LILONGWE, Republic of Malawi – The credit union movement in Malawi faces problems that U.S. credit union leagues couldn't even begin to imagine. However, the Malawi Union of Savings and Credit Cooperatives (MUSCCOGM) still keeps plugging. Headed by Sylvester Kadzola as their Chief Executive, MUSCCOGM has 53 people who oversee 111 credit unions with 67,000 members. If that seems a high ratio, it isn't because of the problems they encounter. "Overseeing" is very labor intensive. MUSCCOGM isn't complaining. The number of credit unions in Malawi grew in 2000 thanks to a major drive to sign up new groups as a way to help farmers financially. The success of the drive demonstrated that the need is there. Most of the new groups are in rural areas where 90% of the population live. The factors of rapid growth and distance combine to make the need to consolidate and develop what exist more critical. Malawi is a small landlocked country, only about 118,480-sq. km. of which 24,400 sq. km. are water. Most of the population survive, but just barely, by farming. Since most of the population live in rural areas, getting to them is not like driving down a modern turnpike, but going through rough terrain. The country is still recovering after massive spring floods in 2001, when a majority of the citizens lost everything: crops, livestock, homes. Kadzola said it was the worst flood the country has ever seen. For people whose per capita income is less than $200 a year, to lose what little they had, is worse. And although there are people who are slightly well off, by any industrialized country's standards, they are still desperately poor. Hunger has become a major problem as a result of the floods. The economic situation in this country isn't helping. There is a 35% inflation rate, hitting what real income there is very hard. Financial institutions, such as they are, just are not available to the rural poor. For those that can borrow money, interest rates can be as high as 50%. Deposits might earn 1%, which makes great margins for the lender. It also means that credit unions can easily be better service providers. To handle the work generated by the credit unions, MUSCCOGM has divided the country into three regions, North, South and Central with representatives assigned to each area. Ten years ago the situation was far better. The government owned or controlled the property. Tobacco was a major product and other high value crops were maize and tea. However, that has changed. Dr. Barbara Hagaman, an anthropologist who has done development work in four African countries, has pointed out the following problem with many micro-financing schemes that are sponsored by different aid agencies: they may develop small businesses, create products that are needed, but when they market those products, no one can afford to buy them. This is also true with the credit unions in the country. Although self-financing is always the goal of a credit union, at a certain poverty level, it is impossible for anyone to save. As a result MUSCCOGM often provides the money for loans. Yet it is almost a miracle that MUSCCOGM can report that credit unions have $4 million in savings, which gives Kadzola hope of providing a real help to his people. This accomplishment is outstanding considering how little people have. Kadzola says the most common loan is seasonal. From September to December people need to buy fertilizer. They pay the money back when their crops are sold at harvest. Seventy percent of credit union loans are agricultural. Again this is a huge difference from loans in more industrialized countries. Hands on help is needed as well by the fledgling credit unions. Kadzola says there is no lack of enthusiasm, but that alone is not enough. Bookkeeping knowledge is essential. Without that MUSCCOGM is unable to reduce its involvement making the new credit unions more independent, which is the final goal. Hired and trained staff is necessary, but finding skilled employees and funding their salaries represents another uphill battle. One of the World Council of Credit Union's (WOCCU) beliefs is that there has to be a legal structure for credit unions to meet their full potential. To date the Malawi government has taken a neutral stance toward credit unions. A cooperative act was passed in 1999, but there needs to be more work done. MUSSCOGM has representation with the government and will fight the necessary battles. Corporations hopefully at some point will play an important roll in development. Corporations may be in the cities, but they are not a big part of the country life. Businesses can offer structure, Kadzola told Credit Union Times. Until then the league must fill the void. Although Malawi has been settled since 8000 B.C., it was only in 1891 that it became a country in the western sense as the British protectorate of Nyasaland. They achieved independence and took the name Malawi in 1964. After three decades of one-party rule, the country held multiparty elections in 1994 under a provisional constitution, which took full effect in 1995. It is still a developing country. There are many problems as well faced by the nation that affect the economic development: deforestation, land degradation, water pollution from agricultural runoff, sewage, industrial wastes which endanger not just agriculture but fish populations. One of the gravest is AIDS which is cutting a wide swath through the population. Kadzola, who is a graduate of the University of Malawi, was in private business before becoming MUSSCOGM CEO in 1997. He said he is hoping that a credit union or league in the U.S. will read this article and decide to twin with his league or individual credit unions. Although they do receive help from USAID, the U.S.'s major aid agency, Kadzola hopes one day to be independent. Kadzola serves on the board of the World Council of Credit Unions, and each time he attends a meeting, he worries that he won't gather enough information from others that justifies the expense. To date this hasn't happened. The meetings also give him a chance to tell others about what is happening in Malawi as well as contribute to the world movement. Kadzola doesn't consider himself a Don Quixote tilting at windmills. His dream of his people having access to affordable financial services to help raise their standard of living is a possible dream, it is just a dream which requires an extraordinary amount of work and devotion. -

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