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Kabarole SACCO management alarmed as loan recovery drops to 20 percent

The management of Kihondo Savings and credit cooperative society (SACCO) in Kabarole district has expressed concern about the declining loan recovery rate within just four months of lockdown.

Kihondo SACCO, one of the better performing financial cooperatives in Kabarole district, primarily comprises micro- and small scale entrepreneurs for its members. 

However, most of its members report being hard-hit by the COVID-19 pandemic and the related restrictions, and the SACCO’s loan recovery efforts have suffered as a result.

According to Tom Bylon Tumusiime, the Manager, Kihondo SACCO, before the lockdown, loan recovery was at 70 percent but it has since reduced to 20 percent which has put the SACCO’s life at stake.

“Most of our members had small businesses like boda boda, saloons and bars, among others. Since the president announced a lockdown and closed most of the businesses, some of which are still closed, our members have not been able to service their loans because their income is very low,” he says.


Tumusiime says one of the interventions put in place to save the SACCO is rescheduling the loans for those who have been paying very well and were about to finish their payments.

“We have decided to reschedule the loans for those who were about to complete their payments by giving them another loan in order to service the first and then use the balance to invest in their businesses,” he says.

He adds that they have also considered extending the loan repayment period and reducing the amount paid per instalment in order to keep their members in business as they strive to make it through this tough phase.

“If a member was supposed to clear a loan in one year, we have decided that we extend it for about six more months, and if he was paying Shs 200,000 for every instalment, it means the payment per instalment reduces to either Shs 100,000 or Shs 150, 000,” Tumusiime explained.

The SACCO has also undertaken to sensitise members whose businesses remain closed on alternative income-generating activities they can engage in, such as farming, rather than waiting until their businesses are allowed to resume operations.

“The situation is still challenging because some of our members are finding it difficult to transition from what they have been doing to other businesses because the lockdown caught them unaware,” the SACCO Manager said.

President Yoweri Museveni announced a total lockdown in March to curtail the spread of COVID-19, leading to closure of many businesses including schools, bars, monthly markets, saloons and transport.

Although the lockdown was later eased (about three months later) to allow a few businesses to operate, a majority of the small scale enterprises, such as saloons and bars remain closed, while others like and boda bodas are still restricted to only handling cargo. This has negatively impacted many who depend on these activities for their daily income.

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