Governor of Central Bank encourages Mayo credit unions to utilise new lending powers

by Caoimhín Rowland

The Governor of the Irish Central Bank, Gabriel Makhlouf, has encouraged credit unions in Mayo to utilise new regulations to reach their full potential.

Speaking during a visit to Castlebar during which he met members of the local Chambers of Commerce, Network Mayo and representatives of multi-nationals based in the county, he advised credit unions to ‘do more to help people and businesses access loans’.

He told The Connaught Telegraph: “I think credit unions are in a very, very good place right now to exploit the fact that we've got two big banks leaving the market.

"Credit unions have got one of the most respected if not the most respected brands in the country. Not all credit unions are equal, some are much bigger, and some are much smaller.

"And the bigger ones clearly have got the capacity to play a more active role in the community while the smaller ones need to think about how they're going to manage that.

"We changed the regulations over a year ago to give credit unions the ability to do more and to lend more, but they're not using all that potential."

He admitted ‘capacity’ is a factor in not feeling the benefits of the credit unions’ new powers.

First Choice Credit Union, based in Castlebar, recently announced its decision to offer mortgages to its customers.

Mr. Makhlouf was part of his nationwide tour to gain a better insight into what is happening in less trodden parts of Ireland.

He explained: “We can't just sit in Dublin and understand the whole country. We’ve got to go out and travel around the country, talk to businesses, mainly listen to businesses, and that gives a much stronger understanding of what's going on, what are the issues, and it helps to draw a very good picture on what normally for me is a set of numbers I see and graphs."

Businesses in a rural county such as Mayo present their own challenges and unique opportunities, admittedly far from Dublin and Frankfurt but where decisions taken there have a real impact on commerce here.

The central banker was keen to highlight one such opportunity the pandemic has presented Mayo in terms of hybrid working and an upgrade in the quality of life many find here.

“It seems to me from what I've been hearing some businesses actually have done very well out of the pandemic, in the sense that they adapted quite quickly, the goods, different business models, they use technology, they use the advantage of being flexible in their workforce,” a positive sign from the earnest Makhlouf, who spoke about the changing times we’re experiencing as a workforce.

“There is this transformational change that is happening, enabled by digital, facilitated by having a pandemic and lockdown where people suddenly realised, actually, you can work remotely.”

As ever, the issue in Mayo has been the young people we lose to emigration and the opportunities we can now offer to attract our diaspora home. The problems he witnessed in Mayo reminded him of his time previously working as treasury secretary in New Zealand.

“I came from New Zealand before I came here, and the issues are exactly the same. And one of the things that happens in New Zealand is that young people leave, but they come back. And the big challenge is how do you attract them to make sure they come back.”

When asked about the eye-watering billions of capital receipts the Irish government currently possess through record tax intakes, he was reticent to call for a splurge.

“I think the government needs to be careful about how it uses its money. A big sizeable proportion of corporation tax receipts, it should treat as essentially as surplus, and unlikely to be guaranteed forever.

"So it should not assume that this money is going to be a permanent income that [they] can then spend. There's too big of a risk.”

Instead he prefers the idea of a ‘resilience fund’ similar it seems to what we’ve heard recently from the government with regard to a rainy day or sovereign wealth fund.

Makhlouf’s inaugural visit to the county had a local tinge too. Derville Rowland, the deputy chair of the Central Bank, is a native to Castlebar and, apparently, during a trip through Mayo, she remarked how much the road infrastructure had improved in the county.

Mr. Makhlouf is known for his commitment to gender equality and advocates for it regularly in areas of business.

He spoke about a book from New Zealand, If Women Counted, by politician turned academic Marilyn Waring.

As we move away from measuring economic growth through traditional metrics and aim for a more inclusive approach, unpaid carers and historically female labour are never taken into account when assessing the growth of the economy.

But it doesn’t mean those roles are less important in the Irish success story.

“A lot of that unmeasured work is going to involve caring, not just caring for your own kids, but caring for family, caring for older people, just that whole sector.

"And in my view, that is important economic activity that needs to be measured in some way.

“Because, what you measure, you then value,” he added.