Malawi union of savings and credit cooperatives project

PES covers the period 9/80-10/83 and is based on an attached special evaluation, XD-AAP-086-A, from which detail has been added. Despite a year"s delay in staffing, a central CU, the Malawi Union of Savings and Credit Cooperatives (MUSCCO), has been successfully established with a functional board of directors and an effective staff, including 3 field officers. MUSCCO has fostered increases in: member CU"s, from 24 to 39 (with 39 the target); membership, from 7,742 to 11,000 (vs. a targeted 16,000); member savings, from MW363,000 to MW544,000 (vs. a targeted 1,044,100); and family beneficiaries, from 37,140 to 54,955 (vs. a targeted 81,065). Although no loans have yet been disbursed, 11 have been approved and sent to the Ministry of Trade, Industry, and Tourism for concurrence. Recently, MUSCCO sent the first bills for annual membership dues to 30 CU"s. Training has been provided to: MUSCCO field officers in CU management, bookkeeping, and accounting; MUSCCO"s assistant general manager in risk management; and CU committee members and boards of directors both on-the-job (by field officers) and in local, regional, and national seminars on risk management, bookkeeping, etc. However, member CU shares in the MUSCCO central fund (established to finance institutional loans and generate MUSCCO revenues) have been only 12% of target and earned income only 10%; it is doubtful that MUSCCO will be able to finance 35% of its operating costs by project end as planned. CU savings/loan activity (and MUSCCO income generation) have been hampered by: lack of trust in the CU system by current/potential members; MUSCCO failure to research, promote, and grant institutional development loans; overly restrictive MUSCCO lending policies and lax collection procedures resulting in a high loan default rate (from the pre-existing lending society portfolio). Long-term MUSCCO viability is dependent on CU capacity to grow by generating local savings. Also, latent loan demand should be studied, more women involved, and mediation provided to solve a public relations problem in the north. Nineteen action decisions are given.