MADISON, Wis.–Seeking to effectively respond to the coronavirus pandemic, representatives 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 the World Council of Credit Unions and the African Confederation of Cooperative Savings and Credit Association.
The World Council said its participation was led by its Technology and Innovation for Financial Inclusion Project team under the auspices of USAID’s Cooperative Development Program.
According to WOCCU, with SACCO/CFI members losing their jobs, the heads of several associations reported 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,” WOCCU said.
George Ototo, managing director of the Kenya Union of Savings and Credit Co-operatives (KUSCCO) and a board member of both WOCCU and ACCOSCA, told attendees that because cash is at such a premium, the organizations are working with SACCOs to gauge liquidity, WOCCU reported.
“Liquidity is something Kenya’s market regulator is now requiring SACCOs to report on daily, to ensure the stability of the sector,” WOCCU said.
What One Regulator is Doing
According to the World Council, 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,” WOCCU said. “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.”
WOCCU added 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 Ototo.
Challenging Government Restrictions
Dickson Chidumu of the Reserve Bank of Malawi noted the challenges of operating under government restrictions such as limits to the size of 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.”
According to WOCCU, Malawi Union of Savings and Credit Cooperatives (MUSCCO) CEO Fumbani Nyangulu said the national government has 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,” WOCCU reported.
In addition, WOCCU said 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 said 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 reported.
A Roadmap for Regulation
During the webinar, Andrew Price, World Council’s VP-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.
The full webinar can be viewed by clicking here.