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Local Cooperatives A $7 Billion Business

Co-ops positioned to compete with private banks


April 8, 2004
Copyright © 2004 CARIBBEAN BUSINESS. All Rights Reserved.

Puerto Rico’s cooperatives have seen unprecedented growth since 2001, with total assets of $7.1 billion through March 2004 and generating 4,000 direct jobs throughout the island, said Irma Hilerio, administrator of the Cooperative Development Administration (CDA).

This growth has been the result of an aggressive promotional campaign by the CDA. There have been 70 new cooperatives formed between 2001 and March 2004, producing 627 jobs, said Hilerio. Of those, 29 are for youngsters, for a total 102. The number of jobs generated from these reached 71, up 48% over the past three years.

"Our emphasis has been on supporting and facilitating the co-op movement rather than on acting exclusively as a regulator," said Hilerio. "However, we had to settle our finances and prepare our staff before we could start moving forward."

Puerto Rico’s cooperatives sector currently includes 142 savings-and-loans, the Cooperative Bank, and two insurance co-ops. Last year, savings-and-loan cooperatives alone had deposits/memberships of some $5.6 billion, loan balances of more than $3.5 billion, and assets of nearly $6 billion; the latter was a 33% improvement over 2000.

One benefit of the growth of cooperatives has been an increase in capital investment on the island. In fact, capital investment in fixed assets (land, equipment, and furniture) has reached $212.4 million, a 19% increase since 2000.

"We are very satisfied with the job we have done, mostly because it demonstrates that the cooperative movement is a capable and feasible tool for Puerto Rico’s economic development," said Hilerio.

Among the recent achievements, said Hilerio, was the Western Pole (Polo Oeste) initiative, whereby employees of various shopping centers in Isabela, Aguada, and Aguadilla formed a co-op to acquire and operate those malls. The total investment in those purchase transactions is estimated at $13 million.

In other notable developments, eight new cooperatives in the apparel and shoe sectors were born from one manufacturing cooperative and Cotice emerged as a cooperative manufacturer of a wireless Internet system. The advances promised by this system are expected to benefit the local communications market.

"We are now trying to develop cooperatives for other trade groups such as electricians. The challenge is to establish a base from which they can offer their services," said Hilerio.

The CDA is confident that by 2005, it will have been able to promote 35 new cooperatives generating more than 2,500 new direct jobs.

This Caribbean Business article appears courtesy of Casiano Communications.
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