SACCOs to bring economic transformation in Uganda
Jun 03, 2010
SINCE Prosperity for All (PFA) was launched about three years ago, over 628 Savings Credit and Cooperative Organisations (SACCOs) have been set up across the country, which indicates an over 60% success rate.
By Joshua Kato
SINCE Prosperity for All (PFA) was launched about three years ago, over 628 Savings Credit and Cooperative Organisations (SACCOs) have been set up across the country, which indicates an over 60% success rate.
The Government has given out sh58.7b. As at February 2010 these funds have gone to 623 SACCOs, 32 microfinance institutions, 11 cooperative unions and 10 small and medium enterprises, among others.
Prosperity for All is implemented under the guidance of the President, but supervised and coordinated by the Office of the Vice-President.
While the PFA coordination unit falls under the office of the VP, the Rural Financial Services Strategy/Rural Financial Services Programme falls under the portfolio of the Minister of State for Micro-finance. “The major aim is to reduce poverty levels in the country,†says state minister of for microfinance Ruth Nankabirwa.
PFA has four components; production and productivity, value addition and marketing, community information systems and the rural financial services programme. “The rural financial services strategy is to assist the people access financial services, to invest in their production enterprises both in the rural and urban areas,†says Yusuf Giduno, the communications officer, RFSP.
According to the mandate of the programme, every sub-county should have at least one SACCO. Kampala was declared a special zone because of the big population. Instead of having a SACCO at every sub-county, SACCOs were formed at parishes.
The Government mandated the Uganda Cooperative Savings and Credit Union (UCSCU) to help people select enterprises, form and register their SACCOs.
The SACCOs also get equipment and furniture, staff and member training, rent, burglar proofing of offices, salaries of managers, a cashier and askaris. There is also a generator and a motorcycle given to fairly advanced SACCO. At the moment, over 628 SACCOs have received most of this equipment. “The package is critical for institutional and confidence building among the community in the SACCO financial institutions,†says Wilson Kabanda, UCSCU board executive director.
Kabanda says once the capacity of these groups has been strengthened, they will be linked to the Microfinance Support Centre Ltd for wholesale lending. Overall, according to Kabanda, the task of starting and developing SACCOs has been handled very well. “It has been a success, though with challenges,†he says. The Government has also enhanced the capacity of UCSCU by renovating offices in Maganjo, donating vehicles and office equipment.
Members of the parliamentary finance committee have visited several parts of the country to assess the progress made. They went to Busoga region, Teso, Bugisu, parts of Buganda, Toro and Bushenyi.
According to the Government’s Prosperity for All programme, each of these sub-counties is supposed to have at least one SACCO. Any of the SACCOs that meets the requirements is supposed to receive money from the Microfinance Support Centre (MSC). In Teso region, the process was affected by the LRA insurgency and prolonged floods. The sub-region has 104 SACCOs, with 35,000 members. They have a share capital of sh899m and a savings portfolio of sh2.1b.
In the central region, the best performing district is Mubende, where three of the six SACCOs in the district are advanced. Rakai has also got three advanced SACCOs out of nine, while Masaka has two advanced ones out of nine. The other districts have their SACCOs either at formation or basic stage. Luwero has one advanced SACCOs, as well as Nakaseke. The western region performs far better than all the other regions.
For example, Bushenyi district has 72 SACCOs, 18 of these mixed basic or advanced. Only three are still under the basic category. Of the seven in Ibanda, one is advanced. In Ntungamo, of 16 SACCOs, 10 are already advanced. “I wish SACCOs in our area were as good as these ones,†says Ruth Tuma, Jinja Woman MP.
In Bugisu, Mbale is the best, with three out of seven SACCOs rated as advanced.
Sironko has one advanced SACCOs out of seven. The SACCOs in Manafwa, Kapchorwa and Pallisa are either basic or under formation. “The formation and strengthening stage has gone on well. Now SACCO members should start saving in order to get credit,†Nankabirwa says.
“The key words in the word SACCO are saving and credit,†she says.
There has been progress in both Lango and Acholi areas. By March 2010, there were 107 SACCOs, with 58,335 members. According to officials, the membership has been growing at an impressive 134%. The region has got a share capital of sh1.4b and a savings portfolio of sh7.1b. The region has received loans of sh8.076b from the Microfinance Support Centre.
The majority of the members are women. It is only in Kitgum and Pader where men are more than women. It is said that Acholi women are more development-oriented than men. “As men, our role was to fight and protect the family. The women did most of the work at home,†says Nwoya MP Simon Oyet.
Also, most of the NRM supporters in Acholi are women and because SACCOs were at first seen as an NRM initiative, these women joined them quickly. Some took the programme to be NRM’s and refused to join it. “If funds from the Microfinance Support Centre (MSC) reached us in time, the SACCO would attract more people,†says Martin Kiiza Aboja, a member of Ongako SACCOs in Gulu.
When the idea to start SACCOs first came up in 2006, sub-county chiefs were to work as the focal persons in mobilising for SACCOs. All of them were taken to the National Leadership Institute, Kyankwanzi, for training.
“When they came back to the villages, they told people to start SACCOs and then receive money from the Government,†says a UCSCU official.
Many people started SACCOS and waited for the funds. They had not saved. “A big number of them lost interest in the system,†says UCSCU’s Wilson Kabanda.
SACCOs image was tainted by several groups that conned people of their money. “It created a bad impression in this area and we are convincing people to join,†says Francis Okello, UCSCU officer.
Nankabirwa also says many SACCOs failed to set up proper leadership, which affected their progress. She says SACCOS are not affiliated to any political group or party.
SACCOs also complain that the Microfinance Support Centre delays to disburse loans. However, Rosette Nakanwagi, says the delay is in processing documents. A group should have audited books, a record of annual meetings, a recognisable board and a good savings record, to get a loan.
SINCE Prosperity for All (PFA) was launched about three years ago, over 628 Savings Credit and Cooperative Organisations (SACCOs) have been set up across the country, which indicates an over 60% success rate.
The Government has given out sh58.7b. As at February 2010 these funds have gone to 623 SACCOs, 32 microfinance institutions, 11 cooperative unions and 10 small and medium enterprises, among others.
Prosperity for All is implemented under the guidance of the President, but supervised and coordinated by the Office of the Vice-President.
While the PFA coordination unit falls under the office of the VP, the Rural Financial Services Strategy/Rural Financial Services Programme falls under the portfolio of the Minister of State for Micro-finance. “The major aim is to reduce poverty levels in the country,†says state minister of for microfinance Ruth Nankabirwa.
PFA has four components; production and productivity, value addition and marketing, community information systems and the rural financial services programme. “The rural financial services strategy is to assist the people access financial services, to invest in their production enterprises both in the rural and urban areas,†says Yusuf Giduno, the communications officer, RFSP.
According to the mandate of the programme, every sub-county should have at least one SACCO. Kampala was declared a special zone because of the big population. Instead of having a SACCO at every sub-county, SACCOs were formed at parishes.
The Government mandated the Uganda Cooperative Savings and Credit Union (UCSCU) to help people select enterprises, form and register their SACCOs.
The SACCOs also get equipment and furniture, staff and member training, rent, burglar proofing of offices, salaries of managers, a cashier and askaris. There is also a generator and a motorcycle given to fairly advanced SACCO. At the moment, over 628 SACCOs have received most of this equipment. “The package is critical for institutional and confidence building among the community in the SACCO financial institutions,†says Wilson Kabanda, UCSCU board executive director.
Kabanda says once the capacity of these groups has been strengthened, they will be linked to the Microfinance Support Centre Ltd for wholesale lending. Overall, according to Kabanda, the task of starting and developing SACCOs has been handled very well. “It has been a success, though with challenges,†he says. The Government has also enhanced the capacity of UCSCU by renovating offices in Maganjo, donating vehicles and office equipment.
Members of the parliamentary finance committee have visited several parts of the country to assess the progress made. They went to Busoga region, Teso, Bugisu, parts of Buganda, Toro and Bushenyi.
According to the Government’s Prosperity for All programme, each of these sub-counties is supposed to have at least one SACCO. Any of the SACCOs that meets the requirements is supposed to receive money from the Microfinance Support Centre (MSC). In Teso region, the process was affected by the LRA insurgency and prolonged floods. The sub-region has 104 SACCOs, with 35,000 members. They have a share capital of sh899m and a savings portfolio of sh2.1b.
In the central region, the best performing district is Mubende, where three of the six SACCOs in the district are advanced. Rakai has also got three advanced SACCOs out of nine, while Masaka has two advanced ones out of nine. The other districts have their SACCOs either at formation or basic stage. Luwero has one advanced SACCOs, as well as Nakaseke. The western region performs far better than all the other regions.
For example, Bushenyi district has 72 SACCOs, 18 of these mixed basic or advanced. Only three are still under the basic category. Of the seven in Ibanda, one is advanced. In Ntungamo, of 16 SACCOs, 10 are already advanced. “I wish SACCOs in our area were as good as these ones,†says Ruth Tuma, Jinja Woman MP.
In Bugisu, Mbale is the best, with three out of seven SACCOs rated as advanced.
Sironko has one advanced SACCOs out of seven. The SACCOs in Manafwa, Kapchorwa and Pallisa are either basic or under formation. “The formation and strengthening stage has gone on well. Now SACCO members should start saving in order to get credit,†Nankabirwa says.
“The key words in the word SACCO are saving and credit,†she says.
There has been progress in both Lango and Acholi areas. By March 2010, there were 107 SACCOs, with 58,335 members. According to officials, the membership has been growing at an impressive 134%. The region has got a share capital of sh1.4b and a savings portfolio of sh7.1b. The region has received loans of sh8.076b from the Microfinance Support Centre.
The majority of the members are women. It is only in Kitgum and Pader where men are more than women. It is said that Acholi women are more development-oriented than men. “As men, our role was to fight and protect the family. The women did most of the work at home,†says Nwoya MP Simon Oyet.
Also, most of the NRM supporters in Acholi are women and because SACCOs were at first seen as an NRM initiative, these women joined them quickly. Some took the programme to be NRM’s and refused to join it. “If funds from the Microfinance Support Centre (MSC) reached us in time, the SACCO would attract more people,†says Martin Kiiza Aboja, a member of Ongako SACCOs in Gulu.
When the idea to start SACCOs first came up in 2006, sub-county chiefs were to work as the focal persons in mobilising for SACCOs. All of them were taken to the National Leadership Institute, Kyankwanzi, for training.
“When they came back to the villages, they told people to start SACCOs and then receive money from the Government,†says a UCSCU official.
Many people started SACCOS and waited for the funds. They had not saved. “A big number of them lost interest in the system,†says UCSCU’s Wilson Kabanda.
SACCOs image was tainted by several groups that conned people of their money. “It created a bad impression in this area and we are convincing people to join,†says Francis Okello, UCSCU officer.
Nankabirwa also says many SACCOs failed to set up proper leadership, which affected their progress. She says SACCOS are not affiliated to any political group or party.
SACCOs also complain that the Microfinance Support Centre delays to disburse loans. However, Rosette Nakanwagi, says the delay is in processing documents. A group should have audited books, a record of annual meetings, a recognisable board and a good savings record, to get a loan.