Microfinance Institutions In Trouble In Kwania

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.

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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

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.

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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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Long-dormant sacco in Masindi bounces back

A long-dormant savings and cooperative credit society has been revived.

The Masindi Savings and Cooperative Credit Society Limited has been revived by members after a two-year lull.

The SACCO membership comprises mainly active and retired civil servants of the Masindi district local government.

On April 1, Moses Kalyegira, the Masindi district commercial officer, convened a special general meeting that elected a new board.

Addressing the meeting at the council chambers, Kalyegira said the SACCO had been dormant for two years because the board chairperson resigned under unclear circumstances. After her resignation other board and SACCO members lost interest in the association, Kalyegira said.

“This is a special meeting because the board has failed to perform its duties. I have engaged the former chairperson Ruth Kisakye three times to convene a meeting so she could hand it over officially but in vain. I have decided that I chair this meeting so that the SACCO can put in place a new board to start conducting business because the business couldn’t go on without signatories,” he explained.

Kalyegira said he convened the meeting because he couldn’t just sit and let the SACCO collapse. He wondered why SACCOs of people with little financial knowledge were thriving and theirs full of professionals in finance was limping.

“People have been unable to access services and yet they have money on the SACCO account because board members lost interest. Let’s forget that and start a new chapter today. I have been receiving many complaints from members about their money being idle in the bank and being deducted,” Kalyegira said.

The outgoing board treasurer, Charles Musinguzi, and the vice-chairperson Godfrey Baharagate attended the meeting.

According to Kalyegira, the SACCO, which started in 2003, at one time had about 300 members before those numbers dropped to just 100 active members currently.

“The purpose of its formation was to enhance a saving culture amongst members and to offer loans at a low-interest rate to civil servants,” he noted.

Charles Musinguzi, the outgoing treasurer told members that Shs 20 million was loaned out. He said the SACCO has Shs 6.5 million on the account. He also said there’s a time savings totaled Shs 70 million.

“Some people are willing to pay back our money but they have not done so because we have not been active. This is the time to forget the past and set a new agenda,” Musinguzi said.

He said some monies may be difficult to recover.

“The mode of recovery and saving was an automatic deduction from the salaries. Recovering this money might also be a challenge because some civil servants no longer work with us,” he said.

Elections

During the elections presided over by Moses Kalyegira, Ibrahim Nasur, the senior assistant secretary for the Kyatiri town council, was elected as the board chairperson, Charles Musinguzi, the retired personnel officer, is the new secretary and Patrick Okise, the principal internal auditor, is the treasurer.

Other board members include; Prudence Alituha, the principal fisheries officer, Godfrey Bahemuka, the district community development officer, James Mugoya, the lands officer, and Oliver Mabeho, a teacher.

The supervisory committee has David Baguma, the chief finance officer, as its chairperson while Joseph Kabubi and Mary Birungi were elected as members.

In his inaugural speech, Ibrahim Nasur said, “I am one of the people who had lost interest. This is a SACCO for technocrats. How can it fail?”

“My first agenda is to ensure that people’s money is recovered. I will also follow up to see whether the money deducted automatically for saving and repayment is remitted to the SACCO,” he stressed.

Patrick Okise, the new treasurer, urged people who had lost interest to come back.

“We need to wake up now and revive this SACCO because it can give us loans at a low interest. Every day we are exploited by banks and other financial institutions who give us loans at over 40% interest and yet we can do it ourselves at a low interest. We need to wake up now.”Okise said.

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Cooperative slashes fees to attract new members

To shore up its numbers, Lira Diocese Multipurpose Cooperative Society Limited has slashed its membership fee from Shs 50,000 to Shs 30,000 to encourage registration of new members with minimal fees.

In a speech at the recent annual general meeting (AGM) held at the Apostolic Social Centre in Lira City, Cyprian Okello, the cooperative’s vice-chairperson, said many people had failed to register because they couldn’t afford the registration fee of Shs 50,000.

“We are forming the central mobilization committee. We shall ensure that each and every parish forms a mobilization committee that will include the catechist, parish priest, and the key people to strengthen mobilization, we want people everybody to understand the benefit of joining a cooperative,” he said.

So far the cooperative has 150 members. It was formed by Sanctus Lino Wanok, the Bishop of Lira Diocese in 2019, to improve the livelihoods of Christians in the nine districts of the Lango sub-region.

Patrick Vincent Muge, a member of the cooperative, said to succeed, the cooperative should engage only able and willing people to carry out Sacco activities.

Muge also urged the leadership to carry out more mobilization of Sacco members.

Father John Bosco Oryema, a member of Alito Catholic parish was excited by the reduction of the membership fees, saying it will encourage women to participate in the cooperative.

“The reduction will give avenues for women to join the cooperative, most women spend their money on running the day-to-day family affairs but now the fee reduction is an open chance for them to join the cooperate and save money to grow,” he noted.

Rt. Rev. Sanctus Lino Wanok, the founder of the cooperative, rallied the public to join the cooperative to alleviate poverty.

“Due to the coronavirus pandemic that negatively affected businesses, the time is now for people to head towards a direction that will make them easily assist one another, cooperate in business enterprises and alleviate poverty,” he said.

The man of God nudged the clergy to mobilize the community to join the cooperative to increase household income and improve their livelihoods.

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