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Minnesota CUs get Hispanic-loan lessons in Paraguay
ASUNCION, Paraguay (6/13/08)--Highlights of an internship two Minnesota credit union executives recently completed in Paraguay included: community commitment, a strong link to the credit union philosophy, and an unusual loan program that disburses funds and collects payments on a daily basis.
From left: Christian Torres, Mercado 4 operations manager; Heather Hernandez Viveros, Anoka Hennepin CU, Coon Rapids, Minn.; Lidio Guanes, Paraguayan store owner; and Jaroslav “Jaro” Mendoza, City-County FCU, Brooklyn Center, Minn., during an internship in Paraguay (Photo provided by World Council of Credit Unions)
Heather Hernandez Viveros, associate vice president of human resources at Anoka Hennepin CU, Coon Rapids, Minn., and Jaroslav “Jaro” Mendoza, assistant branch manager and loan officer for City-County FCU, Brooklyn Center, Minn., visited eight credit unions during their 11-day internship. The internship was made possible due to a partnership facilitated by the World Council of Credit Unions (WOCCU) between the Minnesota Credit Union Network and Central de Cooperativas del Area Nacional Ltda. (CENCOPAN), Paraguay's credit union association. “Our credit union recently implemented plans to serve the Hispanic population in this area, and there are aspects we can improve upon,” Hernandez Viveros said. “By going to Paraguay I was hoping to see how Latin American credit unions reach out to members and build trust with their members.” Mendoza said his visit was for much the same purpose. “In Minnesota, very few credit unions are set up to serve Hispanic communities,” he explained. “But that's what credit unions were set up to do--serve those who are underserved or not served at all.” Hernandez Viveros and Mendoza worked with Paraguayan credit union staff to explore philosophical and operational issues. Credit unions in the Latin American country emphasize community and member commitment, including helping to build and subsidize schools and pharmacies. Both participants spent time at Mercado 4 CU, examining its microfinance initiatives for the credit union, located in the center of a busy market. The member-merchants’ operations required daily cash infusions to operate, so the credit union designed a 60-day term loan with a daily repayment structure compatible with the merchant's cash flow patterns. The merchants borrow money in the morning to purchase goods to sell from wholesalers and then deposit their funds at the end of the work day. Credit union loan officers circulate among the market stalls, collecting daily loan payments from borrowers. The rates are favorable to borrowers, who save more than $40 in interest per loan, or more than $240 per year--the equivalent of a month's wages for the average Paraguayan worker--compared with rates offered by local loan sharks for the same type of service. Merchant and credit union member Lidio Guanes leveraged the loan program to expand what started as a small herbal remedies concession limited to a three-foot-by-six-foot table financed originally by a $100 credit union loan. Today, he occupies a storefront at a busy market intersection and has trademarked his products under the brand name Poha Ñana, or “natural remedies.” He also warehouses the products and serves as wholesaler to other vendors, through Mercado 4's loan program. The program also benefits the credit union. With the new loan product, the formerly struggling Mercado 4 grew its loan portfolio to $2.3 million by the end of 2007 from $1.1 million in 2005, participants said. Credit union assets also grew by 60% in 2006. “It's so incredible how they have been able to meet the needs of members rather than asking members to meet the needs of the credit union,” Hernandez Viveros said. “They are living the people-helping-people philosophy. I returned home feeling very good about being part of the credit union movement.”
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