Muscco clarifies debt relief

Malawi Union of Savings and Credit Cooperatives (Muscco) says not everyone of its members can benefit from the debt relief proposed by Reserve Bank of Malawi (RBM)because the move targets those whose incomes have been affected by the novel coronavirus (Covid-19) pandemic.

Muscco chief executive officer Fumbani Nyangulu said this in an interview on Friday following calls by some members of Savings and Credit Cooperatives (Saccos) to have their loans and interest payments suspended for the next three months to cushion them against the impact of Covid-19 pandemic.

He said: “Case by case basis in this respect means that only those borrowers whose incomes have been greatly affected by Covid-19 to the effect that they can hardly honour their loan and interest installments during this period.

“We have advised Saccos to communicate this message to their members so that those in distress because of Covid-19 and want a relief during this period should come to the Sacco to discuss the moratorium.”

Nyangulu cautioned members that have loans against taking advantage of the situation because Saccos will need the same liquidity to advance loans to those critically affected during this difficult period.

To mitigate the impact of the Covid-19 pandemic on livelihoods, President Peter Mutharika announced measures to alleviate the pain by directing that the Registrar of financial institutions discuss with financial institutions to implement a three-month moratorium.

In reaction, RBM Governor Dalitso Kabambe last week said all microfinance institutions and financial cooperatives have immediately suspended interest and principal repayments for loans by borrowers, including pay-roll borrowers on a case by case basis. The central bank also signed an agreement with commercial banks to provide relief to borrowers whose loan repayment will be affected by loss of business due to the impact of Covid-19.