they appear to be filling a gap,” Weeks was quoted by FrontPageAfricaOnline.com as saying, “it is difficult to ascertain a clear picture of the operational and financial health of these financial institutions as less than one-third of the primary credit unions report to LCUNA.”
There is a need, the Governor said for all concerned to work together to correct this “deficiency,” according to the report.
“Governor Weeks also expressed concern that following more than four decades of existence, credits unions have not materialized into a robust federation as seen in other low-income countries,” FrontPageAfricaOnline.com reported. “With a few notable exceptions in Liberia, Mr. Weeks said, credit unions are not well managed. He maintained that they do not operate sound management information systems; and are not properly governed and offer only basic services. Governor Weeks said efforts are being made by the Central Bank of Liberia to correct this trend. He disclosed that among other measures the CBL has issued a Regulatory and Supervisory Framework for the licensing and operations of credit unions.”