The Malawi Union of Savings and Credit Cooperatives (Muscco) has said, despite the economy sailing in troubled waters, most of the savings and credit cooperatives (Saccos) posted surpluses (profit) in 2012.
Malawi’s economy is going through a bad patch characterised by soaring cost of living, rising inflation, currently at 37.9 percent as of February, and exorbitant bank interest rates hovering at over 42 percent, thwarting businesses’ expansion plans.
Muscco chief executive officer Sylvester Kadzola, speaking on the sidelines of the 19th annual general meeting (AGM) of PTC Group Sacco in Blantyre on Saturday, advised the Saccos to grow even bigger to attract a larger volume of business.
“Saccos tend to operate with narrow margin and for them to continue to post gains, they really need to have bigger volumes because even if they may charge lower interest rates, they will still be able to post revenue and be able to return to members through dividends,” he said.
Kadzola commended PTC Group Sacco, whose assets have grown to K75.5 million (about $188 750), a 10 percent jump from K68.8 million (about $172 000), for posting a surplus amidst difficult economic circumstances.
PTC Group Sacco has posted a 21 percent increase in surplus to K7.4 million (about $18 400) from the previous year’s K6.1 million (about $15 250).
“Generally, when you consider the challenges of the economy in 2012, the performance of PTC Group Sacco is quite commendable because with the rising inflation and the high cost of goods and services, the Sacco was still able to post a modest surplus at the end of the year and they are able to declare dividends to the their members of over 10 percent,” he said, adding that the group is on the right track.
But Kadzola advised the Saccos that with the rising inflation, they have to ensure growth of their surpluses should be above the rise in the price of goods and services.
Chairperson of PTC Group Sacco, Jallon Mweya, announced a dividend of K5.1 million (about $12 750) which will be distributed to over 1 400 members.
This means that the remaining K1.8 million will be invested as reserves whereas K500 000 (about $1 250) will be used for education campaigns to sensitise employees of the group on the importance of joining the Sacco.
In the year, the group’s interest income on loans dropped five percent to K11.8 million (about $29 500) from K12.4 million (about $31 000) largely due to a reduction in membership resulting in fewer loans.