WOCCU heads off Costa Rica's anti-CU efforts

SAN JOSE, Costa Rica (4/29/08)--World Council of Credit Unions (WOCCU) officials last week mounted an effort to head off anti-credit union sentiments among banks and other financial institutions in Costa Rica.

World Council of Credit Unions (WOCCU) and Alabama Credit Union League officials visited Costa Rica to protect the country's credit unions' tax-exempt status. From left: Pete Crear, WOCCU president/CEO; Manual Bolanos, CEO of the Federacion de Cooperativas de Ahorro y Credito de Costa Rica R.L.; Oscar Arias Sanchez, Costa Rica's president; Gary Wolter, president/CEO, Alabama Credit Union League; Jose Eduardo Alvarado, CEO Coopenae CU; Victor Corro, WOCCU international partnerships manager; and Edwin Barboza, president, Costa Rica's National Council of Co-ops. (Photo provided by the World Council of Credit Unions)

They also mounted an international lobbying effort against the threat of taxation facing the Central American country's not-for-profit financial cooperatives.

WOCCU officials and the Alabama Credit Union League visited with Costa Rican government officials, including President Oscar Arias Sanchez, at the request of the Federacion de Cooperativas de Ahorro y Credito de Costa Rica R.L. (FEDEAC), WOCCU's Costa Rican member organization.

The Alabama league and FEDEAC are partner organizations through WOCCU's International Partnership program.

Costa Rican banks have attacked the country's credit unions because credit unions have grown rapidly and increased their market share from 3% to 12% in assets. The country's credit unions also are growing membership 15% per year and have evolved from small storefronts to more sophisticated and competitive financial institutions.

A few credit unions exceed some Costa Rican banks' asset sizes, and the banking industry has lobbied the country's government and presented the cooperatives as an untapped source of tax revenue.

"No matter how successful they are and no matter where they're located, credit unions are member-owned financial cooperatives and should not be taxed," said Pete Crear, WOCCU president/CEO. "Our goal is to help Costa Rican lawmakers understand the differences between credit unions and banks and legislate appropriately."

Gary Wolter, Alabama league president/CEO, and Vicki Williams, league senior executive vice president and chief operating officer, met with Sanchez April 23. Sanchez spoke favorably about credit unions as a way to help the country's rural poor. He appreciated the solidarity shown by WOCCU in support of Costa Rica's credit unions and how external support might foster the growth of his country's cooperatives, Sanchez added.

Wolter and Williams also visited Costa Rica's National Congress.

WOCCU and FEDEAC officials pledged to monitor activities within Costa Rica's legislature and respond to threats against the country's credit unions.

"Credit unions have been exceptionally important for the development of rural indigenous communities in this country," said Jose Manuel Echandi, congressional representative for Costa Rica's Independent Party. "Where communities previously were barely able to meet basic subsistence needs, they now have access to resources for building wealth and are expanding into new entrepreneurial activities."

Resource Links

World Council of Credit Unions

Why CUs are Tax Exempt statement stuffer