Officials from SACCO and CFI (credit union) associations across Africa shared experiences with managing liquidity and dividend payments, and the need for ongoing regulatory relief during an April 8 webinar organized by World Council of Credit Unions (WOCCU) and the African Confederation of Cooperative Savings and Credit Association (ACCOSCA).

World Council’s participation was led by the Technology and Innovation for Financial Inclusion (TIFI) Project team under the auspices of USAID’s Cooperative Development Program.

With SACCO/CFI members losing their jobs, the heads of several associations said less cash was coming into their institutions. That is resulting in less liquidity, forcing a slowdown in loans to small and medium enterprises (SMEs) and other businesses—leaving SACCOs to work hard to mitigate those effects.

George Ototo, Managing Director of the Kenya Union of Savings and Credit Co-operatives (KUSCCO), and a board director for both WOCCU and ACCOSCA, told attendees that because cash is at such a premium, they are working with SACCOs to gauge liquidity.

Liquidity is something Kenya’s market regulator is now requiring SACCOs to report on daily, to ensure the stability of the sector. Peter Njuguna, Chief Manager of SACCO Supervision for Kenya’s SACCO Societies Regulatory Authority (SASRA), said that along with daily liquidity checks his agency is:

• Conducting all SACCO audits online.
• Deferring SACCO inspections, originally scheduled for May, to a later date.
• Allowing SACCOs to continue paying rebates and dividends to members without holding Annual General Meetings (AGMs)—which are common this time of year.
• Guiding SACCOs to implement lending flexibility and maintain consistency when restructuring loans.

At the same time, SASRA is advocating to the telecommunications authority for SACCOs to have fees waived for mobile transactions—relief that has already been granted to banks. in Kenya. SASRA has also pushed to clarify that SACCOs have the designation of “Essential Services” in order to continue to serve their members despite curfews and other restrictions. The close collaboration between KUSCCO and the government is essential at this time.

“All APEX bodies need to have close communication with the regulator and work as a team,” said George Ototo.

Dickson Chidumu of the Reserve Bank of Malawi noted the challenges of operating under government restrictions like limits to gatherings. He noted that as the national government responds to the COVID-19 crisis, “SACCOs must be taken seriously as economic drivers of the country.” 

Malawi Union of Savings and Credit Cooperatives (MUSCCO) CEO Fumbani Nyangulu said the national government announced a number of issues its regulator should address for banks and SACCOs. The number one issue noted by the government is giving SACCOs the ability to pay dividends to members without holding an AGM.

Before the government directive, MUSCCO had begun discussing solutions with member SACCOs – including the development of loan products that carry lower interest rates to targeting at SMEs.

Credit union association officials and regulators from South Africa and Zimbabwe cited several similar issues facing the institutions in their own countries, describing the proactive ways they are monitoring the level of stress among credit unions and seeking to include credit unions in support for financial systems.

A poll conducted during the webinar found 40% of the attendees saying their national regulator had yet to provide any relief. Of the 60% who said they had gotten relief from their regulator, nearly half said it was in the form of permission to conduct virtual board meetings, while about one-third said their regulator was offering relief from reporting deadlines.

WOCCU Advocacy offers a roadmap for regulation

Andrew Price, World Council’s Vice President of Advocacy, presented a list of regulatory relief actions recommended by some of largest international standard setting bodies, including the Basel Committee on Banking Supervision and the International Accounting Standards Board.

He advised regulators on the webinar to follow the flexibility being afforded in those recommendations, while suggesting credit union associations in Africa push for the relief measures encouraged by those international bodies.

You can watch the full “COVID-19 Regulatory Advocacy Issues: Saving and Credit Co-operatives (SACCO) Strategies for Addressing Impacts from COVID-19" webinar by clicking here.