Savings associations recipe for youth financial independence

Apr 29, 2015

Despite the worrying youth unemployment figures, a reports says there is a positive story to tell of young people who have beat odds to prosperity.



By Evelyn Angiji

Despite the worrying youth unemployment figures, currently at 62%, according to a report by Action Aid In Uganda, there is a positive story to tell of young people who have beat odds to prosperity.

The successes behind such youth range from perseverance, commitment, focus to determination. But most outstanding of them all is a saving culture.

Dinah Atai, is between 30 and 33 years and she has accomplished what some people in their 40’s are still struggling to achieve. This young lady did not get weighed down by the fact that she is a woman to build her own house, buy a car and she is in the process of building apartments for rent in her hometown, Soroti. 

Moreover this young lady is making progress outside Kampala and this is a challenge to the youth who have a bias towards living and working outside Kampala. That is the life every ambitious young man and woman would love to have and Atai is just but among several youth who are breaking barriers of poverty and unemployment.

 But this does not come easily. To get to where one wants to be, it is important to learn and appreciate the practical benefits of saving. This means foregoing a fancy and extravagant lifestyle and instead inject every penny into a viable venture or by directly saving.

Young people should realize that the jobs or sources of livelihoods they have can be a recipe for prosperity. Take for example one earns 500,000 shillings monthly and out of that amount, they can save 100,000 for a period of 5 years with other factors constant.

By the end of 5 years, one would have saved 6,000,000 shillings which no one can hand to you on a silver plate. This can be used as startup capital for a good business which will create more wealth over time. Remember, “one by one makes a bundle”.

One of the ways leading to financial independence is by joining a Savings Association. But the earlier one embraces a savings culture, the better results she/he will achieve in the long run. Atai has a job which pays her a modest monthly salary but she is also a member of the Mighty Savings and Credit Association in Soroti and it is largely through this association that she managed to get to where she is.

This Association has 50 members and each member must save a minimum of 70,000 shillings every month. Good news is, this money is lent out and by the end of year, one gets their savings plus interest earned. Another benefit of this association is that a member can borrow up to three times their savings at a lower interest rate compared to other financial institutions. This entices a member to save more.

And for one to be able to make meaning out of their savings, instead of withdrawing yearly, one can decide to plough the savings back because the more you do that, the more interest it earns. Despite a few challenges, this Association has so far been successful for the past 4 years because it is governed by a constitution.

But most important of all, is the membership. The strength and success of this association is dependent on the trust, will and commitment of its membership and most of them comprise of people who are known to each other.  In the same way, loans are given out to mostly borrowers who are known to the association members to minimize cases of non-payment. 

This Association is just an example of several others that have been established and are successfully operational countrywide.  However, young people tend to ignore the power of such Associations and yet if properly utilized, such groups among other existing interventions will help in the fight against poverty and unemployment.

The other option is to open an account with the bank for those youth who cannot keep up with the conditions of a Savings Association. But one has to look out for accounts which can earn interest and have restricted withdrawals as banks are quite tempting compared to savings associations.  Banks have several products which are suitable for youth.

For example CentePlus account in Centenary Bank. This account allows the holder to accumulate savings for financing future investment.

 Again, this is an example of several banks which also have products targeting youth.  And to realize a more successful investment, it is imperative for one to gain some basic knowledge and training in business and entrepreneurship management. There are several institutions in Uganda that offer such training at affordable fees among which include the popular Enterprise Uganda. 

Once one is able to gain some semblance of financial independence, the interventions by Government will come in as complimentary to what you have already set rolling as opposed to waiting for government and lamenting. 

Much as it’s in the interest of government to see the citizens prosper, it is largely in your benefit to see yourself thrive.

Government’s role is majorly to ensure that the citizens enjoy good infrastructure, social services, good laws and policies but it is up to you to secure a prosperous future for yourself. 

The writer is a Communications Officer-Uganda Parliamentary Forum on Youth Affairs
 

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