Friday March 9 2018

Why Saccos are the engine to propel economy to middle income status


By Fabiano Okware

For the last 10 years, the country has seen increasing numbers of Savings and Credit Co-operative Societies (Saccos).

According to the Malawi Model, a Sacco is defined as an autonomous association of persons united to meet their common economic and social needs through a jointly owned and democratically controlled enterprise or business.

Besides, a Sacco should have a common bond. There are two types of bonds namely, community bond for residents of a particular locality, and occupational/association bond, for people employed by the same employer or belonging to the same profession.

The philosophy of a Sacco is centred on equality, equity and mutual self-help. The objective of a Sacco is to provide members with a safe and convenient place to save their money whatever amount, offer loans, financial counselling and member education.

The overriding principle is that, “The members are the owners and the only users of the Sacco. No one person has monopoly in a Sacco regardless of one’s share or savings.

In Uganda, the Sacco movement is meant to fill the vacuum that was created after co-operatives closed shop. Co-operatives used to promote commercial agriculture and improve economic welfare of majority Ugandans who depend on agriculture.

Today, the Saccos are playing a vital role in line with one of the key components of the National Development Plan towards attaining the objectives of creating wealth for the citizens. According to the NDP II, there are more 6,351 registered Saccos with savings of more than Shs120b, total shareholding of more than Shs25b and loans of Shs80b.
In essence, Saccos can be equated to small and medium scale businesses.

In India, small businesses are referred to as cottage industries with their outputs channelled as inputs for the medium and large scale industries. Using the philosophy for equality, equity and mutual self-help, there is a perceived more equal income distribution for its members that stimulates consumption by the majority of the population thereby raising productivity.

While attending the annual general meeting for Banda B10 Village Sacco as guest, I concurred with MsNabwire-Kigozi, the Nakawa commercial officer under the Ministry of Trade, Industry and Cooperatives about the importance of the association, not only to the individual members, but also the trickledown effect of the association’s effort to the country’s economy.

It is important to note that Uganda is endowed with abundant, but underutilised human resource, especially in the rural areas. This resource can be used to change the face of communities.
Some Sacco members include retirees with proven and impeccable character and experience.

They have worked in both public and private sector and have wider networks. Such persons would offer free consultation services to the association. This is yet their new employment after the formal one.

They may be retired, but not tired. It is yet another avenue for them to exercise their potential to achieving their unmet dreams.

Saccos provide opportunity for both individual and group development. The local community can benefit a lot from retirees with vast experience to operate their small businesses after borrowing from their Sacco.
Where possible, Sacco members should appoint to management positions persons with known expertise and experience. Appointing educated, knowledgeable, and skilled persons to manage a Sacco will enable it to thrive.

To the retirees, this is an opportunity for you to dedicated your energy and effort and display your knowledge, skills and vast experience obtained either from public or private sector. It is a moment of truth. Your continued relevance in society is still awaited.

Time is ripe for you to provide your expertise, mobilise the community and share with them all the concepts, principles and models of development that you acquired while working in public or private office. You are now the repositories of knowledge and should that you should make good use of in the local Sacco.

To the community and Sacco members, you have a triple benefit from the association. Knowledge and skills shared by retirees can help you take your business to a higher level. Secondly, the dividends you get from the association can boost your personal savings, thereby increasing your working capital.

Thirdly, you can borrow at a subsidised interest rate. As a Sacco, the income generating activity ventured into, for example, agriculture can provide raw materials for the food processing industry.
The products of these industries can be consumed locally or exported to earn the country the badly needed foreign exchange for settling balance of payments in the international trade market.

All in all, mobilising and sensitising communities by the elite as is always done by President Museveni, will go a long way in empowering our people to increase their productivity, for the already abundant East and African consumer market.

The Ministry of Trade, Industry and Cooperatives, should be at the fore front transforming the Sacco movement into a vibrant industry in pursuit of elevating the country to middle income status.