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22ND MARCH, 2017

Table of Contents






2. FORMATION ... 4





Credit unions differ from banks and other financial institutions

in that the members who have accounts in the credit union are the
owners of the credit union and they elect their board of directors in
a democratic one-person-one-vote system regardless of the amount
of money invested in the credit union
Generally speaking, credit unions see themselves as of "higher
moral ground" than banks; they feel that they are "community-
oriented", and "serve people, not profit".
Surveys of customers at banks and credit unions have consistently
shown a significantly higher customer satisfaction rate with the
quality of service at credit unions.
A credit union's policies governing interest rates and other matters
are set by a volunteer Board of Directors elected by and from the
membership itself. Credit unions offer many of the same financial
services as banks, often using a different terminology; common
services include: share accounts (savings accounts), share draft
accounts (checking accounts), credit cards, share term certificates
(certificates of deposit), and online banking.
Normally, only a member of a credit union may deposit money with
the credit union, or borrow money from it. As such, credit unions
have historically marketed themselves as providing superior
member service and being committed to helping members improve
their financial health. In the microfinance context, "credit unions
provide a broader range of loan and savings products at a much
cheaper cost [to their members] than do most microfinance


A dictionary definition describes a Credit Union as a non-profit-

making money cooperative whose members can borrow from
pooled deposits at low interest rates . It is formed when such
members with the same interest agree to save together to create a
financial pool, out of which they can credit among themselves in
time of need for productive or provident purposes.

All operations are a blend of sound business principles, practices

and co-operative principles.
In Ghana, credit unions are fast developing as sustainable rural and
urban institutions. Many Credit Unions are putting up permanent
and well furnished structures, others are computerizing their
operations as more people continue to join and use their services.
We believe this is a phenomenon of the positive impact credit
unions make in the lives of people.


The first successful credit unions began in Germany under the
leadership of cooperative pioneer Hermann Schulze-Delitzsch.
These credit unions would be recognizable today, since they
adhered to the basic aspects of the co-operative identity: that is,
they were based on the values of self-help, self-responsibility,
democracy, equality, equity and solidarity. In the tradition of their
founders, co-operative members believe in the ethical values of
honesty, openness, social responsibility and caring for others.
Shulze is credited with developing the bond of association which still
forms the legal basis for credit unions today.

Unlike many of his contemporaries, Schulze-Delitzsch recognized

that the functions of retail lending and purchasing business inputs

were best kept separate in the interests of sound cooperative
management. In 1852 Schulze-Delitzsch consolidated the learning
from two pilot projects, one in Ellenburg and the other in Delitzsch
into what are generally recognized as the first credit unions in the


In September 1955, the first credit union in Africa was formed at

Jirapa in the North West now the Upper West Region The idea was
introduced by Rev.Father John McNulty an Irish Canadian.
In 1960, when Pope John XXIII appointed Bishop Dery as the Bishop
of Wa he encouraged the formation of Credit Unions in all the
Parishes. Among them were Nandom, Kaleo, Ko, Daffiama, Wa,
Lawra and Tumu. The Bishop gathered courage at that time and met
the President Dr. Francis Kwame Nkrumah to discuss issues relating
to the Credit Unions movement in Ghana. The President of the first
Republic finally said You are doing a good service to Ghana and I
encourage you to continue and its from here that Credit Unions
began to develop throughout Ghana. Memberships were considered
such an honour and previlege that aimost everybody wanted to be
a member.

In 1967, the Credit Unions in the North were united in a chapter

because the White Fathers had been advisors to all of them and
Credit Unions in the south alsao felt a need for joining together for
training programs and an exchange of experience.

Following a meeting sponsored by CUMA International (Credit Union

Managers Association) in Lesotho in January, 1968 the idea of a
National Association in Ghana was conceived. A follow-up
conference was held in April in Tamale the same year giving birth to
the Ghana National Union and Thrift Association, the forerunner of
the Ghana Cooperative Credit Unions Association (CUA) Limited. The
duties of CUA limited were to promote, educate, organize and
support the Credit Union Movement nationally and internationally

which affiliates to the African Confederation of Co-operative Savings
and Credit Association(ACCOSCA) and the World Council of Credit



The Credit Union is such that people with a common interest come
together in a society, mobilize funds regularly so that after six
months, when a needy member applies for a credit facility he/she
would be offered with a minimum interest rate payable within a
period of time. At a close of a financial year, management declares
profit and shared among members contributions. The concept is
good and appreciated and need to be promoted in workplaces,
churches and communities.

Credit unions are financial co operatives: - The goal of a financial

cooperative is to act on behalf of a unified group offering traditional
banking service to its members. These institutions attempt to
differentiate themselves by offering above-average service along
with competitive rates in the areas of lending and investment (e.g.
Fixed Deposit) dealings.
It is member owned: - Facilities and other services are extended to
members; Credit Unions often pay higher-than-average interest
rates and are only accessible to those that have accounts.

A vehicle for human development: - its main purpose is to enhance

the livelihoods of its members.
Members become both the agent and object of development: - in
building up the lives of other members through low interest rates
and provision of flexible facilities; members tend to also improve
their personal lives and assist themselves through this avenue.

Pricing of all cooperative products and services are competitive

which ensures its long term sustainability.

The funds accumulated in the credit union through the systematic
savings of its members are the source of credit that members use.

The membership of credit unions also cuts across all segments of

society, rural and urban poor, low and middle income earners,
market women, artisans, petty traders, farmers and professionals.
This goes to confirm that credit union members are made up of
people from diverse backgrounds.

To begin a business such as a credit union, you first of all need a
place of operation and materials that are relevant for the day to day
administration of the business which includes stationery, furniture,
and other fixed assets. In Ghana, every Credit Union is required to
have at least 150 members to begin operations and every member
is required to pay an entrance fee of not less than ghc5. It was also
identified that it is required by all credit unions to register under the
Cooperative Credit Union Association (CUA) which is a regulatory
body for all credit unions in the country. This however can be
achieved by having accumulated an amount of GHC 15,000.00 of
Individual Unions are also required to purchase GHc 500.00 worth of
shares in the association. Below is an expatiated criterion for the
formation of a credit union in Ghana.
1. The Credit Union shall be required to have a minimum
membership of 150 with a potential membership of not less than

2. Founding members shall undergo a Credit Union member

educational program for a period of not less than three months with
personnel from CUA/DOC.

3. Members of such societies shall be required to pay an entrance

fee of not less than five Ghana Cedis (GH 5.00).

4. Members in the Credit Union shall be required to save not less

than five Ghana Cedis (GH 5.00) per month.

5. Societies will be required to have permanent offices to operate
from, with the Credit Unions signboard and business hours properly
written and conspicuously placed.

6. The society shall engage the services of an officer,

Manager/Bookkeeper who will be trained to maintain accurate

7. Before a new society is affiliated with CUA, CUA shall conduct a

feasibility study to ascertain that the conditions surrounding the
formation of the society prove that the society will be viable.

8. Affiliation of a society shall be effected by CUA when the society

has accumulated savings of Fifteen Thousand Ghana Cedis (GH
15,000.00) and above.

9. Societies seeking affiliation shall be confirmed by their financial

statement that all members in the credit union have purchased a
minimum share of not less than one hundred Ghana Cedis (GH
100.00) per member in the society.

10. After affiliation, CUA will conduct economic survey on such

societies before recommending them to the Registrar of Co-
Operatives for registration.

11. All societies seeking affiliation shall pay an affiliation fee of fifty
Ghana Cedis (GH 50.00) as determined from time to time by CUA.

12. A society accepted for affiliation shall be required to purchase

aminimum share of five hundred Ghana Cedis (GH 500.00) in CUA.

13. Societies seeking affiliation to CUA must have saved at least five
per cent (5%) of their total funds in CUAs CFF (Central Finance
Facility) and shall continue to save not less five per cent (5%) of
their total funds at any point in time.

14. Societies seeking affiliation to CUA must satisfy CUA that they
are part of the Risk Management Program or arrangements have
been made to become a member of the Program.

15. Affiliated societies shall contribute an agreed percentage of the
total savings of members as at June every year, into the CUA
Stabilization Fund.

16. No society shall be required to print its own stationery.

It is also required that every credit union have a Board of Directors

and committees set up to perform specific tasks that concerns the
growth of the credit union some of these committees can be, the
loans committee, human resource, education, etc.


- Financial security: Members join the credit union for Financial

security that is to be able to have access to funds in times of need.
Secondly, owning affordable houses, the credit union assist
members acquire land, building materials and putting up houses so
that when they retire they may have a place to stay. Also to be able
to educate members themselves and their children in higher
institution of learning like Polytechnic, Universities, and Training
Colleges etc. Easy access to low interest loans and attractive return
on your savings. The benefits are very real and reasonable such
that people really need to become members to upgrade their living

- Friendliness and Accessibility: Big banks can seem cold, formal and
even unreachable It often seems that branch managers don't have
the authority to make the decisions to help you, or that the bank
itself is so huge it doesn't really care about having your business.
Credit unions can be friendlier in atmosphere and tone and simply
more accessible on every level. According to Jenn Cloud (A digital
marketing manager for RedKey Realty Leaders in St. Louis, USA) , "being smaller
and local allows them to be very connected to their neighborhoods
and versatile to respond to feedback."

-Better Rates: "Being member-owned generally allows the rate of

returns on savings accounts to be higher and the interest rates on
loans to be lower than at a bank," noted Cloud. The ability to make
money on your own money is a huge step in the right financial
direction, but something that's often out of reach at a corporate
bank unless you reach a high balance in your account. Since profits
to stockholders aren't a part of the company vision, credit unions
are free to pass surplus money on to members "in the form of fewer
fees, more services, lower interest on loans and higher dividends on
deposits," Cloud said.


Though seen as a better alternative of banking, credit unions
do sometimes fail. Like banks, they may hand out bad loans, suffer
mismanagement or make speculative investments. Loan
delinquencies and rampant withdrawal of savings are also major
challenges currently facing the managements and Boards of credit

Delinquent loans are loans which are given to individuals or

institutions without appropriate appraisal and approval. Such loans
in the long run can become a bad debt which goes against the
credit union.

With the credit unions, giving loans are its lifeline and keep the
business running therefore failure to grow the loans book may also
contribute to its failure.

Failure to get genuine volunteers: since the credit union is largely
owned by the members, most may wish to volunteer to serve in the
business. However if the right people are not recruited or appointed
to serve the business is likely to fail. Right people here mean people
with knowledge in financial operations.


During this study, we sought for random views from the general
public who have an experience in the operation of credit unions and
here are some their suggestions;

1. Most people advised that the manager of the credit union

should not be a member of the church and also should be paid
an allowance instead of a salary.

2. There was also the suggestion that there should be a set

period for education and sensitization in the churches as to the
purchase of shares and how to become a member of the credit
union and the benefits that go along with it.

3. Members are advised to save regularly for a period of six

months or more before starting to grant out loan facilities.

4. All withdrawals may come with a charge, eg, 50p charge on an

amout of ghc500.

5. Association should raise funds for capital investments.

6. Initial products should be savings and the purchase of shares

by members.


In this study it was realized that credit unions can operate manually
at its beginning stages with just an office, a manager and clerk or
secretary. The set up Board for this credit union should consists of at
most one pastor from the Baptist Church. Proper documentation is
also advised in order to have a smooth running of the credit union.