Ikwera SACCO Archives - The Uhuru Institute for Social Development

SACCOs Tipped On Playbook For Success

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KWANIA – Cooperatives should follow a basic playbook for success which has a blend of good financial character and good governance, Patrick Bura, the District Principal Commercial Officer of Kwania, has said.

Bura offered the management tip while officiating at the recent Annual General Meeting (AGM) of Ikwera Co-operative Savings and Credit Society Ltd at Aduku town council in the northern district of Kwania.

The AGM was attended by about 900 members from the sub-counties of Abongomola, Nambieso, Chawente, Inomo, Akali, Ayabi, Atongtidi and Aduku.

On the same day, Ikwera SACCO elected a new board to run its affairs for the next four years.

Robert Odur, the former SACCO chairperson retained his job, Acayo Molly Grace is the new vice chairperson, Sister Molly Grace (treasurer), and Opio Nam Joseph (general secretary).

Awor Dilish, Adupa Bilington, Lawrence Etin, Ngu Jasper, and Ocaka Sarafina were elected members of the committee.

SACCO delegates elected

The meeting also elected 22 SACCO delegates representing 11 sub-counties in Kwania district.

“It is the duty of the delegates to formally and informally educate the SACCO members. It is their duty to spread the SACCO gospel to potential members.” Bura said.

A 2019 forensic audit found that Ikwera SACCO had made a loss of Shs 245m after unknown assailants broke into its premises and stole members’ savings. A security guard identified as Bonny Doi was arrested.

https://thecooperator.news/saccos-urged-to-embrace-tech-digital-lending/

“The robbery took place amidst loud sounds of door breaking, safe dismantling and wall digging at night but Doi, the SACCO’s security guard, failed to make an alarm or call police officers at Kwania police station, which is less than 500 meters away,” Felix Oguna, the SACCO manager said, adding, “that prompted his arrest, investigations are ongoing although we have not recovered the money.”

Bura however, urged the new board to ensure good governance, which includes having credible leadership that implements good management practices.

“Given the turbulence it has had before, the SACCO is now on track. But it can only keep on track if the board is not selfish and practices good corporate governance,” he said.

He said a strong foundation for any cooperative starts with leaders who are willing to dedicate their time and resources to developing the SACCO.

“Your SACCO’s philosophy is savings and credit so members must be ready to save and save regularly to be able to access credit, which they must repay in time.” he explained.

George KK Akaca, the Aduku Town Council area councilor, urged prudence in appraising individual loan applications to avoid lending money to defaulters.

“Poor appraisal of loan applicants by loans officers has led to the collapse of many cooperatives,” he warned. He said a proper appraisal should take into consideration the applicant’s assets and carefully record their addresses.

“Otherwise, in no time you will find that they have gone bankrupt, or you cannot trace them, and it would be very hard for the SACCO to recover its money,” he said.

Growing SACCO

According to Ikwera SACCO’s General Manager, Felix Oguna, the SACCO, which was started in 2010, currently has 1,129 members.

The SACCO’s loan portfolio shot from Shs 540m to Shs 762m last year. It projects to have saved at least Shs 900m by the end of 2021.

“The SACCO has a number of challenges which include poor loan recovery, delay in loan payment, limited loan fund and high cost security provision among others, but now that we have the delegates in place, slowly the problems will come to an end,” Oguna said.

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Struggling SACCO Appeals For Bailout

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HOIMA – A struggling Teachers’ Saving and Credit Co-operative Society (SACCO) in Hoima Oil City is appealing for a government financial bailout – with good reason.

The 175 member Hoima Municipality Teachers SACCO which started in 2018 offers cheap loans of at least 8% interest rate to only government teachers.

There are about 500 government teachers in Hoima city.

Moses Ayebale, the SACCO chairman, said the SACCO is struggling to grow because it lacks funds.

https://thecooperator.news/hoima-elders-stuck-with-two-year-old-sacco/

He said the SACCO was fully registered in February 2019 and has saved over Shs 10 million but the teachers’ demands for loans outstrip its savings.

Ayebale said the high office rent, payment of staff, lack of furniture and other office equipment such as computers are crippling the SACCO.

“We had employed a full time manager but because of inadequate funds to pay him we agreed that he should work three days a week,” Ayabale said.

He said the government should invest in the struggling SACCO to help teachers turnaround their livelihoods and avoid expensive bank loans. He also urged the government to get experts to train them in skills and knowledge of managing the SACCO.

“If the government injects money in our SACCO, we shall be able to meet the teachers’ high demand for loans. And again, there is no harm if the government can provide us with experts to monitor this SACCO. If they can convene a meeting, train us and provide us with tools, it will help us manage our SACCO because we teachers, are not trained in financial management,” he said.

Ayebale said they managed to lobby for Shs 65 million from the government salary loans kitty of Shs 25 billion injected in Walimu Sacco. He said 12 teachers out of the 30 corded within Hoima city have already benefited from the funds.

“To be corded, one must be an active member of the SACCO and on the government payroll. The recovery of the Shs 65 million is good because it only benefits corded teachers. The teachers benefiting from Walimu SACCO salary loans pay 15% interest and 7% of the 15% is given to our SACCO.” he said.

He added that the SACCO expects to get another Shs 200 million from Walimu once the borrowed Shs 65 million is recovered.

Johnson Kusiima Baigana, the Hoima City Principal Education Officer, said the SACCO will save teachers from acquiring high interest loans from banks, which pile pressure on them.

“You find a teacher having loans in more than one bank with high interest rates. When they fail to pay, banks start harassing and chasing them around like thieves. This affects their concentration in class because they are looking out of the window to see who comes into the school. They are ready to take off,” he said.

“The government has a hand in this Teachers’ SACCO because its the government through our president, that encouraged teachers to form SACCOs and even injected billions of shillings in Walimu SACCO to save them from borrowing from banks.” he said, adding that, “We thought our SACCO was going to get soft loans for teachers but we found some challenges at the national level, they have not kept their promises because money is not flowing as we expected.”

“We are going to engage Walimu SACCO managers to find out what went wrong because teachers apply for the money and they get no response.” he said.

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Fuel Theft Derails Oil Roads Construction

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KIKUUBE – A steep rise in the theft of cement and hundreds of litres of fuel from Chinese road contractor; China Railway Seventh Group (CRSG) threatens to derail completion of the on-going construction of the Shs 500 billion ,97 kilometer, oil roads project in the Albertine Graben region.

In 2018, the government contracted China Railway Seventh Group (CRSG) to tarmac the 25 kilometer Hohwa-Nyairongo-Kyarushesha-Butole Road, Kabaale-Kizirabfumbi road (25kms) and the 47 kilometer Masindi-Biiso road.

Overwhelmed by the persistent fuel thefts, an CRSG official recently petitioned Kikuube Resident District Commissioner Amlan Tumusime to intervene and stop the escalating vice.

Ambrose Atwine, the company spokesperson, said CRSG is overwhelmed by the problem.

According to information from CRSG, the company loses about 4,500 litres of fuel worth over Shs 162 million to fuel thieves per month, which translates to over Shs 1.3 billion every year.

Charles Muhangi, a maize farmer and cattle keeper in Kyarushesha village in Kyangwali sub-county, said security must intervene and stop the fuel theft.

https://thecooperator.news/market-vendors-tipped-on-sacco-formation/

“We farmers have suffered with poor roads for a long time. It has been very difficult to transport our produce from here to the markets, so when we hear someone sabotaging the construction of these roads, we get concerned because they mean a lot to us,” he said.

RDC Amlan Tumusime said stealing road construction materials was becoming a serious challenge to government projects.

He said government officials including police officers were involved in the theft.

Tumusime said they are investigating several police officers implicated in the theft.

“Several police officers who have been singled will soon have tough measures taken against them and they have started recording statements” he said, adding that the suspected officers have been conniving with truck drivers to siphon fuel from CRSG trucks and sell it in jerrycans.

Fuel thieves connive with company truck drivers to siphon fuel from trucks. The stolen fuel is sold in Hoima, Masindi and Kampala.

Tumusime said spy networks have helped pin down the suspects.

Speaking to theCooperator last Monday, Tumusime said over 10 thugs were arrested, produced in courts of law, charged and remanded last month.

He said the district has managed to impound two vehicles used by thieves to transport the stolen fuel last month and this month.

Vehicle registration number UAD 189K Toyota Corona and Premio registration number UAS 609N were impounded in an impromptu security operation.

The culprits allegedly fled and abandoned the vehicles when security stormed. The vehicles are currently parked at Kikuube central police station.

He said over 10 jerrycans of siphoned fuel, 10 drums and a pipe used to siphon the fuel were also impounded during the operation.

“We first sensitized the community and educated them that these projects benefit them and not the Chinese. I am very happy that the community was empowered and whenever they see anybody stealing fuel, they call us and this has helped us to curb this challenge,” he said.

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Masindi Demands New Modern Market

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MASINDI – A heave of frustration and anger is boiling over in Masindi Municipality as vendors lash out at the delayed construction of a new modern market under the Markets and Agriculture Trade Improvement Project (MATIP).

All the riled vendors are allied to Masindi Central SACCO and Masindi Central Market Vendors Association.

David Asiimwe, the chairman of Masindi Central Vendors’ Association, said all requirements were met yet the project is not taking off.

“We have enough land measuring five acres and it’s free from encumbrances. We also want to operate in a good market. Masindi is one of the traditional districts but we are wondering why it has never benefited from this project yet other traditional districts have benefited,” he said.

Asiimwe said the market is in a sorry state.

“We operate in darkness because lights are not enough. We also have a problem of thieves who steal vendors’ items. All the gates are dilapidated, thieves easily break in and steal vendors’ properties,” Asiimwe said.

There’s only one security guard yet the market has five gates, he said.

Asiimwe said too many vendors are jostling for the small, crowded space in the market.

“This can be addressed when a modern market is built. Right now the congestion is uncontrollable. That is why we are calling upon government to expedite the process (of building a modern market). This market was not well planned, that’s why we cannot all fit in here,” he said.

According to Asiimwe, the market has over 2,000 vendors; food handlers, old clothes sellers and fish mongers.

Kenneth Bitaroho, a fish monger, said he is disappointed to see Masindi District lagging behind on development yet other districts have become cities.

“Our leaders promised that the project would commence this financial year but we are seeing the year ending without any development. They keep saying next financial year but nothing happens. If other districts have gotten modern markets, why not Masindi?” Bitaroho asked.

Lamura Kabasindi, a vendor in Masindi Central Market, said when it rains, customers avoid the market.

“Whenever it rains, the market becomes muddy and sometimes it floods. How can a customer come to such a market?” she said.

James Masaba, the chairperson of Masindi Central Market, said SACCO officials who run the market are ashamed to collect dues from vendors working in such a bad situation.

He said vendors run the risk of contracting diseases like diarrhea, dysentery and cholera due to poor hygiene and poor garbage disposal.

“We only have one stance latrine to cater for over 2,000 vendors. This latrine is not enough for the whole population. But all these challenges can be addressed when we get a modern market,” he said.

According to district elders, Masindi Central Market started with makeshift structures in the 1920s. It was later taken over by government in the 1970s.

https://thecooperator.news/masindi-central-market-vendors-revive-sacco-after-5-year-break/

“The first people who embraced it were the Nubians who would sell pancakes and rolled simsim,” Abiasali Kasingwa, 88, said.

On March 23 2020, the Permanent Secretary Ministry of Local Government Ben Kumamanya wrote to the Town Clerk Masindi Municipality, saying; “Masindi Central Market in Masindi municipality has been considered for re-development and as part of the prerequisite for executing the program, you are required to submit the following; a copy of the land title where the market is located, a copy of the register of vendors and a copy of the management structure.”

According to the letter, Masindi Municipal Council authorities were supposed to send the documents not later than April 17th 2020.

Kumumanya promised that the market would be constructed during the 2020/2021 financial year under the Markets and Agricultural Trade Improvement Project (MATIP).

The ministry letter raised lots of hope among vendors only to be dampened later.

Haruna Ismail Irumba, the councilor representing the Civic Ward in the municipality, blames Masindi mayor, the town clerk and the area member of parliament for not following up the matter aggressively.

“We were told that they needed a land title for the project to begin. We secured it two years back but nothing is taking off. I think the delay can be blamed on the laxity of our leaders here because everything required was done long time ago,” Irumba explained.

Interviewed for a comment, Deo Kabugo, the town clerk Masindi Municipality, told theCooperator that he went to the ministry two weeks ago.

“I was told they had advertised for a consultant to do the architectural design. All the required documents were sent. The people of Masindi should be rest assured that they will get the market since it’s already in the process,” he said.

The new mayor for Masindi Municipality Ronald Kyomuhendo Busingye said his team met the Minister of Finance Matia Kasaija who assured them the market will be rebuilt.

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Microfinance Institutions In Trouble In Kwania

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KWANIA –In Kwania and Apac Northern districts Savings and Credit Co-operative Societies (SACCOs) have become the preferred go-to lenders threatening to lock out microfinance institutions.

The SACCOs are drawing in huge numbers of civil servants who ordinarily are clients of microfinance institutions.

SACCO leaders in the two districts have agreed to bolster the inter-SACCO lending market by lending and borrowing money from each other – thereby locking out microfinance institutions whose loans are considered ‘expensive.’

Under the new arrangement, 11-SACCOs in the two districts will run their own inter-SACCO market. They will be able to lend and borrow from each other at reasonable interest rates to offset their dire financial positions.

Their proposed working arrangement has been forwarded to the Ministry of Trade, Industry and Cooperatives for legal advice.

Robert Odur, the Chairman Board of Directors of Ikwera SACCO in Kwania district, said the latest move is bound to put an end to the exploitative commercial relationship between civil servants and microfinance institutions, which is costly to many borrowers.

According to Odur, many civil servants are shunning the expensive microfinance loans.

“We want to create a forum through which SACCOs can interact. For example, if SACCO ‘A’ has a cash flow problem it should be able to access funding from SACCO ‘B’. It just allows SACCOs to team up and develop their capacity to serve their members. The current situation is that if your SACCO runs short of money the only place you can go to is the nearby SACCO to save civil servants from microfinance lending institutions,” Odur said in a recent interview.

Bazil Odongo, a livestock dealer and resident of Ololango Village in Apac district, said he borrowed Shs 25 million in October last year at an 8% interest rate from Acanpekun Credit and Cooperative Society in the district. Odongo said he has serviced the loan well and is making a lot of profit.

“Shs 25 million that I used to borrow from Platinum (microfinance) at an interest rate of 10% could earn me a profit of Shs 5 million, but when I opted to borrow the same amount from the SACCO, I started realizing a profit of Shs 10 million. That is why I am expanding my livestock business,” he said.

William Odoc, a teacher at Acungi primary school in Kwania district, said many teachers are turning to SACCOs.

https://thecooperator.news/budget-kwania-cooperatives-get-shs-89m/

He said microfinance institutions make unnecessary deductions on teachers’ salaries even after loans are repaid.

“It is better to acquire loans from SACCOs, it’s easy to access and repay unlike the microfinance lending institutions that are fond of making unnecessary deductions and chasing after defaulting customers,” he noted.

But Patrick Okullo, the manager Platinum Apac branch, dismissed as false claims that microfinance institutions make unnecessary deductions and chase after debtors. “In the financial year 2018/2020 our loan portfolio was at the tune of Shs 300 million, however, in the financial year 2019/2020 we realized a drop of up to Shs 180m, this is partly attributed to the Covid-19 pandemic. Although to some extent we think the coming up of SACCOs is equally doing us more harm,” he said.

Apac District Local Government currently has a total of six fully registered SACCOs with 1,512 Village Saving Lending Associations, (VSLA) and three Microfinance institutions that include; Brac, Platinum and, Bayport operating in the two districts of Apac and Kwania, with over 15,000 clients.

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SACCO Leaders Shun Management Training

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HOIMA – Last week Hoima City and the district leadership scheduled two weeks of training sessions in financial literacy for all SACCO leaders that lack basic money management knowledge but surprisingly they were shunned by many.

Speaking to theCooperator Joy Kabatalya, the Emyooga focal person, said the training sessions were meant to equip SACCO leaders with financial management skills and help them understand the concept of the Presidential Initiative On Job And Wealth Creation (Emyooga).

She said city and district leaders also wanted to equip SACCO leaders with knowledge and skills in SACCO management to ensure sustainability and avoid misappropriation of funds.

According to her, the trainings are conducted at the respective sub county/division headquarters but unfortunately many have shunned the sessions.

She said only 30 out of 72 SACCO leaders turned up.

Kabatalya warned that members who shun financial literacy training will not access funds since the training is a mandatory condition for accessing the funds.

“We were training them as one way of preparing them before accessing this money to understand the do’s and don’ts of this initiative, to avoid what is happening in other districts where SACCPO leaders are embezzling the money but most of the leaders have decided to shun the training,” she said.

She also decried the poor saving culture among SACCO members yet they must save at least 30 percent of the money they apply for to be eligible for the Emyooga loans.

Kabatalya said the condition is forcing some SACCO members to withdraw their membership, which is detrimental to the future of SACCOs.

In the same week Hoima district and city authorities led by Samuel Kisembo Hoima, the Resident City Commissioner, released 62 SACCO certificates out of 72, which were formed from1,460 Emyooga associations.

https://thecooperator.news/anger-in-hoima-as-leaders-cling-on-to-emyooga-cash/

However, after handing over the certificates, the SACCO leaders were told they will not access the money until they get financial literacy empowerment. Hoima district and city received Shs 2.24 billion to be disbursed to 72 SACCOs.

John Tumusiime, the Hoima District Commercial Officer, said financial literacy training is mandatory because it will help beneficiaries to ensure that Emyooga cash, which is meant to be a revolving fund, is used sustainably.

“You need to put in place measures to ensure that the systems and structures of the SACCOs and associations are strengthened. For example, you need to have proper records, offices, which are independent from individual members’ businesses, and staff with basic qualifications,” he advised.

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SACCOs urged to embrace tech, digital lending

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Savings and Credit Cooperative Societies (SACCOs) have been urged to embrace the latest technological innovations in order to catch up with market trends and safeguard their market share.

Speaking during a one-week training of Ikwera SACCO Members, held in Aduku town council, Kwania district, the former Land Minister Daniel Omara Atubu rallied the SACCO Members to join the digital lending space, especially with the coming of mobile money.

“Technology is reshaping the financial industry forcing SACCOs to match up with the trend or risk being left out. Let’s utilize mobile money for conducting business and embrace digital loans to provide quick cash to members through mobile money wallets. Entry into digital loan platforms will safeguard the market flooded by independent digital lenders such as Commercial banks,” Omara, an Economist, noted.

Geoffrey Okello, a senior accountant at the Uganda College of Commerce, Aduku, underscored the security that digital transactions offer.

“It would protect you from the danger of being targeted by thugs after withdrawing your money from the bank,” he said.

For his part, Kwania District Commercial Officer, Patrick Bura, urged the SACCO members to appoint knowledgeable leaders who can guide them on how to make the best use of their resources.

Ikwera SACCO Ltd Manager, Robert Odur, said plans are underway to integrate the SACCO members into available digital platforms, noting that it would be one way to extend financial inclusion to the unbanked.

“We need innovative ways to bring the unbanked population into the formal financial system,” Odur said.

Ikwera SACCO Ltd., established in 2009 is fully registered with the Ministry of Trade Industry and Cooperatives. However, despite having 1,037 members and growing, and a current portfolio of over Shs 300m, the SACCO is as yet not enrolled on the Mobile money system.

The Uganda Finscope survey for 2018- a periodic study of the country’s financial sector since 2006-indicates a sharp increase in the number of Ugandans who use financial services.

The total value of mobile money transactions grew from Shs 37.4 tn ($9.7 bn) in June 2016 to Shs 79.8 tn (USD 20.7 bn) in FY 2019/2020, according to Bank of Uganda data.

The survey also found that 50 percent of savers, which works out to five million adults, save informally with village savings and credit associations and trusted community members.

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Microfinance minister to promote Emyooga products

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The Minister of State for Micro-Finance & Small Enterprises, Hon. Haruna Kasolo Kyeyune has pledged to create a department within the Microfinance Support Centre to expand the market base for products produced under the Emyooga scheme.

Kasolo made the pledge last Friday while visiting Emyooga SACCOs in Mbarara after Immaculate Tumuhimbise, the Chairperson of Mbarara City South Women Entrepreneurs’ SACCO raised concerns over potential overproduction by Emyooga enterprises with no ready market for their products.

“People should not produce and fail to find a market. I will propose to the cabinet that funds be set aside to help in marketing and research for Emyooga products,” the minister promised.

He encouraged the entrepreneurs to be innovative and to produce attractive products that will be competitive in the international market.

“I implore Emyooga members to be innovative and creative such that when you make a product, say a bag, it is as good in quality as those made from established markets like China.”

He also cautioned prudence in managing their capital resources.

“You are not supposed to overspend; create cheap capital within the informal sector because you may find it difficult to access credit from commercial banks,” Kasolo advised.

Robert Mpakibi, the Assistant Registrar of co-operatives confirmed that 32 out of 36 registered Emyooga SACCOs in the district have already accessed money under the initiative.

Impressive savings

Meanwhile, Phiona Aheebwa, the Front Desk Officer at the Microfinance Support Centre Ltd (MSC) was impressed by the saving culture demonstrated by Mbarara City South Women Entrepreneurs SACCO.

The 202-member SACCO has already saved Shs 38m since November 18, last year, bringing its total capital to Shs 68m after adding the Shs 30m Emyooga cash from MSC, revealed SACCO Chairperson, Tumuhimbise.

Aheebwa appealed to members to maintain the savings culture and promised that if they are consistent, they could benefit from a bigger loan facility from the MSC in the future.

“If members keep taking and paying their loans well, as MSC we shall make sure that we add more money in the project at a small interest rate, depending on the performance,” she said.

Aheebwa recommended that Mbarara City South Women Entrepreneurs SACCO apply for more money from MSC should the need arise.

“If you need more money, whether it’s 100m or 300m, I will recommend that you receive it from the Microfinance Support Centre. What matters is the members to grow but not for the SACCO to build magnificent buildings,” says Aheebwa

She encouraged the Commercial Officers to continue training Emyooga members for the program to benefit the entire country.

Mbarara district, comprising of Kashari North and South, received a total of Shs 1.12 bn to cater for 36 SACCOs at constituency level, while Mbarara City received Shs 1 bn also for 36 SACCOs.

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Kabarole: Kitojo Care SACCO holds first AGM after COVID-19 setback

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Kitojo Care SACCO in Kabarole district has held its Annual General Meeting (AGM) this week, after missing out on holding one in 2020.

While cooperatives are required by law to hold an AGM every year, Kitojo Care SACCO, like many others countrywide, was unable to fulfill this obligation last year due to the COVID-19 pandemic that resulted in a temporary suspension of all manner of public gatherings.

Moreover, the SACCO saw its savings and loan portfolios take a hit as most of its members were constrained in conducting their business as a result of restrictions imposed by the government to limit the spread of the pandemic.

“Last year was a very hard one; the majority of our members are Boda Boda riders and others work at tour sites which were not working during the lockdown, so most of the businesses were on standstill. This affected our savings, loan repayment, and loan portfolio,” said Fortunate Kusemererwa, the SACCO’s Manager.

Consequently, he revealed, by year’s end the loan repayment rate had dropped from 92 to 85 percent, and the loan portfolio reduced from Shs 634m to Shs 464m

Kusemererwa said that Kitojo Care SACCO, which was started in 2007 with the aim of increasing members’ household incomes and improve on their saving culture, has since last year been faced by the challenge of the majority of its members being dormant, “to the extent that they cannot even afford to save Shs 10,000 per month.”

Taking a toll

The slowdown in the SACCO’s momentum has taken its toll on some of the developmental projects that it had recently undertaken.

For instance, Kusemererwa disclosed that the SACCO had in 2019 embarked on a project to construct its own office premises after squatting for several years at those of Kitojo Integrated Development Association (KIDA), its mother organization.

“KIDA has been hosting us for all these years, but in 2019, we decided to start constructing our own offices because members have since increased and cannot fit in the little space we are currently occupying,” he said.

However, due to the financial difficulties from the last year, they have not been able to continue with construction works.

“We had hoped to complete our office last year, but due to the lockdown, we had to halt it. Savings have drastically reduced, loan recovery is still poor and our members no longer take loans,” he explained.

AGM resolutions

Kusemererwa said this year’s AGM resolved that each member should contribute Shs 1,500 per month towards the completion of their office block, which he believes is the only option that will save them.

The Kabarole District Commercial Officer (DCO), John Kabango, who attended the AGM, advised members to reacquaint themselves with the reasons why they joined cooperatives in the first place so that they can enjoy the most benefits from them.

“Some people just join SACCOs to borrow money and run away without paying back. You need to know that these SACCOs are voluntary and are meant to help people improve their standard of living,” Kabango said.

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SACCOs grappling with fraud, poor governance

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A significant number of Savings and Credit Cooperative Organizations (SACCOs) in Uganda have suffered fraud and poor governance, a new report indicates.

The report was released by the Project for Financial Inclusion in Rural Areas (PROFIRA), an organization that monitors the performance of different SACCOS in Uganda.

A study by the organization found that 64 out of 453 SACCOs supported under the program had collapsed, while 312 are grappling with fraud and poor governance issues, among other challenges.

Collins Agaba, PROFIRA’s Program Manager, says that only 77 of the SACCOS supported by PROFIRA had no issues.

“141 have at least one problem, and the rest have suffered more than three problems,” he noted, adding:

“We found that the main challenges facing SACCOs include defaulting on payment of loans by members, low volume of business and poor financial practices.”

Agaba explained that whereas cooperatives are managed by elected committees, the leaders chosen often lack the knowledge required to manage them.

“They then end up depending on untrustworthy staff who embezzle members’ deposits.”

In response, he revealed, PROFIRA has embarked on empowering members of different SACCOs with the requisite financial skills.

Robert Odur, the Chairperson Board of Directors of Ikwera SACCO, agreed with the report’s findings.

He cited the case of Ikwera SACCO which was established in 2009 which has had its portfolio drop from over Shs 170m two years ago,to less than Shs 50m currently.

“169 million shillings was loaned out by Ikwera Savings and Credit Cooperative Society Limited in the financial year 2018/2019, but in the last financial year, we only gave out 42 million shillings as loans. Our clients are not able to repay the money in time and loan recovery is a challenge,” he said in an interview.

Kwania District Commercial Officer, Patrick Bura expressed concern about the rate at which SACCOs in the district are collapsing, saying it could lead to an increase in poverty rates among the population if not urgently dealt with.

” There is an urgent need to rejuvenate the failed SACCOs and equip the SACCO leaders with management skills or else many people will suffer and even lose their assets in search of the financial services that SACCOs are meant to offer.”

Joyce Acio, a resident of Aduku town council notes, people are likely to run to money lenders whom she says are worse than banks given their exorbitant interest rates.

She argues that having SACCO members manage them introduces a conflict of interest, thereby negatively impacting their performance.

“When the SACCO staff are also members, they start taking loans and bringing them back without interest because no one is supervising them,” she said.

Acio advises all Saccos to establish Internal Audit Committees whose task should be to regularly audit the financial institutions to avoid embezzlement.

She also called on District Commercial Officers to ensure capacity building for the SACCO leaders as one measure to minimize the chances of their collapse.

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Microfinance Institutions In Trouble In Kwania

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SACCOs urged to embrace tech, digital lending

Microfinance minister to promote Emyooga products

Kabarole: Kitojo Care SACCO holds first AGM after COVID-19 setback

SACCOs grappling with fraud, poor governance

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