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Sacco moratorium brings confusion

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There is confusion among industry players in the Savings and Credit Cooperatives (Sacco) over the three-month, case by case moratorium announced by Reserve Bank of Malawi Governor, Dalitso Kabambe, to help cushion members distressed by the Covid-19 pandemic.

Kabambe on Tuesday announced that the three-month moratorium on loans will be applied on case by case basis meaning members that would feel that they have been affected by Covid-19 would have to discuss with their respective cooperatives on how they could benefit from the facility.

But industry sources on Friday told The Daily Times that the pronouncement has seen a number of firms writing the Malawi Union of Savings and Corporatives (Muscco) that they would like their employees to enjoy the facility.

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Muscco Chief Executive Officer, Fumbani Nyangulu, in an interview confirmed the development, saying a number of firms have misunderstood the moratorium to mean a blanket relief on loan and interest repayment.

“As Muscco, we have advised Saccos that ‘case by case basis’ in this respect means that not all borrowers are on loan repayment holiday within the three months. It means only those borrowers whose income has been greatly affected by Covid-19 to the effect that they can hardly honour their loan and interest instalments during this period,” Nyangulu said.

He cited an example, Saccos in rural areas that give loans to farmers, saying this is the period that famers are harvesting and selling their produce and the farmers want to sell and repay their loans immediately otherwise they will misuse the money and fail to repay their loans after the three months period.

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“Thus, they will not access new loans for the next agricultural season. 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 they should come to the saccos to discuss the moratorium,” Nyangulu said.

He also urged Sacco members that have loans not to take advantage of the situation not to repay their loans as Sacco will need the same liquidity to advance loans to those critically affected during this difficult period.

Apart from the moratorium, Kabambe also announced that Saccos had agreed to defer all payments of dividends to shareholders until the risk of Covid-19 is under control.

Kabambe added that Saccos had agreed to suspend capital expenditures.

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