Nkhatabay — Ministry of Civic Education and Community Development says village banks should embrace new standard village savings and loan associations (VSLAs) best practice guidelines to ensure sanity in the economic sector.
The ministry's Chief Economic Empowerment Officer, Victor Matayataya, said this Wednesday to extension workers and members of Nkhatabay District Council.
He was briefing them on the recently adopted best practices governing VSLAs and Community Savings and Investment Promotion (COMSIP) groups.
"A lot of VSLAs and COMSIP groups have operated in the country for so long but their levels of growth seem to be stagnant because they operate in an informal way.
"There are no set standards in which these groups can operate so that they graduate from the low level they are now to a higher one," Matayataya said.
The ministry is piloting the standard guidelines in Mwanza, Dedza and Nkhatabay districts to improve performance of the VSLAs widely known as village banks.
"We have had cases where people just decide to come together and start these groups without really knowing how they operate; in the end, there has been no growth and many problems emanate from such scenarios," Matayataya said.
He further said in the absence of government set standard guidelines the country has been failing to properly calculate its Growth Domestic Product (GDP) because most of the groups have huge sums of money that are not recorded since they operate in an informal sector.
"For example, recently the Reserve Bank of Malawi said VSLAs have about K2 billion which is not calculated in the country's GDP since the sector that these financial groups operate is informal hence difficult to track them down," Matayataya said.
Meanwhile, VSLAs and COMSIP consultant, Sophie Chitedze has hailed government for adopting the guidelines saying they would lay a solid foundation for the growth of savings and loan groups.
"These are internationally recognized guidelines; we hope savings groups at all levels will grow and graduate from where they are to other stages since some of the challenges that they were facing will be ironed out with the introduction of these practices.
"Apart from that, government will now properly take account of this sector because now it will be running in a legally accepted formal sector," she said.