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FSD Uganda boss urges SACCO members to pay loans in time

MBARARA, March 25, 2024 – Members subscribing to different Savings and Credit Cooperatives Organisations [SACCOs] in the country have been advised to pay their loans if the financial cooperatives are to grow to greater heights.

This was said recently by Patrick Oketa, the Executive Director of Financial Sector Deepening Uganda [FSD Uganda] during the 20th annual general meeting [AGM] of EBO Financial Services Limited held at Bwizibwera Gardens in Kashari South, Mbarara district.

FSD Uganda works closely with financial market actors to facilitate the development of a more competitive, robust, and inclusive financial sector that meets the needs for everyone, especially the unserved and underserved.

Oketa said that the biggest cancer-eating SACCOs in Uganda is loan default which suffocates the cooperatives’ growth as well as the liquidity flow.

“If you borrow the money, make sure you pay because if you don’t pay that money, the balance sheet of the SACCO will drop,” he said.

Oketa said that once the members borrow money and return it in time it will enable the SACCO to continue operating.

“You borrow money to be able to use it for productive use and if that productive use generates cash flows, please make sure by all means you pay so that money can keep in circulation to grow the Ugandan economy,” he said.

According to Oketa, FSD Uganda has so provided about Shs 7.7 billion to support women, youth, refugees and host communities’ projects in the country.

On his part, Mbarara District Commercial Officer, Adams Bwisho warned against multiple-borrowing, saying it is one of the leading causes of loan defaults in SACCOs.

He urged SACCO members to ensure they have good credit records, saying this is an important consideration when financial institutions are giving loans to borrowers.

“We are working with the central bank [Bank of Uganda] right now to work on credit risk rating to be able to determine whether the borrower has the ability to pay back the loan,” he said.

For her part, Rosette Kashaija, the incoming Chairperson EBO SACCO Board of Directors, urged members to increase their share capital, saying it would  grow the SACCO’s liquidity, and help them to avoid external borrowing.

“Members, I wouldn’t want us to clap because when it comes to the liabilities, we are doing badly. We should save more so that we have more liquidity which will make all of us to fetch high dividends. We should avoid external borrowing because this benefits external funders,”  explained Kazibwe.

Joseph Mugume CEO, EBO SACCO Limited (Photo by Joshua Nahamya).

Speaking at the AGM, Joseph Mugume, the SACCO CEO, said: We will continue with an outreach programme of opening other service centres and branches in districts of Isingiro, Sembabule, Ntungamo and Kyegegwa to bring services nearer to the people.”

“Come April 1, 2024 we shall open up Kyegegwa Branch, and we shall continue with the share purchase promotion to grow the share capital of EBO,” Mugume said.

In a bid to conserve the environment, the SACCO distributed 900 Hass avocado seedlings to 450 delegates that attended the AGM.

“We are trying hard to see that in whatever we are doing we protect the environment through going green and also offering biogas loans to reduce greenhouse emissions. We are giving each delegate two Hass avocado trees but I encourage you to plant more trees so that you can get food and money but also conserve the environment,” noted Mugume.

Located in Bwizibwera Town Board in Mbarara district, Financial Services or EBO SACCO has 84,689 members, Shs 64.2bln in total assets, Shs 28. bln in total savings, and Shs 52.7bln loan portfolio.

The SACCO’s net profit increased from about Shs 446 million  in 2022, to about Shs 2.4bln in 2023. The SACCO has 15 branches and outreaches scattered in districts of Mbarara, Ibanda, Kiruhura, Rwampara, and Kazo.

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