The Zambia Institute for Policy Analysis and Research (ZIPAR)’s study on the state of financial cooperatives in Zambia has revealed that Financial Cooperatives have the potential to increase financial inclusion in Zambia if properly managed.
Funded by the Rural Finance Expansion Programme (RUFEP), under the Rural Equity and Innovation Window of the Innovation and Outreach Facility, ZIPAR conducted a study entitled ‘State of Financial Cooperatives in Zambia: A viable option for increasing financial inclusion’ between 2017 and 2018.
Speaking during the Study Dissemination Media Breakfast held on the 9th April, 2019 at Pamodzi Hotel, ZIPAR Executive Director Dr. Pamela Nakamba Kabaso disclosed that the study reveals huge potential for Financial Cooperatives to increase financial inclusion.
“Some of the Financial Cooperatives operates as banks and contributes significantly to overall economic growth. However one of the challenges identified by the study is that the current legal framework constrains the growth of the sector”, Dr. Kabaso revealed.
She added that the study was useful to the current discussions on the Cooperatives Bill which seeks to amend the Cooperative Act.
Dr. Kabaso appealed to the government to adopt the recommendations in the study to revive the Financial Cooperatives in Zambia among them; the need to revise the Cooperatives Act to ensure the new regulatory framework is user friendly and supports the growth of the sector rather than constraining it.
Speaking earlier Ministry of Commerce, Trade and Industry (MCTI) Director of Cooperatives Shadrech Mungalaba said the study provides useful information about Savings and Credit Cooperatives (SACCOS) for policy makers and identifies opportunities for capacity building and investment in the sector.
Mr. Mungalaba thanked RUFEP for providing financial support to ZIPAR for the study adding that the review of the current status of the cooperatives was necessary as the mandate had moved from the Ministry of Agriculture to a different ministry (MCTI)) following the pronouncement by His Excellency President Edgar Chagwa Lungu.
RUFEP National Technical Advisor Caiaphas Habasonda thanked ZIPAR for successfully conducting the study adding that the study was an important element in the financial inclusion agenda.
Mr. Habasonda said RUFEP was hopeful that the results of the study will contribute to the Programme’s Theory of Change which aims to increase access to and use of sustainable financial services by rural people for improved livelihoods and sustainable economic growth.
And speaking during an open discussion, Registrar of Cooperatives Mr. Justin Mwansa disclosed that the proposed legal framework which has been submitted to the Ministry of Justice has already taken into account some recommendations in the study such as the need to review the Cooperative Act.
Other recommendations by the study included the need to enhance the capacity of the National Association of Savings and Credit Unions (NASCU) to provide support services to Financial Cooperatives (FCs) and the urgent need for government to improve its data base and general tracking of FCs.
Click below for the Policy Brief with more details about the study