In an ideal world—that is, according to the African Confederation of Cooperative Savings and Credit Associations— savings and credit cooperatives (Saccos) play a key role in development efforts, maybe because they are regarded as “user-owned, user controlled and user-benefitted organisations”.
The confederation further describes a co-operative as an autonomous association of people united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise.
Because Saccos are regarded as pivotal to national development efforts, countries such as Kenya have regulatory authorities specifically for Saccos. A case in point is the Sacco Societies Regulatory Authority, which has been playing a key role in ensuring that Kenya Vision 2030 goals are met.
Malawi has not been lagging behind. Actually, I came across a document titled ‘Regulation of Financial Cooperatives: The Case of Malawi’. It is attributed to Mtchaisi Chintengo, Chief Examiner–Microfinance Institutions & Saccos, Reserve Bank of Malawi (RBM).
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Needless to say it is enlightening.
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The background reads: “Prior to 2010, Saccos, like all other cooperatives, were under the Ministry of Industry and Trade. An umbrella financial sector law, The Financial Services Act (FSA), was passed in 2010. The FSA appoints the Governor of the Reserve Bank of Malawi as the Registrar of all financial institutions. It also defines/designates Saccos as financial institutions, therefore making Saccos subject to regulation. In 2011, a Sacco specific legislation, the Financial Cooperatives Act, was passed.
“Beginning 2012 until early 2013, all Saccos that were already existing were given provisional licences. They [had] until March 2015 to meet the licencing requirements and apply for a substantive licence.”
As such, before March 2015, the Saccos were subject to quarterly reporting requirements, on-site examinations, registrar’s directions and enforcement actions.
Questions pertaining to who should regulate Saccos and financial institutions were well answered, too.
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“In Malawi, the Registrar of Financial Institutions, who is the Governor of the Reserve Bank of Malawi, is the regulatory authority for all financial institutions including financial cooperatives. It is the policy of the government to have one regulator for all financial institutions in order to leverage on financial resources, available knowledge, skills and information network for regulation and supervision of financial institutions.”
At the time the document I am referring to was released, the central bank was supervising 19 Saccos, with the 19 Saccos then accounting for 70 percent to 80 percent of the entire Sacco movements’ assets, loans and deposits.
“The supervision of all other Saccos is delegated to Muscco [Malawi Union of Savings and Credit Cooperatives] under an MoU [Memorandum of Understanding]. The ultimate responsibility for regulating these smaller Saccos still rests with the Registrar. Therefore, we work hand-in-hand with Muscco especially where enforcements of laws and regulations is concerned,” it reads.
I believe I have laid the foundation for what I want to say. What I want to say is that some Saccos in the country have started taking members for granted.
Maybe, to buttress my point, I should focus on one aspect, namely savings accounts that some Saccos manage for members.
Ostensibly because Saccos have grown and become influential in economic development efforts in Malawi, it pleased the regulator to give them a chance to be getting licences for operating savings accounts for members.
The idea is that, just like other financial institutions such as authorised dealer banks who manage people’s savings operate, Saccos that keep deposits would be making the money available to members and others at the time the people need the money.
Maybe I should, first, define a savings account. Union Bank of India indicates that a “savings account is a financial instrument held with numerous banks, wherein accountholders deposit money in their accounts and earn modest interests on it. People prefer these accounts because of their ease of use, safety, reliability, and liquidity. One can deposit money without any limitation and withdraw when required.”
Fine and well.
No wonder, when Malawi Saccos started running savings accounts for members, the hope among members was that they would be accessing their savings anytime they want, be it 24/7 using digital services or physically at the Sacco during working days and working hours.
However, I have it on authority that some Saccos in Malawi are failing to provide money to savers whenever members want the money for, say, emergencies. Instead, some of the Saccos are telling members who have savings accounts that “We do not have money. Come next time” or “call me on this number before you come to withdraw money to inquire if we, finally, have money to give you from your savings account”.
In other cases, some Saccos are telling members to use online platforms, promising to send them Pin numbers that, in some cases, take months to reach the members. Sometimes, money transfer processes get disrupted but, unfortunately, some people are finding that funds have been deducted from their Sacco accounts but the money is not reflecting in bank accounts or even mobile money platforms.
It is as if some Saccos are using digital platforms to buy time; that is, delay payment.
The question is: Why go digital when you have teething problems?
Anyway, I blame the regulator for letting some Saccos get away with murder. How, on earth, can a member wait for days or weeks just to withdraw money from a savings account? Where on earth does that happen.
Secondly, why should a member who wants to, say, withdraw K200,000 be ‘politely asked’ to withdraw half of that [that is, K100,000] simply because a Sacco has no money? My foot; it is a savings account we are talking about!
I wish the regulator intensified monitoring exercises instead of operating on trust. That [trusting others] does not always work in Malawi.
