Don’t rush to become MDIs, big SACCO told
MBARARA – The chairman Besania SACCO in Mbarara Benson Nduhura has advised thriving SACCOs in western Uganda to transform into multipurpose cooperatives to boost members’ savings instead of hurrying to become microfinance deposit-taking institutions [ MDIs ].
A multi-purpose cooperative, according to the experts in the sector, combines two or more business/ economic activities such as; assembling collection for credit, marketing, trade, and savings mobilisation among others.
In an exclusive interview with this reporter, Nduhura said that a number of SACCOs in the area are in the process of transiting to MDIs], thus putting members’ savings at risk as well as moving away from their missions and visions.
“Becoming an MDI is cost-challenging. Members who are used to bank and receive all their savings will see their monies being deducted because of different operational costs,” he said.
Some of the SACCOs in western Uganda that are being monitored by Bank of Uganda as they undergo the process to transit into MDI include; Ebo SACCO, Butuuro SACCO, Kyamuhunga People’s SACCO, and Mushanga SACCO among others.
Nduhura added that the leadership change also affects the cooperative principles of ownership and democratic member control, autonomy and independence among others.
Becoming an MDI, comes with a change in leadership whereby a SACCO will now be run by directors. It will no longer be member-owned, member-controlled, all the decisions will be taken by the directors, not the annual general meeting this time around,” he said.
He said while commercial banks which charge high interest rates on loans may serve rich entrepreneurs, SACCOs in the country should be in position to help the poor get out of poverty.
He added: “At Besania SACCO, we give people money at the lowest interest rate, equip them with business skills, follow up with their investments, buy their products from the farm, add value to them, and then sell them food at a subsidised fee to address food insecurity among our members.”
He appealed to other SACCOs in western Uganda and the country at large to follow their visions, missions, and core cooperative values to help members get out of poverty.
Besania SACCO is a faith-based SACCO that was started in 1997 to address the persistent poverty among Christian families in western Uganda. Currently, it has a membership of 12,000, a loan portfolio of Shs 7 billion, total assets of Shs 8 bln, share capital of Shs 2.2 bln.
Amon Namara, General Manager Muhame Financial Services Cooperative Limited also supported the aspect of SACCOs turning into multi-purpose cooperatives instead of MDIs.
He said: “Our purpose is to serve the members. As Muhame Financial Services Cooperative, we want to remain as a cooperative to show the rest that whenever you grow big, you don’t have to become a commercial bank because we have seen major SACCOs growing stronger than some of the commercial banks in the country. For example, Wazalendo SACCO.”
He however urged cooperatives to pay the taxes they are supposed to pay. “Taxes must be paid even though we are lucky that we are on tax holiday. Assume if all entities in Uganda dodge taxes, how would the government survive?” He said.
He also urged the government to provide one regulator for all cooperatives in Uganda like it is Kenya which has a strong cooperative movement.
On expansion, he advised SACCOs to always make feasibility studies before opening other branches in different areas, saying it will protect members’ savings. “Branches should not be established just because you want to look big, make research to understand whether your services are needed in those areas.
Currently, Muhame Financial Services Cooperative Limited which started in 1998 has a total of 10 branches, with a total of 33,000 members, total savings Shs 12.5 bln, and share capital of Shs 7.2 bln and a loan portfolio of Shs 26.5 bln.
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