Three-legged Temperance

Three-legged Temperance

The field officer from the Fiji Credit Union League arrived in the remote hill village in a classic LandRover, looking the part in his knee-length socks, balloon shorts, and pith helmet. The villagers conducted the traditional kava greeting and settled to listen. It was the mid-1960s.

He first spent time with the village credit union’s treasurer, reviewing the written records of members’ savings & loan accounts and the cooperative’s income & expenses. After making a couple of suggestions and congratulating the volunteer leadership on their stewardship, he spoke to the collected credit union members.

His message was simple: Their credit union was dependent entirely upon them for its success or failure. The only source of money for the credit union to build a useful loan fund is the accumulating savings of its members. The only source of income for their credit union to meet its expenses, including paying reasonable interest on members’ savings, is the interest paid by borrowing members on their loans.


Thus, the health of their credit union was a direct result of members’ behaviour, both as savers and as borrowers. In summary, the field officer gave them a metaphor of the interdependence between the collective nature of the credit union and their individual participation…


“The credit union is like a three-legged stool; take away any one of its legs and it will collapse. The three legs of your credit unions are: Save Regularly; Borrow Wisely, Repay Promptly.”


I came across this gem some 20 years after it was documented in a promotional film from the old CUNA Extension Bureau (precursor to today’s World Council of Credit Unions). I have recounted it many times to a wide variety of audiences, all within the same context of illustrating how the cooperative approach to grassroots finance works. It has never failed to elicit a combination of ‘aha!’ expressions and nods of sage acknowledgement.


At the risk of sounding like Father Time, I often find myself taken by surprise by the apparent rediscovery of savings as being a ‘good thing’. Us credit union types have known this since the mid-1800s.


Yet I now worry this new-found enthusiasm will tempt today’s advocates to use rhetoric similar to the early days of microcredit, with all the consequent risks of overhyped expectations: “If we are looking for one single action which will enable the poor to overcome their poverty, I would go for credit.” (Yunus 1994)  “Microcredit [is] a compelling antipoverty and development strategy… [with] the possibility of moving toward a world freed from the blight of poverty within a length of time measured in years, rather than decades or centuries.” (Microcredit Summit 1997)


Just like microcredit, savings in of themselves will not be the panacea for poverty, but as Malcolm Harper observed today, “Debt is necessary, some of the time; savings are necessary, all the time.” Let’s stick to such temperate language.


Reader Comments (1)

Indeed we must watch our hype. This post illustrates just how long things take and that we keep rediscovering the obvious. Indeed, savings groups offer both savings and credit (some would say they insure as well) and they have been around for eons.

Incidentally, I used the 3-legged stool imagery in El Salvador this past summer to illustrate similar concepts. The women started laughing. They could barely stifle their giggles and their pity. "Everyone knows," they said, that stools don't have three legs, they have four!"

Wed, November 9, 2011 | Kim Wilson


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