Minister of Trade and Industry Sosten Gwengwe has urged Savings and Credit Cooperatives (Saccos) in the country to consider pooling resources together into a bank for greater impact on society.
In an interview after opening the African Confederation of Cooperative Savings and Credit Associations (Accosca) Southern Regional Bloc Forum in Blantyre on Wednesday, Gwengwe proposed formation of a cooperative bank, where Saccos can be accessing extra-funding, instead of sourcing financing from commercial banks.
He said: “We would like to take a cue from Kenya, being a country that is doing well in cooperatives, and we would want our Saccos to come together to think of opening a bank.”
Malawi Union of Savings and Credit Cooperatives (Muscco) chief executive officer Fumbani Nyangulu said the idea of pooling resources together has been explored elsewhere and it has worked.
“For example, in the United States of America and Canada they have what they call ‘the central finance fund or liquidity fund’,” he said.
Nyangulu noted that while the central fund may not be called banks because of their cooperative approach, they will serve as alternative banks to the cooperatives.
He said Muscco is working towards “putting things in order” for the establishment of a common fund for Saccos.
In his remarks, Accosca executive director George Ombando said the Sacco financial model is the best for community development.
“Saving is not a function of income, you do not save because you have income. In fact, studies have shown that the people who are financially depressed are mostly people with high incomes. The people with lower incomes know how to manage their finances,” he said.
He encouraged people to save and plan their expenditure so that should they need to borrow money they should borrow from cooperatives and not loan sharks.
Malawi has 300 000 Sacco account holders, but Muscco is working towards increasing Sacco membership to one million by the year 2030.
The Accosca is holding its 7th Southern Regional Bloc Forum was held under the theme ‘Community Development and Growth Through Strengthening Sacco Network System’.
