As Barbados joins the world in marking World Credit Union Day, there is renewed attention on the true economic value of the credit union movement, a value backed by hard data, not sentiment.
University of the West Indies economist Dr Ankie Scott-Joseph noted in the media that the cooperative financial system is far more than a successful branch of the economy; it is one of the key pillars of Barbados’ financial stability. Citing the 2024 Financial Stability Report, jointly produced by the Central Bank of Barbados and the Financial Services Commission, she points to the size and scope of the movement.
“Their total asset is approximately $3.66 billion dollars,” Dr Scott-Joseph says. “What that represents is about ten per cent of the financial system. If we consider significance… their total assets-to-GDP is approximately 22.8 per cent.”
That means credit unions hold close to one quarter of the country’s total annual output. As she explains: “If we consider Barbadians, we are talking about nearly one quarter of everything our nation is producing a year… the credit unions are responsible for nearly one quarter of that.” With GDP in 2024 around $14.3 billion, the sector’s assets of roughly $3.6 billion represent a powerful share of national productivity.
While she acknowledges that the sector is still smaller than commercial banking, Dr Scott-Joseph emphasises that its penetration of about 249 000 members — or nearly 80 per cent of Barbadian households — makes it “very significant” and “literally at the heart of the economy”.
At the centre of the credit union movement’s strength is its cooperative model, which she says works because it serves people, not profits. The difference between commercial banks and credit unions is clear: banks exist to maximise shareholder returns, while credit unions aim to maximise the satisfaction and welfare of their members.
Credit unions also handle risk differently. Dr Scott-Joseph points out that while banks lend just over half of their deposits, credit unions lend a much larger proportion — about 74 per cent, demonstrating their willingness to finance members’ needs.
The trade-off, of course, is higher non-performing loans.
“They’re taking on a lot of risk,” she says. “Credit unions are willing to serve riskier borrowers.” Yet this, she argues, is exactly why the model is so valuable. Its greater risk tolerance expands opportunity and promotes inclusion, a key principle for any economy that wants growth to reach everyone.
“Inclusion means more than just having an empty account; it means achieving meaningful participation.”
Participation is made possible because credit unions lower the barriers that often keep people out of the financial system.
“If you consider a domestic worker… she probably cannot maintain the minimum of $300 or $500,” Dr Scott-Joseph says.
Unlike banks, credit unions welcome informal workers such as construction labourers, hairdressers, carpenters, vendors, and young people who may not yet have utility bills or payslips.
“If they change the model, those barriers mean that many people would not have access to the financial sector,” she cautions.
Dr Scott-Joseph believes the credit union’s traditional role in helping members “escape poverty” must evolve towards wealth creation. Given their scale, she says, the movement now has both the capacity and responsibility to build collective prosperity.
She sees opportunities for credit unions to invest more boldly, possibly in partnership with trade unions to acquire assets or even struggling institutions, noting examples in other Caribbean territories where credit unions have successfully purchased banks.
To remain resilient and continue contributing to the national economy, Dr Scott-Joseph outlines three priorities for the movement over the next five years.
First is deposit insurance, which she describes as essential in protecting members should any crisis occur.
“It means that deposit insurance is important for members so that if there’s a crisis, at least a portion of their deposits is protected,” she says.
Second is digital integration and cybersecurity. With younger generations accustomed to digital banking, credit unions must invest in online platforms and secure digital transactions to stay relevant and trustworthy.
Third is compliance with Anti-Money Laundering and Counter-Terrorism Financing (AML/CFT) standards. Because the sector represents such a large part of the financial system, she warns, its compliance protects not just members, but Barbados as a whole. “It’s critical for them to be AML ready to protect their customers and, most of all, to protect Barbados.”
Dr Scott-Joseph’s analysis makes clear that credit unions are not merely financial institutions. They enable access to wealth creation, and they have become a cornerstone of our social and economic progress.
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