Above: Mike Schenk, CUNA's vice president of economics and statistics (far left), visits a farm co-op an hour south of Havana during a tour of Cuba's cooperative sector.
Before Mike Schenk ventured into Cuba for a tour of the country’s cooperatives, he envisioned experiencing extreme poverty, a heavy police/military presence—and a Spartan diet of rice and beans.
While the island nation of 11.1 million certainly has its challenges—in addition to a long and complicated history—Schenk was happy to find many of his preconceptions were unfounded.
“People are definitely poor by American standards, but the Cuban health care and educational systems are held in high regard. And the nation excels in many measures of societal welfare, including life expectancy, infant mortality, literacy, and educational attainment,” says Schenk, CUNA’s vice president of economics and statistics and board treasurer at $2 billion asset Summit Credit Union in Madison, Wis.
His most surreal moment came when the group visited a remote farm—only to see a bus packed with Wisconsin tourists wearing Bucky Badger gear. “That was an eye-opener. It really drove home the point that things are changing quickly,” he says.
Schenk visited Cuba as part of the St. Mary’s University Cooperative Management Education Program in Nova Scotia, Canada. Summit Credit Union paid for the trip as part of the professional development it provides all board members.
For nine days, the group attended classroom lectures in the morning and visited cooperatives in the afternoon. The tour leader, Wendy Holm, is an economist and agronomist, and also a former board member at Vancity Credit Union in Vancouver, B.C.
Among Cuba’s 5,506 cooperatives, more than 90% are agricultural-based. There are no consumer-oriented cooperatives or credit co-ops.
The seed for the recent explosion in Cuban cooperatives was planted by what’s referred to as, ironically, the “special period,” when the Soviet Union collapsed. This sent Cuba into a tailspin, resulting in years of extended power outages, water restrictions, and severe food and fuel shortages.
“There were people on the verge of starvation,” Schenk says.
As a result, agriculture took on a special significance and importance, leading to a focus on sustainable organic farming, urban agriculture, and the formation of true farming co-ops, says Schenk, who noted the group was told that farmers in Cuba earn more than doctors.
With Raúl Castro’s rise to power came the first official recognition that Cuba’s communist system wasn’t working.
“The inefficiencies were obvious. More than one million government jobs needed to be eliminated and leadership turned to co-ops, including those outside of the agricultural arena, to soften the blow,” Schenk explains.
These new cooperatives provide everything from advertising services to oil changes to construction and clothing—even cooperative restaurants.
Schenk believes there are more cooperatives to come.
“Everywhere we went, when we asked people how they liked their cooperative, they invariably said the same thing: They’re making more money, they’re happier, and they’re more productive than they were as government employees,” he says. “They’re more engaged because they have a stake in the business.”
The challenge now is making the transition from government organizations to cooperatively run businesses. “It’s not easy because they’re not familiar with what co-ops are in many cases,” Schenk says. “And a lot of the people in these co-ops have no experience with accounting, hiring, or obtaining resources. That was all done by the government.”
As a result, he adds, new cooperatives are forming that provide these back-office and support services.
What’s the role for CUs?
Despite the success of cooperatives in Cuba, Schenk sees challenges to the formation of financial cooperatives. The country still has a cash-based economy for the most part, although a national bank provides basic financial services, such as savings accounts, ATMs, and personal loans, which require collateral or a co-signer.
The Cuban government has entered the credit business by financing the replacement of inefficient Soviet appliances with efficient Chinese models, Schenk explains.
But there are no checking accounts or credit cards, and only recently have Cubans been able to buy or sell real estate or vehicles. “So there’s certainly room for development from a products and services standpoint,” Schenk says.
Neighborhoods in Cuba’s urban areas tend to be tight-knit communities, which would lend themselves well to fields of membership, he adds.
Plus, the success of cooperatives in Cuba is creating more wealth. This will drive demand for consumer goods that require financing, such as cars and mopeds.
“Still, I don’t think there will be an explosion in consumer financial cooperatives in the next couple of years,” he says. “It’s likely to be more of an evolution than a revolution, but it’s exciting to see.”
What excites Schenk most about his tour of Cuban cooperatives is the immense impact these organizations have on peoples’ lives.
“The transformative power of cooperatives in Cuba is alive and well,” he says. “They’re truly making a difference in peoples’ lives. You see it everywhere you go.
“I wouldn’t be surprised if soon the world views Cuba as a leader in cooperative development.”