Liberian Credit Union


Independent Research Project

Presented by

Molley V. Jones




 December, 2010







This is an unpublished Independent Research Project



All rights reserved.











This project aims to encourage and help Liberia to form a viable credit union organization. It shows that a developing country with limited resources can benefit from a credit union that enables its citizens to become self-sufficient and improve their overall standard of living. By forming a credit union with the help of the government, Liberians will have the opportunity to save and invest and reduce the high rate of poverty. Liberians can rethink their financial system and take a new approach that will improve the social-economic development of all the citizens. The Liberian Credit Union will be an accessible tool for all citizens. In interviews with several Liberians, especially Liberians living in the United States, they agreed that a credit union run and managed by its members could help solve some of Liberia’s social-economic problems. This project includes research from various sources and concludes with a credit union model.




Table of Contents


Chapter 1: Introduction

Chapter 2: Literature Review

Credit Unions




Credit Unions versus Banks

Credit Unions versus Microfinance

Chapter 3: Methodology

Chapter 4: Interpretation of Survey and Interview Responses

The Problems



The Limitations

Chapter 5: Liberian Credit Union Model

Key Definitions

Chapter 6: Recommendations and Conclusion



Appendix A: Experienced Consultant's view of the problem in Liberia

Appendix B: Interview Questions




Chapter 1: Introduction

As a Liberian, I am aware of some of the problems that most Liberians are facing. One of the major problems that I observed in Liberia is the difficulty of obtaining a business loan. Fourteen years of civil war has left Liberia in a state of collapse, with devastated infrastructure, a broken-down economy, and millions of people who have lost their lives and homes. Driving around the country it is obvious to notice the images of destruction old buildings burned, bridges closed, and the wreckage of old cars piled up on the roadside.

There is also an emotional aspect of the residue of the war. Many children are orphans, women are left with no husbands and orphaned children are fending for themselves to find food to eat. These images are hard to ignore and forget. For these reasons and many other setbacks that have faced Liberia, one comes to understand the need to assist Liberia’s development.

In an effort to regain and rebuild these broken-down communities, Liberians must consider new steps. Rethinking a new direction can lead Liberia to increase the development of each citizen and the revitalization of the country.

The establishment of a Liberian credit union is one of the best ways to achieve these goals and improve the economic growth of Liberia. With the formation of a Liberian credit union, the citizens of Liberia can have an alternative system of financial services that would be much more competitive with the major lending institutions, such as banks, micro-lending and other electronic transfers of money in the country. It is obvious that, despite the presence of banks and other financial institutions in the Liberia, a high level of poverty still exists. Apparently those financial institutions have not been successful in meeting the financial needs and improving the economic conditions of the Liberian citizens.

In an interview this researcher did with some of the local business women in Liberia, one woman said, and “One of the most important problems that we as business women face in Liberia is how to get a business loan.” This point of view is shared throughout the Liberian business community because many of the business owners are not aware of the various loan services that the banks offer, especially for business loans. Many of them are also not aware of the procedures to obtain a business loan from the bank. Many business owners rely on friends and relatives to lend them money for their business.

There are many banks in Liberia and they are very inexpensive to start. According to the Central Bank of Liberia (CBL) in Monrovia, a $1,000.00 fee payable to the Central Bank of Monrovia and $25,000 one-time fee for license, and $10,000 per year to stay in operation are conditions for one to operate a banking institution in Liberia (CBL, 2009). In fact, foreign banks open most of the banks in Liberia to take advantage of the low costs; most Liberians do not have enough money to open their own banks.

                    A credit union is a financial organization that is owned by its members. According to the Association of the British Credit Union League (ABCUL), it provides low-rate interest loans for its members and efficient credit assistance to small business owners who are registered members of the credit union (ABCUL, 1999).

The principle purposes of a credit union are to encourage members to save regularly and to facilitate the borrowing of money at a lower interest rate than that offered by banks (Chambers & Ryder, 2008). The Liberian credit union will also assist its members with sound financial education through training and various financial services workshops. This is intended to enable members of the credit union to learn and understand the basic functions of the credit union. It is important to note that the full participation of members is very important in helping to promote and build a viable, trustworthy credit union for all of its members (ABCUL, 1999).

It is good to understand that credit unions have been in existence for many years. Many of them have shown successful track records in assisting and improving the social and economic conditions of their members. In the developed countries, such as the United States and Great Britain, they have established credit unions that serve as additional means of meeting the economic and social needs of low income citizens according the World Council of Credit Unions (WOCCU), credit union organizations can be found in both the private and public sectors of these countries.

Unlike the banks, which focus on certain individuals with good credit or good credit histories, the credit union can assist people who do not have enough money to use banks to improve their situation. Its members become part of a movement and work together with other members. Together they use the limited resources available in their position to provide needed services to all the members and to improve their own standard of living.

Other money-lending institutions such, as microfinance (or micro-lending), have entered Liberia. These financial institutions offer similar assistance to the citizens of Liberia, but their model is different from a credit union model. One of the major differences is that a credit union is owned by its members and run by the members themselves without second or third party interventions.

The potential and the need for a Liberian credit union are great, as evidence from other sources and countries that have their own credit union organizations will point out in this learning paper. The Liberian Credit Union will be an excellent way of providing loans and savings for its members, especially for low-income families and small business owners who want to improve their businesses and family’s lives. By working together as members of the Liberian Credit Union, members can embark upon or undertake development programs that are geared toward self-help activities and community development.

The goal of this paper is to produce a credit union system in Liberia that is effective and applicable to the needs of the Liberian people. Credit union systems that they can use to assist them reduce the high rate of poverty in the country. The Liberian credit union is actually an economic development tool that is decentralized throughout the country’s fifteen counties. The credit union expansion is needed to encourage economic development that involves all regions of the country. Historically, all major economic development has been centered in the capital city of Liberia. The credit union will make financial transactions, including saving and investing, easier in rural Liberia, enhancing development efforts. Unless there are some steps and efforts taken to expand development, it will continue to be very difficult to economically reach out to the vast majority of rural citizens, who desperately need social and economic development programs.



Chapter 2: Literature Review

Forming a credit union with cooperative banking systems will help develop Liberia. The establishment of a cooperative banking system in each of the fifteen counties, the political subdivisions of the country, can help credit union members have access to their own banking system that will assist them in carrying out business activities. For example, in Ghana, the Rural and Community banks have been doing very well; a study stated that the community banks were extending loans for purposes such as housing, petty trade, and as “start up” for farmers to be able to manage their farms. Some of the loans were used for many other varieties of activities, such as dairy cow raising, poultry farming and purchasing capital machinery (Asiama, 2007).

Community Development Banks (CDBs) help rural communities develop. They provide the resources necessary to rebuild low-income communities. They provide loans to nonprofit community organizations (Lowell, 2000). Community Development Credit Unions (CDCUs) are geared toward promoting community ownership of assets. They also provide credit and retail financial services to lower-income people. Their borrowers are also members of the credit union. Some of their capital sources include member deposits and nonmember deposits from social investors. The CDCUs provide counseling and business planning assistance to members (Lowell, 2000).

The World Council of Credit Unions (WOCCU), which is a global trade association and development agency for credit unions, provides assistance and helps promote the development of credit unions and other financial services around the world. By working with national governments and international organizations, WOCCU advocates on behalf of the global credit union organizations to help improve legislation and regulations that govern credit union operations throughout the world (WOCCU, 2010).

According to the WOCCU, in 2009 there were about 49,000 credit unions in 97 countries serving 184 million people. In 2009, it was reported that WOCCU reached 5.9 million people in 16 countries (WOCCU, 2010). This process can assist Liberia since Liberia does not yet have a government regulated credit union operation and lacks the infrastructure to carry out credit union activities throughout the country, especially to reach the people in the rural sectors of Liberia who need credit unions the most.

There is no doubt that Liberia stands ready with the current improved political condition in the country, to take advantage of the opportunity to become an active and participatory member of the WOCCU. Liberia does not have a functional, regulated credit union system for its low-income citizens in rural Liberia. This is an indication that in the absence of government protection and legal guidelines, it is impossible to practice and carry out sustainable and productive credit union activities without the help of an organization like WOCCU (CBL, 2010).


Credit Unions

Evidence suggests that the first credit union in Africa was established in Northern Ghana in 1955. “A credit union is a financial co-operative that is owned and controlled by its members. It provides them with accessible savings, low-cost loans, and other financial services” (ABCUL, 1999, p. 5). What makes a viable credit union? A credit union is run by its members. The growth and management of the credit union is the responsibility of all its members. The process of “one member one vote” empowers all members to express their views and encourages them to have a say in the decision making process. The credit union is run by board members who use a democratic form of leadership to run the affairs of the credit union.

In the US and Britain, there are regulations that are required for forming credit union organizations. In Britain, the Financial Services Authority (FSA), according to the Credit Union Act of 1979, monitors all credit union activities on a regular basis and requires that they are audited independently. And credit union members come from all sectors of the community, regardless of economic and social background (ABCUL, 1999). Whereas in the United States, according to the National Credit Union Administration, (NCUA), setting up a credit union requires a “common bond or a field of membership, such as place of work, residence in a particular geographical area or a common belief” (NCUA, 2003, p. 2).

The unity and confidence that the credit union instills among its members, demonstrate the strength and the social fabric of the credit union. In the article, “A Credit Union from the Ground Up,” Brown (2010) emphasized the problems of people on welfare not being able to access bank accounts. Brown went on to say that “it was not just people who are receiving welfare” (Brown, 2010, p. 18). He indicated that banks have merged over the years, which has resulted in branch closures in low-income neighborhoods, leaving community members from these areas without basic banking services. The article further suggested that members of poor neighborhoods and low-income communities need to have some form of financial access (Brown, 2010).

The Association of the British Credit Union (ABCUL), is based in Britain encourages people who are interested in forming a credit union to get involve. The different regulations that each credit union has seems to suggest that it is the responsibility of each country that is willing to form a credit union to adapt its own regulations and set the standard that best suits its country’s need. Despite the differences in regulations, credit unions seem to have the same general philosophy; to provide assistance for all of their members. The ABCUL Credit Union adapts approaches that are similar to that of The National Credit Union Administration in the United States. And both of these credit union organizations provide information on how to start a credit union organization (ABCUL, 1999).



Despite the limited government regulations, Liberia has had other traditional credit and loan practices. In fact, many Liberians had been saving money long before the new system of modern banking. They have done so by using various traditional methods. One of the methods that has been in existence up until now is called the Susu, a system where group of members come together and entrust their money to another member for safe keeping. At the end of one year, the money is distributed back to the various members who have made deposits. The problem with the system is that the money kept over the year does not generate any interest for the depositors. It does not help members in their quest to solve some of their most important community problems, such as paying for the cost of a funeral or buy enough seed rice to plant for the next farming season. Above all, there is no accountability; most families still depend on handouts from others, perhaps a family member who might be the only income-earner in the family. Most of the time, the system is ineffective and many members have complained about the lack of trust and the lack of confidence felt by the membership. While the system is still functional, there are doubts surrounding its practices in various communities.

It is clear that these people simply do not want to lose their funds. But because there is no other alternative that they can subscribe to, they have no choice but to continue with the Susu memberships. The Susu practice varies among communities. Other communities have different process and rules and traditional management also varies if they do trust the person who keeps the money, they will join. Trust seems to be one of the most effective causes of members joining it.

In West Africa, the Susu has been used as a way of saving money among poor communities for a long time. However, Susu is thought to have come from Nigeria and spread to Ghana than to all of West Africa (Asiama, 2007). It is not clear if the activities of the Susu have helped West Africa, but certainly many communities in West African are still in the habit of using the Susu system.



Liberians around the world are sending money to their native land; they are sending money to assist friends and families back in their homeland. This trend became most obvious during the course of the fourteen years of civil war. In Liberia these days there are different money lending institutions, such as Money-Gram and Western Union, in the capital city Monrovia. Liberians use these money lending institutions to send money home to assist their loved ones. Through this process of money remittances, especially in the United States, Liberians throughout the country have managed and taken advantage of the opportunity to send hundreds of thousands of dollars to Liberia. According to an article called “Cash Flowing to Native Lands” by Maria Sacchetti (2010), many immigrants in the United States are sending money to their native lands. This is primarily because many families depend on the money they send to support themselves. In Liberia, many families do not have income; they rely on money sent by their relatives from abroad to survive.

Remittances are very important both domestically and internationally. They help to foster economic growth and development. Many people travel abroad for personal or for business reasons. Remittances can help in facilitating their trip and their stay in another country. It is reported that almost ten percent of the population of the world is involved in the process of remittance (Sagar, 2010).



What is micro-finance? Asiama (2007) described “micro-finance as providing financial services, including savings, micro-credit, micro insurance, micro leasing and transfers in relatively small transaction designed to be accessible to micro-enterprises and to low-income households” (p. 17).

An article by John Briggs (2010) “Liberia: Trying’ Small” mentioned the many struggles most Liberians go through and the various organizations (NGO’s) that have come to assist them. Briggs understands some of the problems that most rural Liberians are facing. Extending Microfinance credit into rural Liberia will definitely be a great help for rural Liberia. But there are problems; the countryside does not have the structure needed for Microfinance operations. For example, there is no infrastructure; there is no electricity and no phone communication. The worst part is that during the wet season, the roads to the countryside are bad, and there is no transpiration available in rural communities (Briggs, 2010). Furthermore, if the overall infrastructure of the country is weak, and there is none in the rural communities, there may be a problem setting up a credit union or running a business (Garrick, Keefe, & Koft, 2007). To establish a credit union in Liberia, you must seriously take into consideration the infrastructure issues; including, education, literacy, electricity, politics, and law enforcement. But most of these microfinance organizations do not have the right mechanisms in place, and the lack of good structures and facilities of some of these microfinance programs has made the delivery process very difficult. Many people whom the program is mainly intended for are not being reached, partly due to poor planning, lack of transportation and bad road conditions (Garric, Keefe, & Koft, 2007).

          Also in reviewing the National Credit Union Administration (NCUA) from their website, you generate a sense of the strength of a credit Union. There are various services that relate to organizing a credit union.

          The aim of the Liberian credit union is not just about providing capital for the poor or to combat poverty, it has a responsibility to create institutions that will be able to deliver services to the poor who have been excluded from the mean sector of the economy.

In the last decade, there has been an explosion of agencies offering credit financing opportunities, (micro-finance) for people living in poor communities in Africa. And Liberia is no exception. Since the war ended and the country now has a stable government, many financial services have come to the country to help the poor. It is obvious that people are anxious to get help from anywhere and from anyone. According to Central Bank of Liberia (CBL), the major concern on people’s minds is how long will these microfinance programs last? Are these financial institutions in the country to stay; or are they here because the country is in drastic need of improving its social-economic conditions? These are some of the issues that can be addressed if the government simply regulated credit unions’ principles (CBL, 2010).

A recent forecast of the National Credit Union Administration (2010) stated that the prospects for future growth and development of credit unions are excellent. (See details in Appendix A.) In comparing banks, microfinance, the traditional Susu, and other money lending programs in Liberia to credit union, there is some confusion as to which one of these entities can really stand up as a remedy for solving the economic problems of Liberia.


Credit Unions versus Banks

Everyone needs a good place for saving money. One needs to have an account with either a credit union or a bank. Unfortunately in many developing countries in West Africa, including Liberia, there are still people who do not go to banks or do not have a credit union to go to. There is also a popular misconception about banks and credit unions; many people think they are the same, but in reality they are different. Banks and credit unions provide a safe place for one’s money.

Banks can be used to cash checks, obtain money orders, and wire money. Banks are insured and are run by investors who have capital. Credit unions, on the other hand, are established to offer services to their members. Since, credit unions are not for-profit, the profits and interest earned are for the members rather than the Shareholders (, 2010).

According to the National Credit union Association, credit unions in the United States are insured by the NCUA. Members have more say in the decision making process than they do in a bank, and have their own power to elect their board of directors (, 2010). Because of the low cost and low interest rate, many people choose credit unions over banks for their saving and financial services (, 2010).

Like banks, credit unions make money due to the number of deposits. The higher the deposits by members, the higher the benefit to existing members, credit unions are also tax-exempt, which banks are not. Membership fees help to pay for expensive to run the credit union.

The primary objective of creating a credit Union is to provide financial opportunity and assistance to Credit members. It is through this membership fees and volunteerism that the credit union is able to do most of its work. “The functions of the credit union depend highly on the cooperative efforts of all its members.”(Ryder & Baker2003, p.118). It is for those who have been left behind by the mainstream economic and those who have been unable to have access to major financial banks.  

The idea of seeking the members’ interests and helping to solve their problems in their community also enables the credit Union to grow and expand. It is obvious that to operate, a credit union cannot simply lock away the members’ money until the funds are withdrawn. “A credit union needs help from its members in order to keep its organization functional” (ABCUL, p.10).

In order to generate income from which to pay for operating cost and cover other financial expenses, it is necessary that money deposits be invested. The primary income producing avenue is making loans back to the members. Credit union members depend on the organization for services, such as low interest rates on loans and other community based services, education for families, small business loans and several other community initiatives (ABCUL, 1999).

Most credit unions issue cards to their members. The membership card shows one’s photo and the date and time of registration in the credit union. All transactions are done by the member presenting his or her membership card. Most membership cards can be renewed annually (ABCUL, 1999).

The lack of management skills has caused most Liberian business owners and farmers to lose most of their incomes. Farmers and business owners have not been able to benefit and profit from most of the crops they produced and goods they sold in the public market. This trend will continue to be an obstacle, especially for poor market women and small business owners, if drastic steps are not taken.

In Liberia, a viable credit union will serve as a gateway for the revitalization of communities and families that have been devastated by war and tribal violence. Traditionally, many Liberians have been left out from participating in the financial and market system of Liberia. Those who are left behind have no formal knowledge about how the financial markets functions, and have never gotten involved in using the banking services or other financial services within the country. This has happened simply, because they have not had the knowledge and the training required to compete in financial markets or go to banking institutions. There is no financial training and no regulations that are established and efficient to assist them to properly sell and manage their farms’ products or run small businesses (Briggs, 2010).

A credit union can become a driving force in producing financial education, and Liberians must unite and take this challenge and responsibility for themselves.

There are some important differences between credit unions and banks. For example, banks are for-profit and credit unions are non-profit and are member-owned. In the United States, banks sometimes charge high interest rates on loans; while credit unions work to reduce interest on members’ loans. These differences are essential for members to understand (Chambers & Ryder, 2008).


Credit Unions versus Microfinance

Right now, there is not enough literature on micro-finance in Liberia. Having more information available will certainly help to improve the delivery of micro-finance services in the country. Many borrowers of micro-finance need additional help in understanding the risk of borrowing money and how the money that they borrow will help them improved their standard of living.

As indicated before, Liberia has had traditional credit and loan practices in the past. There are new micro-finance credit systems that have emerged after the war to help the poor Liberians. Liberia seems to be the right market for these new credit ventures because of the war that destroyed its infrastructure.

Many Liberians hold a critical view of some of the lending programs and their tactics or procedures toward the poor. There is a sense of frustration among some of the poor about these micro lending programs. Micro-finance is subject to risks because the funds are not secured and there is no insurance involved. The funds allow the poor to get loans from the organizations that operate in their country. The loans are especially targeted to women and small business owners. A loan can be from $ 5.00 up to $1000.00. The benefits of such a loan directed to poor people are hard to measure. How can such a loan lead to the development of the very poor people and their community?

Despite the fact that the loan is small in amount, it does not prevent the poor from paying a 5 to 10 percent interest rate, which they pay to the loan providers (the lenders). This is a very high rate for a poor person with little access to money. It is difficult to comprehend the amount of suffering the poor people go through to sell their goods in order to make their loan payments. Most of the market grounds (facilities) are located in places that are very remote for the poor people to get to by walking; the roads are bad, and during the rainy season, vehicles find it difficult to get to the market ground (Briggs, 2010).

The situations under which they work and sell goods that can enable them to pay back a loan and interest are sometimes very difficult because of deplorable road conditions. Given these difficult circumstances and the hard process that the poor people go through each day, one wonders whether the lenders have really come to assist the poor. Why can’t they just give them the money to help themselves?

Micro-finance members do not get involved in the decision making process. In credit unions, on the other hand, members are part of the decision making process. They have input into interest rates and goals of their lending programs. In credit unions, the repayments go back into that credit union’s funds, staying in the community. Micro-finance is not committed to the community. They may leave at any time if they run out of funds. A credit union will remain, to be part of the community, if there is a problem. The credit union, because it is locally run, members can adapt policies to local conditions.

In the credit union, which is member-owned, the interest earned is totally owned by its members and they can decide what interest rate to charge. The benefits from the credit union are for the members themselves. Members can vote on how they want to use any surplus funds that the organization earns. Members can decide on what project they want to undertake in their community. As you can see, the actual difference between the micro-finance and credit unions is that, micro-finance is seen as some rich people who want to help the poor who are living in poor countries (Briggs, 2010).

Whereas, a credit union is seen as an organization that belongs to the people themselves who want to help themselves. While it is clear that both entities want to help the poor, there is a vast difference in activities and functionalities. Liberians must understand the differences between micro-finance and community-owned credit unions. They must understand the different functions of micro-finance and credit unions in their communities and learn how they can work together to solve problems (CBL, 2010).





Chapter 3: Methodology

This research learning paper was done by conducting interviews and about 30 survey questionnaires sent through emails to various interested Liberians living in the United States and Liberia. Twenty survey questionnaires were returned and the researcher was able to reach all 20 of the participants for individual interviews. The reasons for the interview and the survey were to get some feedback about the idea and an understanding of the problems involved in setting up a credit union in Liberia.

Based upon the survey and interview analysis, the participants who responded were between the ages of 18 and 56. Most of them lived in various states throughout the United States. The rest of the participants were farmers, political leaders, Susu members, educators, business women or ordinary people living in Liberia.

There was also discussion with some local community leaders in the city of Tubmanburg, Bomi County during a visit there by the researcher. In addition the researcher spoke with an official of the Browerville Susu Association, a Nigerian employee of the State Street bank, and an experienced NGO field consultant in Liberia. These were all informal communication that contributed to researcher’s understanding.


The Interviews

The interview participants were asked the following questions:

  1. Would you be interested in joining a Liberian credit union?
  2. Do you want to see a credit union establishment in all of the fifteen counties of Liberia?
  3. Do you think a credit union can assist in improving the living standard of Liberians?
  4. What are some of the problems of forming a credit union in Liberia?

           In answers to question one, the interview data suggested that many Liberians are interested in joining a credit union in Liberia. All of the twenty participants agreed they were interested in joining a credit union. Most of the people interviewed expressed concerns about the management of the credit union and how it would benefit its members. Among the people interviewed, most of them had never joined a credit union, but would be willing to give it a try.

           The question two responses were different. Of the twenty participants who were asked, only ten agreed that a credit union would benefit the fifteen counties; the other ten participants disagreed. The half who agreed said they were mainly responding about their personal interests; they did not know how it might help the fifteen counties overall. The half who disagreed said they were not sure what the benefit would be of a credit union in each of the fifteen counties.

            According to question three, when asked if a credit union could assist Liberia, all of the twenty participants interviewed agreed. The participants said that they needed a place to go to save money besides just going to the bank. They believed that a good credit union could help Liberians save money for their children’s education and future needs.

            And finally, in question four, all of the twenty participants agreed that there were huge problems regarding forming a credit union in Liberia. Most of the people thought that the war had destroyed the country and it was going to take some time before any development could be successful. Some indicated that the main issue was money: the country did not have money and money is needed to carry out any development activities.


The Surveys

              In the survey aspect of the learning project, the researcher focused first on the name, occupation, age, education, and place of residence of the participants. The survey than contain the following questions:


1. Are you current a member of credit union organization? 

Five participants answered yes and fifteen participants answered no.


2. Have you ever joined a credit union organization?

Nine participants answered yes and eleven answered no.


3. Would you be willing to join a credit union organization in Liberia?

All of the twenty participants answered yes.


4. Would you be willing to become a sponsor for Liberia credit union?

Ten participants answered yes and ten answered no.


5. Would you be willing to become a volunteer and help form a Liberian credit union?

Nineteen participants answered yes and one answered no.


6. Do you think that a country like Liberia should have a credit union? If no please explain.

Fifteen participants answered yes and explained that it would be a challenge to establish a credit union. Five participants answered no and explained that Liberia did not have the money to run a credit union.

       The next questions on the survey were answered on a scale of 1-10, with 10 being Strongly Agreed, 1 being Strongly Disagreed, and 5 being Neutral.

1. Liberians are capable of managing their own credit union.

Fifteen participants strongly agreed and five participants strongly disagreed.


2. Credit union organization in Liberia will help improve communities.

Ten participants strongly agreed, five participants disagreed and the other five were neutral.


3. Credit union is nonprofit organization and will help the poor.

All of the 20 participants agreed.

Chapter 4: Interpretation of Survey and Interview Responses


The result of the survey and interview was very positive. The majority of the participants agreed that the formation of a credit union in Liberia was a good idea. All the participants were interested in joining and half of them were willing to sponsor someone. Sponsors encourage and assist people who cannot afford to join but are interested in joining. Almost everyone was willing to volunteer. The answers to the question regarding volunteerism stressed the significance of knowing that there will be people who are willing to volunteer their services and help build the credit union. These answers are clear indication that Liberians are eager to get actively involved in a credit union establishment.

The participants of the survey and interview also think that a credit union would help the country developed. They all thought that this would help improve the living standard of Liberians. Half of them felt strongly that it would help improve communities and they all agreed that it will help the poor. The participants show that they understood the significance having a viable credit union as a development tool.

There was disagreement about a few questions. They thought credit union brunches in all the counties would be convenient for them personally, but they did not know if this was good for the counties. They were also split on whether Liberians can manage their own credit union. Most of them strongly agreed, but the rest strongly disagreed. A credit union will be good for the counties if it is well managed by its members. Members will have to be well trained and educated credit union as to how to manage and run their counties branches.


In an interview with several Liberians living in the United States regarding the formation of a credit union in Liberia, they agreed that establishing a credit union in Liberia would make a huge difference compared to current financial systems and would help the citizens and the country.

There were also positive responses in the researcher’s discussions with other Liberians about a credit union. Speaking with some of the local community leaders in the city of Tubmanburg, Bomi County, during a recent visit there, also confirmed that there is a need for a Liberian credit union. One of the officials said, “We need to get rid of the traditional way of saving our money.”


The Problems

    The outcome of the survey is that Liberians are willing to start a new credit union. However, they were also worried that Liberia does not have sufficient funds and there are infrastructure problems. There are numerous problems involved in setting up a credit union in Liberia. An experienced NGO field consultant in Liberia pointed out some problems and challenges in a conversation with the researcher in 2010. (See Appendix-C for the consultant list).

The significance of the problems listed by this experienced consultant is that most people in Liberia share the same views about the problems mentioned above. He emphasized the main concern of trust, which seems to be the most important issue about lending and financial transactions for Liberians.

     The following is a synthesis of the main issues of starting a credit union in Liberia, from the reading, interviews and surveys, according to the researcher:

  1. The Delivery System - is very poor and transportation is difficult during the rainy season.
  2. The Communication System - is very limited. Most of the people in the rural sector of Liberia do not have access to a telephone.
  3. Transportation - Transportation is very limited for the delivery of credit union products in the rural sector of Liberia.
  4. Electricity – This is nonexistent in the rural sector of Liberia, thus usually making it impossible to conduct business in the rural sector of Liberia.
  5. Safe Drinking Water - Most rural sectors do not have clean drinking water systems; most people get water from wells or creek water.
  6. Government Regulations - This is another major concern among the citizens. There are not sufficient laws about the activities of credit unions in the rural sector of Liberia. The Central Bank of Liberia (CBL) seems to be in charge of registration of all financial institutions.
  7. Corruption - Among the major concerns regarding the delivery of a credit union system are the issues of corruption and lack of trust among the citizens.
  8. Lack of Trust - Also of concern is the lack of trust among the citizens when it comes to money lending.
  9. Education -This is a problem because most of the people do not know about credit unions and have never been trained about finances before.
  10. Literacy – The illiteracy rate is very high. There are few people who can read and write.
  11. Lack of professional/experts - Another major problem is the lack of professionals to manage credit union activities.
  12. Support - The support for credit union activities is very limited. Most people do not know what to do, since they have never been involved in setting up a credit union.
  13. Health - The problem of healthcare is a major one in the rural sector of Liberia. There are not sufficient hospitals or clinics for the vast majority of the citizens. Poor health reduces people’s ability to develop themselves and their communities.

          The problems involved in setting up a credit union in Liberia can be summed up in four categories. The first problem is the infrastructure; the credit union will not be able to function without good infrastructure in place. Government will have to assist in the implementation process and help build good infrastructure. In the meantime, the credit union will have to allocate its own resources to supplement the building of infrastructure. Second, there are the problems of education; credit union members must be trained and learn how to run the credit union. The third problem is government regulations, corruption, and the population’s lack of trust. The credit union will need government protection in order to function. It will have to abide by government laws, along with its by-laws and constitution. And fourth, the general welfare of the members is very important; therefore members of the credit union will have to ensure that there are good healthcare facilities in the environment they work in.



One official of the Browerville Susu Association in Liberia (BSA) agreed that there are problems associated with running the Susu. He said, “Most people in Liberia want to invest their money, but they are simply afraid to do so because they do not know what will happen to their money.” In an interview with an employee of the State Street Bank in Boston, a Nigerian, he confirmed that the Susu is still active and well in Nigeria. “The system is not regulated by government and its full activities are not reported.” This means that there is no way of knowing the actual success or size of the Susu business.

Because the Susu is not regulated, no one knows the extent of the benefit or the problems it generates. The Susu has always been there and it will always be there. But it does not help raise people from poverty, helps parents pay for children’s education, or help pay for funeral activities, all of which are important social problems in the community. If there was a well-regulated credit union system, it would be more secured and beneficial to the community and help reduce poverty.



An interview with some Liberians in the U.S. about money remittances confirmed that they would be willing to invest in a credit union in Liberia on behalf of their friends and relatives. A link can be established between the Liberian credit union and remittances, since most low-income Liberians receive money from friends or relatives abroad. The important issue is how to manage the money that low-income people receive from remittances so that they can benefit maximally. The answer lies in the Liberian credit union. If they put the remittances in the credit union, they will receive interest and be able to save for longer term goals. The credit union might also be able to reduce remittance fees, to enable members to transfer funds more economically than through other private agencies. A good credit union system will assist many Liberians who receive money from abroad to deposit and save for their future.

Many Liberians living abroad would prefer to use the credit union system in Liberia to send money to relatives and friends, rather than using expensive private services. Many agreed that they were spending a lot of money by using other remittance systems to send money to friends and relatives in Liberia.

Some money remittances in the US charge from $10 to $100.00 depending on the amount being sent. Given the number of Liberians living in the US and the need to assist friends and relatives due to the war in Liberia, Liberians have spent millions for remittances over the years. Liberians are willing to work and invest in a credit union that caters to their own needs.

In summary, sentiments expressed by many in Liberia point to the fact that there is a need for a credit union in Liberia to make sure that community members can invest in an organization that is responsible and capable of protecting their investments.


The Limitations

The ILP was limited to two forms of data collection: interviews and survey questions. It was very challenging to organize interviews and find people who were willing to respond on time. Therefore, the researcher had to exercise patience to allow people to participate in the research. Making telephone calls, and especially international phone calls, was challenging due to connection problems. Dealing with participants from Liberia posed a challenge; some participants reported having difficulty getting in touch with the researcher on their cell phones. Interviews were also kept short because of the difficulty and expense of international connections.

Their individual responses were collected by taking notes and the data collection might be considered unscientific and informal. The twenty individuals who participated volunteered their time and were not compensated for the information they provided. There were numerous phone calls to participants in Liberia and the United states. Most of the participants were engaged informally and were only asked general questions about credit union activities in Liberia. Since there data were not a random sample and were collected informally, they are not intended to represent the views of the Liberian population as a whole.

The interviews suggested that many people in Liberia had never joined a credit union. This makes sense because Liberia has never had a credit union organization that was regulated by the government. On the other hand, many Liberians who live in the United States are aware of credit union programs. Many of them are also members of an employment-based credit union; others have and use credit union credit cards that are employment-based. This means that some of the respondents knew little about credit unions, while others knew a great deal. Because the group was analyzed together, some important information may have been lost in the process.

Chapter 5: Liberian Credit Union Model


Membership for the Liberian Credit Union will be open to the public. In order for one to become a member, one must register and pay a small fee. The goals of the credit union are to:

  • Reduce poverty and assist poor communities in Liberia to develop;
  • Empower women and young adults;
  • Train and educate credit union members to take full responsibility for managing their own economic and financial needs;
  • Build credit union facilities in rural Liberia that will help protect the deposits and savings of credit union members; and
  • Ensure that there is a financial link between rural Liberia and urban Liberia.

The presence of credit union banking facilities (CUBF) in all the fifteen political subdivision of Liberia will set the stage for loan services and banking activities for all credit union members. Each of the counties in Liberia will have a cooperative bank establishment that will include full banking services and will provide affordable credit and loan service to all credit union members.

Each CUBF will include water supply, telephones, electric, Internet services and banking equipment and computers to provide full services for credit union members.

Each CUBF will have five paid employees and volunteers working at each facility. The employees will include a branch manager, assistant branch manager, field coordinator, office clerk and a security personal. There will be room for additional employment depending on future growth rate of the credit union.

The (CUBF) will be set-up to provide loans and accept deposits from credit union members. Credit union members will be able to make loan payment and obtain new loan at any (CUBF) base on their personal needs and business situation.

All credit union members will be issued a credit union membership ID card that they can use to process loans at any (CUBF). The ID card will include their name, their photo, date of membership, and their county. Credit union membership will be determined by payment of reasonable fees to be paid toward membership ID cards.

Credit union members in each county will help in the process of membership drives: Old members of the credit union can help recruit new members. They can bring in family or friends from their community who they think qualified for membership. They can assist in indentifying member’s needs, business location, problems, and other situations that will lead to membership.

Credit union members will be trained in all aspects of being able to manage their own funds through the credit union. Members also must be able to understand the risks involved in saving money and the reward gained, if their money is safe and managed properly.

Target: To provide credit assistance to poor women, young adults living in poor communities and neighborhoods, to assist farmers and business owners improve their businesses, and to help develop and build good communities in Liberia. To make sure that every child of a credit union’s member is in school. Each member will have an open account and can choose to close his or her account if necessary. An opened account will allow the member to deposit or withdraw funds at any time during normal business hours as established by the credit union’s laws. There will be an interest rate paid for all savings and a minimum amount for each withdrawal. All these activities can be carried out by the members themselves which is actually the basis of the credit union organization. For a credit union to grow, its members must come forward and be willing to demonstrate leadership ability. The leadership can come from all backgrounds, such as accounting, computers, bookkeeping, management and counseling. These are very useful elements for building and developing a viable credit union organization. The members are the strength of the organization and they have the power to make sure that the right people are elected and are capable of running the credit union.

The Credit Union of Liberia must make use of the internet, by creating a webpage that will assist viewers to understand what programs the credit union offers and other plans that will be initiated in the future. This will be important for donors and especially for Liberians who are living abroad.

Throughout the United States, many Liberians have organized various chapters that represent the Liberian communities. Through these chapters, Liberians come together to identify and discuss personal issues that concern them and how they can help solve problems back home. These chapters organized by Liberians also depend on the use of the internet to make information available to them. And these chapters will help to pass on information about the credit union in Liberia and abroad.

Given the current political situation back home, most Liberian are happy that the country is now stable and many Liberians are returning home to participate in the development process of the country. The presence of the credit union will give them encouragement to do financial transaction in Liberia and support the local economy.



Figure 1. Liberian Credit Union Organizational Structure


The structure of the Liberian credit union work force is made up of eighty-two employees within the national and county levels.

Table 1. Number of Employees in Liberian Credit Union

National Level:

   Chairman                                        1

   Vice Chairman                                 1

   Board Members                               5

County Level:

   Managers                                       15

   Field Coordinators                           15

   Tellers                                            15

   Receptionists                                  15

   Security Officers                             15

                        Total                         82 Employees

Figure 2. Counties with Credit Union Banking Facilities

Liberia has fifteen political subdivisions which are governed by superintendents and development superintendents. These are the regions that make of the population of Liberia. According to the 2008 census’s report, the population of Liberia is now estimated to be about 3.5 million (CBL, 2010). Montserrado County, which holds the major political seats of government including the president of Liberia, is the epicenter of all political and financial transactions in the country. Other counties do not have strong political influence and economic base. As a result, many people prefer to live in the capital city Monrovia which is over populated and underscored by high cost of living.

Unless there is an extension of financial institutions, into various counties, it would be very difficult for the economic condition in these areas to improve. The idea is for each Liberian political division to have its own credit union makes it feasible for rural people to stay in their own geographical location to transact business activities. Government legislation would be the most significant tool to assist the control, implementation and function of a viable credit union in Liberia.

Because of the threat of corruption, a continuous monitoring of the new credit union program would be necessary to insure great results. This is the apex for a new credit union establishment in Liberia. There must be in place a good management system. A credit union designed for the people, by the people would help Liberia develop. By creating jobs in the communities, helping their own members in times of financial need, and helping them to educate their children, the credit union would be a good system for rural development in   Liberia. Low-income people would have access to financial institutions and would be able to transact business at their own local level and convenience. The management of a productive credit union system in Liberia requires great leadership, trained experts and professionals who will be ready to coordinate and conduct the overall activities of the credit union system.


Key Definitions

BOARD MEMBERS – Board members will be responsible for all major decision-making processes and policies of the credit union. The chairman of the board will preside over all meetings initiated by the board members.

CBL – The Liberian Credit Union will work in conjunction with the Central Bank of Liberia (CBL) to ensure that government’s banking regulations are adhered to and administered by Liberian Credit Union (LCU).

COUNTIES – The fifteen counties will have credit union banking facilities that are accessible to all of the members. Membership drives will be initiated in each county. A complete account of total membership will be reported and serve as a measure to provide membership information and statistical results for the credit union.

L CU – The Liberian Credit Union will be headed by a chairman who is elected by the board members. The work of the chairman will be to oversee the activities of the credit union by working with board members to represent the credit union and explain the policies of the credit union and its status.

MANAGEMENT – The management of the credit union will comprise professional’s expert in various disciplines, such as accountants, financial managers, financial planners, computer engineers and bankers.

MEMBERS – Credit union’s members will be responsible for the election of officials of the credit union, including board members.

REMITTANCES – These are the transfers of money by migrant workers back to their families and friends staying in another country.

Chapter 6: Recommendations and Conclusion


The beginning of any new process is very difficult and so it is with the idea of forming a new credit union in Liberia.   There are many ways that Liberians can pursue, which will lead to the formation of a viable credit union organization. After a review of articles and pertinent information gathered from other countries that have credit union organizations, the government of Liberia can initiate the process by educating the population about the need for a credit union. This should be with the understanding that a credit union is a nonprofit organization and is intended to help the poor.

Government can create legislations to govern the implementation and function of credit unions in Liberia. In Liberia, a credit union organization can be created in all fifteen counties to enable citizens to have access to loans and make deposits in their own communities. Based on this research, the Liberian Credit Union (LCU) must take a holistic approach in supporting and building new infrastructure.

This means there must be a focus on education, the improvement of road conditions in rural Liberia, healthcare and the business environment. The Liberian people are ready to do business, and there is business potential in the rural sectors of Liberia if the women and young people are trained and have access to education. Training, especially in the areas of accounting, literacy and business financial management, would be a positive step in the right direction.

On the other hand, education about basic healthcare issues will help bring an understanding and build awareness among families and communities. People who are ill cannot contribute as much to economic development. Other recommendations would be to make sure that children get the education needed for them to be successful. This means that parents and community leaders need to encourage their children to attend school.

The most important recommendation is to educate members of the Liberian Credit Union (LCU) about the mission of the credit union organization. Those who will become participants need to understand where funds are coming from and how the funds are being used. Additionally, all staff members must be well trained and must understand the vision of the credit union. This will keep the credit union image intact and create a significant and positive relationship with community members.

Very good rapport of the credit union activities in rural communities would be a good sign for progress and development. The people must show signs of appreciation and must be willing to work together for the overall development of the credit union and the community.



Forming a credit union in Liberia will not be the only solution that Liberia needs to solve all of its social-economic problems. But certainly, this will be one of the best tools that can be used to assist Liberia move forward on the path of economic development. Liberians organizing and learning how to manage their own credit union will be a productive step forward from the present condition.

A credit union organization that can help the citizens solve some of their community problems can certainly makes a great difference. In retrospect, Liberia has struggled and is still struggling to develop itself.   There is a huge number of uneducated people, a huge number of unemployed people, and a huge number of single mothers living in the country without a job or a source of income. And of course there are those who are just trying: trying to run a business, trying to send their children to school and trying to help their families survive. However, unless there is a CHANGE in the way they do business, the struggle for a better standard of living will continue.

Delivering financial services in Liberia’s rural sectors seems to be a major issue; there are currently credit vendors in Liberia that are trying to penetrate the city and the rural towns. Unless there is some form of education and a clearer understanding as to how microfinance operates and benefits the people of Liberia, most Liberians will continue to suffer and remain in abject poverty. Many NGO organizations are assisting Liberian business women with microfinance loans. But how good are the loans? Credit union members can best answer this question, because they themselves determine the interest rate on their loans. A credit union can become an integral part of the financial sector if government and donors can combine their resources and have a shared vision for building an inclusive financial sector in rural Liberia.

Therefore, the need for a credit union for Liberia is a very important one. A credit union that is supported and protected by the government will help the citizens of Liberia in many ways. One of the most important challenges will be for members to elect the best officials to govern the credit union. They will have to take into consideration electing people who are educated and professional in their areas of work.

This paper has compared and seen the difference between Micro-finance and a Credit Union. What is important to know is that by joining a credit union you are working as a group to solve community problems, such as funeral activities, being able to get a small loan, getting insurance for your car and getting a loan to pay for your children’s school fees.

For many Liberians who are living abroad, the credit union can also be used as a vehicle to help send transfer money to loved ones and family members and even to contribute to the overall development of the country.

This research study throws light on the opportunity Liberians have if they can work together by combining resources to build community and improve their standard of living. Even though a credit union is a nonprofit organization, it is a traditional model that has been in existence for many years (WOCCU, 2010).

Today, some of the activities of credit unions have been modified by the use of modern technology. Members of the Liberian credit union can create a new model that they can work with. This is the same with banking institutions: as technology changes, banks are changing the way they do business. Many banks are using new technology today in order to magnify and improve the quality of their operation. Liberians can get involved in learning about new technology that will enable them to improve the business system and move forward to self-development.

The primary objective of this learning paper is not to negate the previous activities of credit provides in Liberia, but rather to introduce a new approach and provide new opportunities for reducing poverty and improving the standard of living for all Liberians. There is a vise different between people being in charge of their own destiny and allowing themselves to be controlled by others. Liberia will never be developed if Liberians do not take the responsibility for themselves. This is the epicenter of this paper: to encourage Liberians and provide them with the confidence to take control and manage their own money. The Liberian credit union exists for its members, especially women and young people who are the cadre of the organization, to implement a gradual process that will lead to growth, development and prosperity for all.


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Appendix A: Interview Questions


Molley Jones – Master of Management Candidate

Cambridge College School of Management


Your participation in this survey will highly be appreciated. Thank you!


Name: -------------------------------------------------------------------


Occupation: --------------------------------------------------------------


Age: ---------------------


Highest education: -------------------------------------------------------------


Place of Residence: ----------------------------------------------------------


Are you currently a member of a credit union organization?



Have you ever joined a credit union organization?




Would you be willing to join a credit union organization in Liberia?

Would you be willing to become a sponsor for Liberia credit union?


Would you be willing   to become a volunteer and help form a Liberia Credit union?


Do you think that a Country like Liberia should have a credit union? If No, please explain.


These next questions should be answered on the scale 1-10   10 being strongly agree 1 being strongly disagree and 5 being Neutral.

How do you feel about the statements below?



Strongly Disagree                     Neutral                         Strongly Agree



Liberians are capable of managing their own credit union.------------------------


Credit union organization in Liberia will help improve communities.-----------



Credit union is nor – for profit organization and will help the poor.-------------


Thank you for taking this survey. If you would like a free copy of my theses, please list your address below. I will be happy to send you a copy at your request.



Appendix B

An eExperienced NGO field consultant’s view of the problems in Liberia.


        Most Liberian have a bad habit of paying back loan especially money from credit union. One reason is that they have a negative perception about the loan they feel that some charity provided the loan and someone want to exploit them as a result their participation is limited.

        Trustworthiness is also a contributing factor people will not tell you the truth why they want the loan. They will put you under the impression that really need the loan as soon as they get the loan it is misdirected to a different thing and so they are unable to pay back.

        They are of the notion that people from Europe or America are enjoying so they come with these program to benefit from them.

        The high interest rate charge on loan is between 15-20% which is very high but people will accept because they want the money. Time to pay back they start to give excuses.

        Poor business environment. The environment must be able to influence the way money should be use. People taking loan don’t assess their community to know what is missing and needed. They just get into the business because they see others doing business.

        Most loan based on gentleman agreement. Most credit unions are not legally register because they do not want to pay tax to the government. So must loan are giving under such agreement as gentleman agreement. I will give the loan make sure you pay back on time. According to the business law of Liberia any transaction more than LD 500.00 is legitimate and therefore should be done through documentation.

        Most people who give out loan do not investigate pay back potential of creditor. For instance what are they doing to enable them payback the loan.

        Misapplication of funds. For example the fund was taken to start a shop but as soon the person gets the money they will divert the amount into something that was not planned.

        The issue of poverty. Because most people are poor as soon as they get the loan it is overshadow by poverty. They want solve all their family and personal problems as once.

        Poor business recording keeping. People are not able to properly monitor their business. They lack skills in operating a small business. They often used both the interest and principal.

        The communities are not well structure with address and block. So it is difficult to trace someone who take a loan and change their location.

        Loans given out are not guided to find out whether the money taken was used for the intended purpose as a result people do whatever they want with the money making payment difficult.





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