Malawi Union of Savings and Credit Cooperatives (Muscco)—the umbrella body for the savings and credit cooperatives (Saccos)—says it is vital for average Malawians to have basic financial education to ably manage their financials.
Muscco last year embarked on a project to link village savings and loans (VSL) groups to Saccos to equip VSL members with skills on money management, budgeting, credit management and other related money matters.
In an interview on Tuesday, Muscco chief executive officer Sylvester Kadzola said the project—which also aims to create an alternative savings avenue for VSL members before they decide how to spend their money—has received a positive response.
He said Muscco successfully linked close to 125 VSLs to Saccos across the country, bringing into the SACCO system savings amounting to K170 million.
“The initiative is intended to encourage savers in VSLs to build capital, provide security to member’s funds and allow members to make meaningful investments from their savings instead of just saving and sharing for consumption at the end of a savings cycle,” he said.
He said besides linking VSLs to Saccos for capital formation and security of member’s funds, the Saccos will provide access to members to a variety of loan products which VSLs may not provide and also introduce groups to insurance.
Muscco financial cooperatives and development manager Ezeckiel Thindwa was also on record saying most VSL lack sustainability because they do save the money after sharing saying, hence the imperative to save with Saccos to have access to loans and venture in bigger businesses.
In terms of performance, Kadzola said all important key performance indicators such as growth in savings, loans, revenue generation and capital growth, a majority of Saccos had registered above inflation growth rates.
The was evidenced by a Reserve Bank of Malawi’s Financial Stability Report for December 2015 which said the sector remained sound during the six months period to September 2015 and for the first time the sector licenced a deposit taking microfinance institution.
According to Kadzola by close of last year, the total membership was 120 000 while total savings stood at K4.9 billion, representing a 25 percent growth over 2014 figures.
The institutional capital grew from K266 million in December 2014 to K668 million in December 2015. On the other hand, assets of the Sacco movement jumped from K5.4 billion in December 2014 to K6.6 billion by close of 2015. The Saccos put together had cumulative surplus of K465 million—a 33 percent increase over 2014 surplus.
Currently all Saccos are undergoing the process of statutory audits after which they are expected to have clean audits and be in a good position to declare decent dividends to their members.
A Finscope Malawi Consumer Survey of 2014 revealed that at least 1.6 million adults—approximately 16 percent—save through savings and loans groups.
In another development, Kadzola said the financial institution is expected to launch Msilikali Sacco, specifically designed for the Malawi Defence Forces, Chilungamo Sacco for the Judiciary and Kasupe Sacco for the Central Region Water Board.