When Danstan Kisuule resigned from his job in 2009 to concentrate on growing a savers’ cooperative, his colleagues were worried about how he would manage to keep afloat.
The Young Savers Association for Ventures and Entrepreneurship (Y Save cooperative) he started 14 years ago on January 24, 2000; has since grown from the original 15 members to now close to 4,000.
Y Save cooperative, a savings and investment scheme, considered as one of the biggest in the country, has seen its savings grow to more than Shs3 billion, while the share capital and reserves have also grown to more than Shs3 billion. The cooperative has assets worth more than Shs7 billion at cost value.
Y-Save was registered with the Registrar of Cooperatives in the Ministry of Tourism, Trade and Industry and it changed its name to become Y-Save Cooperative Savings & Credit Society Ltd on November 26, 2004.
Due to the needs from the members of Y-Save to get involved in other areas of business and investments, Y-Save changed its legal status to become Y-Save Multi-Purpose Cooperative Society Ltd on May 22, 2013.
Ms Barbara Buyondo Ofwono the proprietor of Victorious Educational Services’ is one of the pioneer members who had lost hope in banks that had refused to give her a loan.
She then approached her colleagues at Y Save Club who offered her a Shs1.3 million to renovate her first premises at Namirembe Road near Pride Theatre.
After renovations she set off with about 30 children and these have spread to over 3500 with four campuses. Some campuses are found along Namirembe road in Kampala and another primary school located in Mbalala, Mukono district.
“I was the first member to borrow money from Y Save Club and they have been part of my growth,” Ms Ofwono Shares.
Much as the core saving seem little, this cooperative has attracted a range of people from company Chief Executive Officers to students, cleaners and those people who are under the care of the church, for instance the widows and ladies who are affected and living with HIV –from Watoto Church’s NGO, ‘Living Hope’ organisation.
Altogether, the association has 700 direct members, 700 Living Hope Ladies and more than 2,500 students.
Managing the growth in numbers from the original 15 members to the current 4000 members has been a challenge.
Kisuule says the other challenges have to do with managing people’s expectations. Many people have heard about this club and when they come in to join, they think it’s a get quick rich association.
“During the AGM people complain a lot. Yet the core objective of the club was for us to get together and use the economies of scales available to improve our financial circumstances,” he says.
“Some people don’t have a business inclination and their expectations tend to be different,” Kisuule adds.
Kisuule’s future investment options
The cooperative plans to buy land for agriculture and seize the opportunities that the industry presents.
“The future is in agriculture. Uganda is one of the few countries where there are two rainy seasons and we want to make use of this advantage,” he said.
Asked about the market for the produce, Kisuule said: “We already have the customers. Members of our churches grow food and every Sunday we shall be selling the proceeds at a lower cost. We have the resources and we shall use modern farming which will involve irrigation even without the rains they will be producing all year-round.”
This year, they will start the construction of four-storied-apartments which they intend to sell out to their members. Since finishing the apartments is costly, the cooperative will only build, fix doors, windows and plumbing facilities then the rest will be done by the members who will have acquired the apartments. This, he says, will help their members to save the money they have been spending on rent.
They are also looking at the transportation business. Many of the members have children who go to school and hire different vehicles yet most of the children go to the same schools. In their transport business, they intend to collectively get the buses to do that job at a lower cost.
Savings products for members
The cooperative’s system of compulsory saving has seen members learn the culture of saving.
Members have become disciplined in the way they save and this is exhibited by the beehive of activity at their offices as everyone struggles to make their payments.
To save with this club, members get interests on the different accounts and they are also helped to plan for their money through the different accounts designed for livelihood needs like school fees, construction, health and pension. Apart from the compulsory savings account; members also save school fees monthly for their children.
Under the school fees account which is classified into three categories namely: School Fees Short- for those members who pay termly education; School fees Medium - where one can only withdraw after five years-Secondary school fees and School Fees Long which can only be withdrawn after 15-years,this caters for University tuition.
When one has a specific target like getting married/wedding, buying a car, going for vacations, or buying land. Members save monthly for a specified period but they can only withdraw this money after a specified target month expires. Short term withdrawals are those done after a period of one to three months; Medium term withdrawals are done after one and half years whereas long term withdrawals are done after five years.
Under this account, members are encouraged to save startup capital for their children. The intention is to have the children utilise these savings for business when they are above 18 years old.
Under this category members save money to cater for relatives or family members who are not covered by any medical insurance scheme. The Account enables one to put aside money but they are not allowed to access it unless they produce a medical bill. This is especially good for elderly relatives or one’s parents. It can also come in handy if one falls out of employment.
This is meant to provide a safety net for members when they retire. It is also especially helpful to members who are self-employed because it helps to relieve retirement pressure.
Members earn compound interest from all these accounts they save into.
Creating the cooperative
Kisuule, who was working as an engineer at National Housing Corporation, had the desire to teach people how to make conscious choices about money. This pushed him to ditch his job and to start the cooperative. Together with his 14 colleagues who were praying at the then Kampala Pentecostal Church, which was later rebranded into Watoto Church-under their fellowship dubbed ‘Young Workers,’ Kisuule crafted the idea of starting to save.
“Our main objective was to teach ourselves and others the culture of saving, because many of us were working but there was nothing to show for it,” Kisuule recalls.
Initially, the members were required to save Shs5,000 every three months, then this was raised to Shs10, 000 every two-months.
Then the savings went up to Shs20, 000 then to Shs50, 000 every month. Early this year, they raised the contribution to Shs90, 000 every month and this is compulsory.
Criteria of joining the cooperative
One must be actively involved in Watoto Churches Ministry.
When they opened up for everybody to save, some people were excited and saved for a few months but along the way, many started defaulting. In order to keep the cooperative operational, regulations were put in place to see that people comply and those who would default were penalised.
Kisuule shares that when someone defaults the first month the cooperative gives a penalty of 7 per cent and one is given a warning letter. In the second month one forfeits the same interest and a final warning letter. In the third month if one doesn’t save, he/she is refunded all their savings and closes their account.
“We don’t entertain non-active members,” he says.
But when a member has lost a job, he or she is required to write to the cooperative about the scenario then he/she is given a grace period of up to six months. When this period expires and a member has not yet secured another job, the cooperative closes that account. At a later date when the member secures a new job the account can be reopened.
Operating a savings cooperative
Mr Daniel Joloba, an expert on Savings cooperative Formation and Management, tips on how to manage a successful savings cooperative.
Rules: Respect the rules and regulations set up by the savings cooperative.
Diversify: Do not invest in one vehicle/venture; spread the savings into different businesses so that if one blows up at least you will not lose all your savings.
Record keeping and accountability is very vital. Share the accounts whether monthly or weekly with the members.