Joshua Kato
1 July 2009
Kampala — The hall at Nakivubo Blue Primary school near Owino market was filled to capacity.
The over 1,200 men and women were not out to watch a musical performance, but to discuss the progress of their Savings and Credit Cooperative Union (SACCO). They were members of Kampala Park Yard Traders SACCO.
"We are here to declare that the creation of our SACCO is complete," said the chairman, Charles Lubega. The members clapped. Also present was state minister for micro-finance, Ruth Nankabirwa, who had come to confirm that President Yoweri Museveni was going to compensate the traders whose market was burnt down at a tune of sh1b.
There were doubts about this thing called Prosperity for All or Bonna Bagaggawale. "It cannot work," said some. "It is just another government project that looks good on paper but will not be implemented," said others.
But three years down the road, there are indications that progress has indeed been made. At the moment, 541 SACCOS across the country are considered ready to receive funding from the Uganda Micro-Finance Support Center. That is half of the target of having at least one savings cooperative in every sub-county.
According to the minister, the saving rate across the country has dramatically gone up as a result. For one to become a member, the average membership fee should not be more than sh10,000. This means if a SACCO has 100 members, they should have sh1m as share capital.
The Kampala Park Yard Traders had registered 1,280 members by the middle of June and had over sh18m as share capital.
In Amuru, although the area was under war for long spells, SACCOS are helping to change the place. The Amuru saving cooperative is mainly engaged in agriculture production, after leasing huge chunks of land in Acholi.
"They have a share capital of around sh3b. They have even started giving tractors to individual farmers," Nankabirwa says.
Even in areas like Karamoja, SACCOS are catching up. "We have been running after these people, disarming them, but they have now realised the use of SACCOS and they are saving," the minister, who recently toured the region, notes.
To reach this far, however, the Government has had to integrate and create several new departments. When Prosperity For All started in 2006, the Government put in place a unit within the Ministry of Finance concerned with managing rural finance development. This unit, called the Rural Financial Services Programme, works together with other institutions, including the Uganda Co-operative Savings and Credit Union.
"The union is tasked to prepare SACCOS and turn them into viable village banks. We have been moving around the country doing this and the results are good," says the field operations manager, Twaha Kyaka Mpugu.
The union's responsibility is to sensitise the population about the advantages of unity, helping them set up a SACCO and providing them with start-up implements.
"We have given them safes, filing cabinets, calculators, bicycles, motorcycles," says Yusuf Salim Giduno, the communications officer of the Rural Financial Services Programme.
The Government also pays the salaries of the SACCO manager, who is a professional cashier. At the moment, most of the 541 SACCOS have already received this start- up package.
SACCO regulations
Under the regulations, a minimum of 30 people are needed to set up a SACCO.
In most sub-counties however, there are at least 1,000 members.
For it to qualify for assistance, it should receive a letter of registration. A registration fee needs to be paid, which amount is decided by the members.
According to the minister, for a SACCO to survive, members should feel they own it.
"Do not call it so and so's sacco.Call it your bank, because you are a registered owner," she says.
As soon as a SACCO is certified and its members trained by the union, they are recommended to receive funding from the Uganda Micro-Finance Centre.
"Under normal circumstances, a SACCO should have been in operation for at least two years before they receive a permanent registration certificate," explains Mpugu.
However, even before receiving government funding, members can start borrowing from their own loan portfolio.
"If you are 3,000 members and each of you paid sh10,000, equalling to sh30m, you can start borrowing it at an interest rate decided by yourselves.
The interest is necessary to run the SACCO and create profit for the members," Nankabirwa explains.
She points out that it is important for the members to look at the first letter of the word SACCO, which means saving.
"Most members put emphasis on the word 'C' which stands for credit. But they should realise that without savings, they cannot have credit."
Financial discipline, according to the minister, is also very important. "Make sure that you return what you are supposed to on time.
"Do not use it to amuse yourself."
Four pillars
Prosperity for All has four main pillars. Besides the micro-finance pillar, there is the production and productivity pillar, which encompasses the National Agriculture Advisory Services (NAADS).
Under this pillar, the Government has selected six farms in every parish to act as model farms and learning points for others.
"One problem we have faced is that some of the prices of farm implements have been inflated. But farmers should not allow this to happen since they will have to pay back this money later," she says.
Procurement under NAADS is done by farmers groups in respective areas.
The third pillar is the value addition and marketing. Having learnt how to produce foods, farmers need to add value to them.
"Farmers should stop selling raw fruits, raw bananas, raw milk or raw coffee. They should turn fruits into juice, bananas into cakes," Nankabirwa says.
However, this has not been possible because farmers do not have money to buy machines that help add value.
The Government has, therefore, set up a fund to help them buy these implements. Loans are offered to farmers at 10% interest per year.
Small and medium size enterprises receive them at 13% per year if they are employing between 10-50 people.
This is much lower than the commercial rates of 24%.
The fourth component consists of information systems, especially at the sub-county level.
"Lack of information about agriculture prices and good markets has greatly affected farmers, but with this information at the sub-county level, farmers are able to decide when, how and where to sell their produce from an informed point," the minister says.
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