Credit union accountability: to disclose or not?

Article by: David Mathuva

I have been studying credit union disclosure by credit unions in Kenya and other developing economies for a while now and I believe that I can make a few comments based on some quick observations:

• Credit union accountability pervades disclosure. Whereas disclosure can be used for impression management purposes, being accountable is just more that mere disclosure of financial (and or social) information;
• Better performing credit unions are those that a
  re more transparent and accountable to their members. Transparency in this case pervades accountability. To be transparent, credit union management and those charged with governance should avoid carrying out the so called "monkey business" and focus on serving their membership in the best way possible
  
  . It is only when the transparency level is surpassed can we talk of accountability. In other words, accountability without transparency may not yield much.
• Credit unions in a developing country setting are faced by numerous challenges: be it fraud, mismanagement, resources, capacity, professionalism and a myriad of other challenges. This makes it challenging to achieve higher order aspirations such as improved quality of disclosure. 
• Disclosure is a necessary [if not sufficient]  condition for any financial market, whether developed, developing or [un] developed. The implication of this is that, in economies where credit unions are opaque in their disclosures, then the sector is likely to be doomed.
• I am impressed by the efforts taken by a developing country like Kenya, Tanzania and Rwanda as far as improving the quality of disclosure is concerned. The regulators has taken the wisdom of engaging professionals in developing disclosure guidelines to assist credit unions in their disclosure processes. In Kenya, for instance, SASRA worked together with the ICPAK to develop the SACCO guidelines in 2010; in Tanzania, the regulator, with the assistance of professionals developed financial accountability guidelines in 2010. These are small but swift steps towards promoting the vibrancy of our credit unions sector. It is also an indirect step towards improving the quality of reporting in the sector and is also in line with the aims of the EAC integration.
  
• I believe  that with time, the credit union sector in developing economies, with sustained efforts  of all stakeholders, will attain the levels achieved by credit unions in Canada, the US and Australia. Kenya is already in the front-line!

In summary, these ideas illustrate that despite the numerous challenges any developing country has to grapple with, we can make simple, small steps towards improving what we cherish most. And credit unions are our core drivers of our financial and social well-being!

Authored by David Mathuva