Credit Unions, the Ukraine's Quiet Revolution

KIEV, Ukraine – The world watched Ukraine's Orange Revolution as people refused to accept an illegally elected leader. But a decade plus before that election, a smaller revolution was going on as Ukrainians looked for greater economic freedom through the development of credit unions. In the early 20th century over 2.5 million Ukrainians belonged to credit unions. Two world wars and communist rule eliminated them until a resurgence in the early 1990s. Temporary provisions were approved by a presidential decree giving credit unions a legislative framework in 1993 that was formalized in 2002 when the Verkhovna Rada (parliament) approved a law translated as "On Credit Unions". The law is based on the same credit union cooperative principals as in other countries: one member, one vote. Like in the U.S., credit union common bonds are based on employment or geography. The Ukraine has seen a large number of agricultural credit unions develop. A special department was set up in the State Commission for Regulation of Financial Services Markets of Ukraine. This is special governmental authority to regulate all nonbanking sectors in Ukraine. Petro Kozynets, who heads the Ukrainian National Association of Savings and Credit Unions (UNASCU), considers the legal framework "quite progressive" but adds "currently there is a law being developed about changes and amendments to the effective law on credit unions. It has to expand significantly a spectrum of services that credit unions may grant to their members." His organization is working with cabinet ministers to prepare a document named `The Conception of Credit Cooperation Development in Ukraine." Average assets of a credit union in the Ukraine is 3 million hryvnias (US$600,000). Average member size is 3,700 people and over 153 credit unions are members of UNASCU. They are spread throughout the oblasts (states) although Kozynets says there is a greater concentration in cities. Although about 180 banks, including foreign banks, work in the Ukraine, they are not interested in those who need small loans or small savings accounts. UNASCU is comprised of the Credit Union Training Center, Service Center, Information and Consulting Service, and United (Central) Credit Union, with a total staff of 13 who work across the organizational lines. They are in the process of moving from rented to owned office space. Kozynets believes in the slogan "From a credit union movement to a credit cooperation system." "Our aim is to build an integral system, including structures for securing deposits, regional service and expand this system on all the credit unions in Ukraine, including those that still do not belong to UNASCU," he said. The movement had help, especially from the new but successful Polish movement, including exchange of information, visits and training sessions held in Poland for Ukrainians. "We are trying to adopt in Ukraine everything that is best in Polish experience." Equally the Diaspora of Ukrainians to the U.S. led to them forming credit unions and they in turn helped those back in the homeland. Kozynets listed many American and Canadian credit union organizations, including WOCCU and CUNA, as providing small donations that helped UNASCU develop programs and its image. On a recent visit, WOCCU CEO Pete Crear talked about increased U.S. help and the support of Poland predicted that 2006 would be a breakthrough year for the movement there. Kozynets has a dream for his credit unions. "Today credit unions in Ukraine unite more than one million persons. In five years we hope to unite more than three million." That would be a revolution of economic liberty for those that had no banking resources. -