United Civil Servants Savings and Credit Cooperative (UCS Sacco) has said government’s delay to remit deductions from civil servants amounting to over K200 million has crippled the Sacco’s operations, forcing it into debt.
A financial statement indicating the financial position of the Sacco shows that as of December 31, 2016, it had an overdraft of K80 million.
The Sacco also borrowed K24.2 million in the year ending December 31 and had liabilities totalling to K374.3 million.
In an interview, UCS Sacco President, Fletcher Mhango, said the grouping was forced to borrow from the Malawi Union of Savings and Credit Cooperatives.
“As an institution, we have been failing to issue out loans to some of our members in time. This resulted into loss of trust in some members because they were not assisted when they wanted help,” Mhango said.
Mhango said while UCS Sacco made some gains on membership and an increase on its financial base, its surplus has been reduced due to the acquisition of Tikwere Sacco and delayed government remittances.
“We have not realised any surplus as we did last year because when we bought Tikwere Sacco, we incurred huge expenditures. The government’s delay to remit finances also affected our earnings,” Mhango explained.
The acquisition of Tikwere in July last year has raised the membership to 12,000 this year from last year’s 10,000.
The Sacco’s membership is made up of teachers drawn from its branches in the northern and central regions and has an asset base of K1.3 billion and a turnover of K400 million.
Treasury spokesperson, Alfred Kutengule, pushed back the blame to the Sacco, saying it is their responsibility to follow up on remittances.
“The government has been paying the remittances and it should be the Sacco’s responsibility to follow up the payment with relevant institutions including the Reserve Bank of Malawi since the payment system has been changed to electronic transfers,” Kutengule said
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