SACCOs urged to embrace tech, digital lending

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

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

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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Co-operators condemn ‘confused’ regulatory regime

Co-operators in Western Uganda have condemned what some referred to as a “confused” regulatory regime resulting from the enactment of various laws meant to regulate the operation of cooperatives, SACCOS in particular, within the country.

The co-operators expressed their discontent during a regional forum on the changing regulatory environment for SACCOs in Uganda. The forum, which was held on Wednesday last week, brought together more than 100 leaders of cooperatives in Western Uganda, including board members, supervisory committee members, members of vetting committees, and other management staff.

According to Dr. Sylvester Ndiroramukama, Chief Executive Officer, Uganda Co-operative Savings and Credit Union (UCSCU), the discussion focused on how to harmonize the different regulations that affect the operations of SACCOs in Uganda.

“We want to bring to the attention of our members the implications of the regulations in the gazetted various sections of the Cooperative Societies Act and the Tier IV Microfinance Institutions and Moneylenders Act, 2016,” Ndiroramukama explained.

Besides the Cooperative Societies Act Cap. 112 by which all cooperatives are governed, SACCOs are now also governed by the Tier IV Microfinance and MoneyLenders Act, 2016, and the Microfinance Deposit-Taking Institutions Act, 2003.

The law further subjects SACCOs to the governance of-the Uganda Microfinance Regulatory Agency (UMRA) and Bank of Uganda, by which they are required to be licensed, in addition to being under the oversight of the Registrar of Cooperative Societies, under the Ministry of Trade Industry and Cooperatives (MTIC).

“Suffocating cooperatives”

Elaborating on the regulatory situation of SACCOs in Uganda, participants at the forum argued that the stringent regulations subjecting the sector to a variety of actors could have the effect of “suffocating” cooperatives.

Ndiroramukama says that as co-operators, they are advocating for a single regulator for the sector, and an independent authority in charge of licensing, regulating, and supervising SACCOs.

“We don’t care who that single regulator would be but what we want is for the SACCOs to enjoy the benefits of backward and forward linkages,” he said.

Ndiroramukama anticipates the collapse of several SACCOs in the country if the issue of multiple regulations in the sector is not sorted out in time.

“Definitely if the status quo remains, SACCOs will die and this is why we are bringing it to the attention of the government that the current laws conflict against each other,” Ndiroramukama said.

Stephen Bongonzya, the vice-chairman of UCSCU, revealed that the different regulators are jostling for control over SACCOS, something he thinks could be injurious to the cooperatives. He too believes the legal regime as it is could spell disaster for some SACCOs.

“The Microfinance Deposit-Taking Institutions Act regulates companies meaning that some of the SACCOs that cross will automatically become companies, and you can never be allowed to slide back. In case of issues, Bank of Uganda will either advise you to merge, be bought or end up collapsing, which is the reason we are insisting that they remain as SACCOs,” Bongonzya explained.

Sort us out, or else…

Some of the attendees at the forum threatened to stage a strike if the law is not rectified to have a single regulator for all cooperatives.

“We had several discussions and made recommendations, but our submissions were not considered when amending the Act? Are we now orphans? If we don’t have any ministry that is concerned for our affairs, this is the right time to start a strike to retain our identity as SACCOs,” a tough-talking staffer of Kitaga SACCO fumed.

However, the CEO of UCSCU, urged the co-operators to desist from any talk of violence, saying they will use non-violent processes to bring about the desired harmony within the cooperative laws.

“We are not going to strike because as co-operators we don’t believe in violence; we are democratic and law-abiding institutions, which is why we use the approach of engaging and petitioning, which doesn’t involve using excessive force or violence,” Ndiroramukama said.

Rev. Can. Duncans Mugumya, the Board Chairman, Jubilee SACCO (West Ankole Diocese), also urged calm, calling instead for engagement with lawmakers, saying, “The existing law was passed by human beings and can just as well be changed be the same.”

Prominent among the issues raised by participants were the number of licensing and supervisory agencies, and the mix-up of funds, among others. that were petitioned to the speaker of parliament.

The UCSCU officials reported that they had petitioned Parliament about the issues of concern to cooperatives.

“We have raised the contradictions with the Office of the Speaker of Parliament through a petition, and she has already written to the relevant committees of ministries to ensure that they harmonize these inconsistencies in the two laws,” Bongonzya said.

Spilled milk

However, a cross-section of the co-operators in attendance likened their peers’ complaints to crying over spilled milk, saying the time for protest is now long past, given that the offending law is already in place.

“I think we should comply with the law. We should have defied when it was still in preparation, but now that it’s already amended it’s a challenge to overcome. We can instead adopt amicable means to resolve the gaps within it,” argued Charles Muramuzi, one of the participants.

Muramuzi also opined that some of the resistance to the new legal regime is born of fear by SACCOs that have till now been non-compliant with existing regulation.

“The problem is that we are fearing change vis-à-vis compliance because these new regulations are very strict with regard to compliance, and yet we are not doing what we are supposed to be doing as SACCOs. But if we accept these laws, then we can benchmark and grow like any other successful cooperatives,” he said.

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Kakumiro bee farmers resolve to form SACCO

Bee farmers in Kakumiro district have resolved to form a SACCO in a bid to address some of the challenges they face in their enterprise.

According to Joseph Serugo, a bee farmer and conservationist with Kayirebwa Chimpanzee Conservancy, since 2010 he and other farmers have been using traditional methods to make beehives and process their honey, but they want to adopt modern ones come April.

In addition, the farmers intend to set up a SACCO with a central collection point where members can bulk their honey that they would then sell at a fair price.

“Plans are in high gear to organize for the modern beehives and establish a SACCO so that things like marketing improve. We are currently earning very little for our honey,” Serugo told theCooperator.

“We are currently earning very little for our honey,” Serugo told the Cooperator.

Serugo, who says he currently earns about Shs 500,000 each season from honey, believes the increased investment in the business will attract more customers and boost his earnings.

Sarah Katono, also a bee farmer and member of the same group, says a SACCO would save them from having to borrow from external lenders who tend to levy prohibitively high-interest rates.

“I want to be able to purchase machines to harvest wax from my bees and add value to it by making items like candles. I am unable to do that currently because the money I get is not enough,” Katono said.

She also hopes that the SACCO can help members push for better honey prices and improve their livelihood.

“I sell my honey at between Shs 5,000- Shs 10,000 to middlemen and also individual customers who buy for their own consumption but I would like to earn more from it,” she said.

Meanwhile, William Lalobo, a private conservationist at Aswa Falls Conservancy and a beekeeper, plans to extract bee venom for export.

“I have already received the machines and will soon begin extraction of the venom,” Lalobo says.

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