Malawi Savings and Credit Cooperatives (Muscco) and Reserve Bank of Malawi (RBM) have said the country’s credit cooperatives, if well nurtured, can be part of the solution to the economic woes currently gripping the country.
Muscco chief executive officer Sylvester Kadzola said in an interview in Lilongwe this week it is imperative that the environment in which Savings and Credit Cooperatives (Saccos) are operating in be improved for them to serve Malawians better.
He said much as Saccos are doing well in terms of growing assets, loan portfolio and increasing share capital, Muscco would appreciate if the economic environment is ‘cleaned.’
“Some of the Saccos are organised in companies or statutory corporations. But sometimes you hear of restructuring of companies or people being laid off. If people are laid off, it means the Sacco loses out because those people were Sacco members,” said Kadzola.
He decried the tendency by Capital Hill not to remit deductions from civil servants that are Sacco members.
Said Kadzola: “The issue of payroll deduction has been a major concern to many. What is the point when you deduct my money and it never goes to my Sacco?
“When I go to my Sacco to request for a loan, the Sacco cannot give me a loan because the money is still at Capital Hill.”
He estimated that government still owes Saccos about K200 million ($363,636) in unremitted deductions which, he said, if reinvested in loan portfolios could make an impact on the growth of Saccos.
Kadzola said currently, about K6.5 billion is revolving within the Sacco movement, a figure he said could be higher if more Malawians embraced the Sacco movement.
RBM director of micro finance and capital markets supervision Hastings Mzoma said Saccos are better placed to play a pivotal role in the economic growth of the country just as is the case in other countries.
“When you look at banks, usually they relate to the middle [class] and elite, but Saccos transcend everywhere from the elite to the middle class people to the poor.
“If Saccos do the right thing, and if well supported and regulated, I am sure that they can compete with banks and that is what RBM wants,” he said.
Figures show that Malawi has 48 Saccos with a combined membership of below 100 000 against an active population of between six and seven million Malawians.