COVID-19: Tough times for SACCOS as more members default on loans

Savings and Credit Cooperative Organizations (SACCOs) in Western Uganda are facing increased member defaults on loans in the wake of the novel Coronavirus.  

According to Pison Mugizi, Chairman of Butuuro SACCO in Bushenyi -Ishaka municipality, about Shs 6 billion was loaned out to members, but none of it has been paid back yet. Most of the defaulters blame the COVID-19 related lockdown for their inability to pay. 

“Many of members, such as bodabodas and traders, have no other source of income following the lockdown on businesses by the presidential directive,” Mugizi said.

In response, the SACCO’s management resolved to extend the affected members’ loan repayment times. 

“We encourage affected members to come and discuss with management how their loan repayments can be rescheduled; or we can give them a grace period of payment,” he said.

 However, he encouraged members whose business has not been directly affected by the lockdown to continue servicing their loans as agreed.

 “Some members pretend to have been affected by the COVID-19 pandemic and yet they haven’t. People like farmers are still planting. We appeal to them to pay their loans as per their schedules,” Mugizi said.

Butuuro SACCO has two branches, one in Kyabugimbi town council and another in Kashenshero town council in Mitooma district.

In a similar bind is Ankole Diocese Millennium SACCO.

According to Agnes Atwine, the SACCO’s Senior acting Manager, loans to members currently stand at Shs 5.8billion. However, there are fears that members will default on payments as measures to combat the spread of the novel Coronavirus continue to take their toll on businesses.

 “We are worried as loans compose eighty one (81%) percent of our total business, and yet members seem unable to pay,” Atwine explained.

The SACCO’s patron, Bishop Rt. Rev. Dr. Sheldon Frederick Mwesigwa, also revealed that the Ankole Diocese Millennium SACCO’s 2019 Annual General Meeting (AGM), which had been slated for March 24, 2020 was postponed until further notice due to the novel Coronavirus pandemic.

Savings, recruitment hit

Benon Kajubi, the Managing Director Kakiika United Co-operative Savings and Credit Society Ltd told theCooperator that the pandemic has negatively impacted savings and recruitment of new members.

“Since the outbreak of this disease, savings have reduced, and we no longer get people coming to take loans. Even the number of new clients seeking to open accounts with us has gone down,” he said.

Instead, he said, the SACCO receives more members coming to withdraw their savings to use during the lockdown.

Founded in 2010, Kakiika United Co-operative Savings and Credit Society Ltd has a current loan portfolio of about Shs 400 million.

Nevertheless, Kajubi is optimistic that the strict measures aimed at combating the spread of the novel Coronavirus will soon be eased and business will normalize.

Uganda has registered 54 COVID-19 cases so far, with zero deaths.