During one of my quarterly visits to the Far North Credit Union, I was intrigued to discover the note “QF” next to several loans recorded in the cash book. I was told these were “quick fire” loans, made without any written record and no collateral, to a maximum of $50. When I asked where the idea had come from, I was told it had been given to them by New Zealand’s credit union pioneer — Colin Smith — during a training workshop.
Formal speaking is a powerful living tradition
Horrified at the idea of a loan of any size being made without a signed contract (and the subsequent default levels!) — and knowing that Colin, a chartered accountant, would never countenance such a thing — I tracked down the origins of their innovation to a presentation he had given on improving members’ experience of the loan
application and disbursement process. He had placed this in the context of quality of service delivery, of finding methods to ensure unnecessary credit union bureaucracy did not get in the way of meeting members’ needs.
Like any good presenter, Colin had spoken to a short paper he had written on the topic — limiting his presentation to an overview, emphasising the key points of enhancing member service. Like the classic repeated whisper game, this had morphed into the “quick fire loan” by the time it worked its way back to the rural north.
Brett’s comments on the tension between orality and paper-based literacy reminded me of my friends at Far North, operating in a small rural community in which Maori — the indigenous people of Aotearoa — figure prominently. Their credit union, like so many of the early phase of credit union development here, had a majority of Maori in both members and leadership. And like all Maori, they valued their oral tradition as a primary element of their daily culture.
Prior to the arrival of British missionaries, Maori were exclusively oral. Despite having become fully literate after the written encoding of their language, ‘orality’ remains embedded in how information of all sorts is transmitted, of how issues within groups are resolved, and of how any visitor to the tribal home base is welcomed and put in context.
As my first in-depth experience of working with Maori, this was a good lesson for me in recognising — and reassessing — all my Pakeha assumptions about effective communications and the supposed pre-eminence of written records. When I pointed out the presence in their office of Colin’s paper on the topic and asked how they could have possibly interpreted that as suggesting contract-free lending, it was clear to me it simply had no impact in comparison to the oral message of “let’s make it easier for our members to access our lending service” that had travelled to the Far North.
villagefinance 
Wow, Greg. Great contribution; great photo! Building modern institutions in indigenous communities is a fascinating challenge and critical domain in village finance.
I totally buy your key point that Colin’s words must have had a far greater impact on the Maori leadership than his paper on service quality in lending!
But is it possible to have a strong oral contract, that doesn’t lead to high delinquency levels? I’m particularly concerned about places where the enabling environment (courts, local authorities etc.) is still closely aligned with oral traditions and often rejects the legitimacy of paper-based contracts completely. In Cambodia for example, the MFIs tried for a long time to get village chiefs to help them collect on delinquent loans, by paying them a ‘service fee’ and having them sign each loan. Eventually though, the MFIs gave up. The process was not seen as legitimate in the villages, and while the village chiefs were happy to take the money, they were ineffective from a collections standpoint!
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Greg’s contribution Be Wary of Assumptions is a salient reminder that practitioners in the field should not approach the development of credit unions from such a functionalist perspective. We should situate people at the centre of what we do. My organisations experience in other Pacific nations is similar to Gregs. I would like to add to the argument by flagging that we must also consider the broader context of culture.
The evidence of social networks and displays of reciprocity and shared values that are necessary in creating and maintaining a financial cooperative are in abundance within the Pacific context but in differing cultural forms. The forms and nature of this Pacific reciprocity and trust when framed within a western context is unrecognisable. When the Pacific social norms and cultural expectations are overlaid with a framework that must also accommodate formal governance and operational standards to protect members money it becomes problematic and particularly challenging to satisfy all these needs. Many of the needs are on the one hand functional in their nature, such as policies, procedures and regulation and on the other actor centric and culturally specific such as the social obligations within everyday life that is embodied within the individual and the social relationships.
It is problematic to overlay what is perhaps an inappropriate organisational and governance framework and what is a very functionalist approach over an existing cultural system. If we take the Pacific Wantok social system for example where social ties and obligations of reciprocity and hierarchy are inherent within everyday relationships and interaction, the functionalist approaches to financial cooperative operation and governance is at best challenging and extremely complex. Suddenly loan applications are viewed not through the prism of a loan criteria document but through the eyes of social obligation. The pressure of the cultural obligation takes precedent over any organisational obligation, policy or practice.
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Has anyone seen any more appropriate practices in overlaying what we could call an ‘alien’ lending/contracting system on an indigenous social system? In the Maori scenario that Greg outlines, I could imagine something (a little!) like this working better …
The entire board of the credit union sets one day (say the first Monday) of every month as ‘QF Day’. They hold a meeting in public (quite possibly in a public square!) and read the terms of borrowing aloud from their policy book (interest rate, repayment period, etc) before the meeting begins. Anyone who wants may apply for a loan under the rules stated. Any details or conditions are sorted out orally, and anyone present has the right to comment, object, make suggestions, etc. Loans are finalized and cash is disbursed on the spot. An official records the loan in the ledger books, and writes ‘QF’ beside it. The member may (or may not) also receive a passbook.
Since the board is composed of many of the senior authorities in the village and the transaction has been widely witnessed, few people dare miss a payment, and those who do face numerous sanctions of a range and effectiveness that the credit union would have no access to.
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Interesting and I dare say that there would be many Maori who would object to your use of the above image, particularly that you have used it to imply that Maori Oral traditions are linked to poor financial management and decision making. I agree with Peter Masons korero, in that reciprocity is about maintaining the relationship between people not the relationship of money. As with most indigenous cultures people and enviroment are at the centre of what matters not money.
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Greaat reading your blog post
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