Thirty of the 44 savings and credit corporative (Saccos) in the country have been licenced by the Reserve Bank of Malawi (RBM) after complying fully to new regulatory requirements while seven have been declared unfit and told to merge with other Saccos for their continuity.
And seven are still doing paper work to meet the RBM conditions.
Under the Financial Corporatives Act of 2011, the central bank is required to regulate Saccos and, among other things, ensure that all saccos in the country are licensed.
Malawi Savings and Credit Cooperatives (Musco) chief executive officer, Sylvester Kadzola, said the Saccos had a December 2015 deadline to comply and that the remaining ones have up to March this year to meet the conditions.
On the Saccos which have been told to merge with others, Kadzola gave an example of United Civil Servants Sacco in Karonga which she said, is working with Tikwere Sacco in the same district for a possible merger.
“We are working together with the Reserve Bank to make sure that the process is completed,” said Kadzola.
He said key conditions for compliance include having a qualified operations manager, setting up a banking hall fit for a financial institution and ensuring that the offices are in good order with adequate staff.
Commenting on the development, Mudi Sacco general manager, Triza Magreta, said the importance of saccos getting licencsed is that it increases levels of trust from the members as they know that institution they are dealing with is licensed by an authority such as RBM.
“At first, our members would just deal with us like an owners’ risk. But with RBM licensing, they feel safer entrusting their money with us,” said Magreta.
“Saccos are now accountable to the regulator which requires us to send periodic reports and help us through provision of proper direction,” she said.
At a meeting of the World Council of Credit Unions in Lilongwe recently, it was agreed, among other things, that credit cooperatives needed to comply with international standards.
Some of the recommendations were that the SACCOs should come up with new strategic plans, new by-laws and that smaller Saccos should merge either with bigger or other smaller saccos to achieve efficiency through maximization of use in available resources, liquidity, and enlargement of their balance sheets.