LILONGWE, Malawi — The parliament of Malawi last week passed the long-awaited Financial Cooperatives Bill designed to strengthen the position of the country's savings and credit cooperatives (SACCOs), or credit unions, and bring basic financial services to one of the poorest countries in world. Malawi President Bingu wa Mutharika is expected to sign the bill into law some time during the next 21 days.
"The passing of the Financial Cooperatives Bill heralds a new dawn in the development and growth of safe and sound SACCOs in Malawi," said World Council of Credit Unions (WOCCU) Director Sylvester Kadzola, chief executive officer of Malawi Union of Savings & Credit Co-operatives (MUSCCO), a WOCCU member organization. "It's an endorsement by the government that SACCOs are part of Malawi's overall financial system and therefore require an enabling regulatory regime."
New laws resulting from the bill's passage will help accelerate financial inclusion among Malawi's poor by strengthening the institutions, which enables them to offer more services, Kadzola said. "MUSCCO believes passage of the bill will facilitate the modernization of SACCOs as fully fledged financial intermediaries offering modern and technology-driven financial services," he added.
WOCCU officials were instrumental in helping draft the bill on behalf of Malawi's credit unions, working as part of a multi-national team to counsel both credit unions and governmental officials on the advantages that a strong cooperative sector can provide. WOCCU also met numerous times with parliamentarians and officials from the Reserve Bank of Malawi to lobby on behalf of the country's credit unions, and the association's endorsement helped convince officials of the strength and merit of Malawi's credit unions as part of a global network.
"This is the successful culmination of many years of effort and will give Malawi credit unions their first-ever stand alone piece of legislation," said Dave Grace, WOCCU senior vice president of association services and primary author of the act. "Strong and sustained development requires both institutional capacity building and an enabling environment with strong prudential supervision. The passage of the bill was an important step forward in this second area."
Parliamentarians who spoke in favor of the bill's passage last week said the measures contained within to increase SACCO services and reach were long overdue. The bill also contains the establishment of a deposit guarantee fund designed to strengthen the movement and build confidence among members.
"This means SACCOs will diversify their products, have ATMs and reduce operational costs," Minister of Industry and Trade Eunice Kazembe told The Daily Times newspaper. "This means more members, and more savings for investments and industrialization."
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 57,000 credit unions in 105 countries serve 217 million people. Learn more about World Council's impact around the world at www.woccu.org.