Delayed payroll deductions chock Saccos growth
Malawi Union of Savings and Credit Cooperatives (Muscco) has asked government to address delays in remitting payroll deductions meant for Savings and Credit Cooperatives (Sacco), arguing the situation is affecting their growth.
Muscco board president Fletcher Mhango made the call on Friday in Mangochi at annual planning conference.
He said although the problem is not as rampant as it used to be, the delays have not been completely resolved.
He said: “We usually have delays of a month or two in some cases. Since Saccos have grown significantly, a delay of two months or more causes serious liquidity challenges and cash flow disruptions, making them to resort to borrowing at high interest rates while their money is withheld without any interest paid on it.”
Mhango said the issue needs urgent resolution as tgovernment owes the Saccos are in billions. He did not mention the actual figure.
In July this year, United Civil Servants Savings and Credit Cooperatives (UCS Sacco) said it was owed K200 million by Treasury, a development that is crippling its operations.
In 2013, government owed teachers K1.6 billion deducted from their salaries, but the remittances were only made after Teachers Union of Malawi (TUM) threatened to stage a strike.
But Mhango said they have been engaging government to find a solution to the problem.
“We currently have one Sacco, United Sacco, which is owed about K95 million by government and is facing challenges,” he said.
Accountant general William Matambo said government is working towards addressing the problem.
He said: “We admit that we owe Saccos and a few other micro-finance institutions some money, but this is a problem of the past. We have been remitting what is due to them relatively in good time.
“What is remaining is for us to go back and have files for the arrears confirmed and certified by the National Audit Office and pay them off.”
He said government is working towards clearingwhat it owes the micro-finance institutions by the end of this financial year.
The conference attracted about 100 local delegates, including heads of various Saccos in the country.
The conference was held under the theme Continuous Transformation of Operations, Products and Services: Foundation of Sustainability Growth and Development of the Sacco. n
