Toronto’s Black population could once again have its own financial institution if a trio of African Canadian organizations can muster enough community support to get the proposed Pan-African Credit Union off the ground.
Although the proposed institution is not exclusive to people of colour, the goal is to provide an alternate banking organization that better serves the Black community in the Greater Toronto Area, and eventually, the rest of the country, said Adaoma Patterson, president of the Jamaican Canadian Association, one of three entities behind the project.
“It’s a lofty goal,” Patterson said. “Well overdue, though.
The group has set an ambitious target for the credit union to open within two years.
“We hope that we can get through all of the stages to launch by the summer of 2021,” she said.
The main aim is to provide financial services to Blacks who have been traditionally under-served or un-banked, she said.
“People have been asking for it for a while,” she said. “This piece was the next logical step.”
While families will be the core of the credit union’s membership, making investments in Black-owned businesses is also key, she said.
“The community has always talked about economic empowerment,” Patterson said. “It enables all of the other conversations when you have that economic ownership.”
Running a credit union isn’t unfamiliar turf for the JCA, which operated one, that puttered along before it folded in the mid-1990s.
The Star reported on the demise of the organization in 1995.
Prompted by concerns for members, the Deposit Insurance Corporation of Ontario, which insured individual deposits up to $60,000, assumed control of the Caribbean Canadian African (Ontario) Credit Union on Aug. 31, 1995. Continuing operating losses were cited by the Ministry of Finance, according to Bill Foster, an insurance corporation vice-president, who replaced the board as administrator of the organization.
“This credit union has no reserves and is in a deficit position. Its liabilities exceed its assets,” said Foster at the time.
A lawyer for the former board members said, in early August, 1995, that the only problem was the credit union had spent money anticipating $750,000 in funding from the government and had only received $370,000 of it.
Plans to revive the credit union started to regain some life in 2016, after Patterson assumed the presidency of the JCA.
“We were tackling a lot of other things, but it seemed like the financial institution piece was missing,” she said.
Patterson soon discovered that the JCA wasn’t alone in championing the return of a black-focused financial institution. The Lions Circle African Mens’ Association, also had an interest in establishing a credit union of its own.
It made sense to join forces, she said.
The idea started gaining steam, after the Canadian Black Chamber of Commerce, which launched in 2019, joined the partnership. A steering committee, including people from financial backgrounds, has been meeting weekly, in recent months.
Andria Barrett, president of the Black Chamber of Commerce, said she often fields complaints from small business owners about difficulties in accessing financing from traditional banks.
“I’ve heard countless stories from Black business owners, who have made some money, but can’t get a business credit card or a loan, so we have to create our own,” she said.
Still in its infancy, the group is gathering feedback, via an online survey, to test the community’s appetite for the kind of financial institution they want.
Once the survey closes in March, there will be a clearer indication of whether the concept has enough backing to move forward.
“We have been working towards getting regulatory approval,” Barrett said. The chamber is hosting Rod Phillips, Minister of Finance, next week Thursday, to talk about this and other economic issues.
“We’ve been going to different locations and actually promoting the survey,” she said. “The response has been good overall.”
Patterson said early research revealed a daunting road ahead, as “not many cultural credit unions are being approved in Ontario.”
Provincial regulators must be convinced that a sufficient cohort of people will put their money into such a scheme.
It’s one of the very reasons the former credit union failed in the 1990s.
“You have to show that people are actually willing to put some money into this as a startup,” she said.
In addition to providing financial services, the new credit union will offer financial education on topics from budgeting to wealth-building, Patterson said.
Entrepreneur and philanthropist, Denham Jolly, is already hailing the potential advent of a credit union as a way to break the financial chains holding back the next wave of entrepreneurs.
“It’s not easy for a Black person to get financing of any nature,” said Jolly, renowned for starting Canada’s first Black-owned radio station FLOW 93.5.
He said Black people have long struggled to walk into a bank and “be taken seriously.”
The former credit union, which went under in the 1990s, had a business plan that required it to hold $5 million in assets by 1997, wrote Cecil Foster, a journalist, author and scholar, in an opinion piece, printed in the Star, in 1995.
Jolly bemoans the missteps that led to the demise of the former credit union, but said that’s water under the bridge.
“I would like to be on the board of governors,” Jolly said about lending a hand on a new credit union.
Foster wrote about efforts by the Black Business and Professional Association and the JCA to to save the old credit union, including a membership drive to get more Black groups and individuals to open accounts.
Barrett said the past will help to guide the current application.
“We see the need and we learn from history,” she said.
Oana Branzei, associate professor at Western University’s Ivey School of Business, said there is a persistent disadvantage minorities, especially those of colour, face, and it holds them back from things such as business startups.
“It is not as severe as the U.K or U.S, but it’s certainly a problem,” she said.
Branzei said specialized credit unions are a catalyst for people of colour to bank in a dignified way.
“When this is a movement from within the community, it feels right,” she said.
Branzei said rejecting a community-driven effort, given the discrimination that has taken place, will be politically hard to do.