MUSCCO: Malawi Union of Savings and Credit Cooperatives
Growth and lessons learned from financial cooperatives in Malawi
This paper details the growth of Malawi Union of Savings and Credit Cooperatives (MUSCO) and lists the lessons learnt from its experiences:
- Organizational Structures:
- For micro insurance to be viable in Africa it has to be integrated with other operations such as savings and credit;
- Distribution of the insurance service will have to be done through an existing organization, which already handles transactions with the working poor;
- Claims verification is done at the SACCO level to reduce the cost of claims underwriting;
- Viable microfinance would involve decentralization of claim preparation and verification to local organizations.
- Product Design:
- Mandatory insurance policies minimize administrative and processing costs;
- MUSCO has a simple life savings scheme, which is cost effective;
- Simple terms make it easier for clients to understand them.
- Actuarial Reviews:
- Actuarial reviews should be carried out regularly;
- Social changes that affect insurance need to be carefully observed;
- Actuarial reviews should specify how reserve funds should be amassed.
Other lessons are that:
- Micro insurance services should be applicable to local conditions;
- Activities in the area of nutrition and health should be undertaken by the insurer, in order to increase life expectancy and decrease the number of claims.
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