SHEEMA, March 16, 2026 — Cooperative experts and delegates have issued a stern warning to the leaders of Savings and Credit Cooperative Organisations [SACCOs] to desist from loan defaults, a practice they say threatens the stability of this category of financial institutions.
This was echoed during the 27th Annual General Meeting [AGM] of Shuuku SACCO held at Brethren Gardens in Kishabya Trading Centre, Shuuku Town Council, Sheema district, where stakeholders noted that conflict of interest and non-compliance among top leaders were key drivers of financial instability in SACCOs.
Milton Tumwesigye, a delegate from the Nyeihanga Branch, said some board members use their positions to obtain interest-free loans and later fail to repay them.
He urged the leadership to expose loan defaulters to compel repayment and safeguard Shuuku SACCO.
Emmy Ronald Tumusiime, Chairman of the Sheema SACCOs Union, challenged delegates to respect the approved bylaws, governing loan repayment and defaults.
Stephen Bongonzya, the Board Chairman of Shuuku SACCO, acknowledged that loan default remains a significant challenge for the organisation.
“According to the Bank of Uganda, if a loan exceeds six months without being paid, it is categorised as a loss, and if it is not recovered, we write it off,” Bongonzya explained.
He added that some members only service the interest on their loans while failing to repay the principal, forcing the SACCO to make provisions for bad debts.
“When members only pay interest and fail to repay the principal, we are required to provide for bad loans in our books of account, which ultimately affects the dividends paid to members who honour their repayment schedules,” he said.
Bongonzya also highlighted contradictions within the SACCO’s bylaws that complicate enforcement of disciplinary measures against defaulters.
“If a board member or delegate defaults for more than 30 days, the bylaws say they should expel themselves from the board. However, another bylaw requires a suspension process where the individual must first defend themselves. These conflicting provisions create challenges in enforcement,” he noted.
Prof. Ephraim Kamuntu, the Chief Guest and vision bearer of Shuuku SACCO, said the board had been undermined by conflicts of interest, making it difficult to enforce accountability.
“I saw board members failing to take decisions because the bylaws also catch up with them. Even you delegates are affected by the same provisions,” Kamuntu said.
He stressed that strong governance is essential for the sustainability of any SACCO.
“The foundation of a SACCO’s sustainability is strong governance. The leaders you choose should be effective, ethical and able to meet the ‘fit and proper person’ test,” he said.
Sheema District Commercial Officer Winston Asasira Kafurembe called for strict adherence to the SACCO’s 30-day default rule for leaders.
“Legally, when a board member defaults for more than 30 days, they should step aside. If you have failed to notify the SACCO why you have not repaid your loan as scheduled, then you should step aside,” Kafurembe said.
Former board chairman Billy Butamanya echoed the call, stressing that leaders must lead by example.
“A loan becomes problematic the moment it is not repaid as scheduled. If a leader defaults, even by a day, they should step aside because failure to recover loans is one of the main reasons many SACCOs collapse,” Butamanya said.
Leonard Okello, Chief Executive Officer of The Uhuru Institute for Social Development [TUI], presented the SACCO with a 2025 Resilience Award but cautioned leaders against emotional decision-making.
“Most cooperatives start experiencing problems when leaders fail to follow their own bylaws. If leaders do not repay their loans, why should ordinary members comply?” Okello asked.
He also urged Shuuku SACCO to diversify its products and investments to protect members’ savings and enhance growth.
“The biggest business for most SACCOs today is credit. The time has come for SACCOs to ask themselves what other investment options they can pursue,” he said.
Okello pointed to potential collaboration with Banyankole Kweterana Cooperative Union, suggesting that stronger partnerships between cooperatives could help increase member income through improved coffee processing and marketing.
“Our members here are also members of Banyankole Kweterana. When they are paid for their coffee, those funds should pass through their accounts here. You manage finance while they manage agriculture; together you can strengthen both sectors,” he said.
He further encouraged the management to introduce innovative products that would motivate members to increase their shareholding.
“If we do not innovate, we shall continue struggling with low share capital,” Okello added.
Rev. Canon Robert Kankiriho, a board member of the Uganda Cooperative Savings and Credit Union [UCSCU], used the meeting to advocate for a unified regulatory framework for SACCOs, opposing proposals to place large SACCOs under direct regulation by the central bank.
“Cooperators believe in unity and cooperation, where small SACCOs learn from larger ones so that we can grow together. We therefore need a single law and a single regulator who understands how cooperatives operate,” Kankiriho said.
Sheema Resident District Commissioner Muhindo Jane Asiimwe called on established SACCOs to mentor government-initiated programmes such as Parish Development Model [PDM] and Emyooga.
“Sheema is known across the country for strong SACCO performance. We should therefore support government-initiated SACCOs through benchmarking so they can learn from successful institutions like Shuuku SACCO,” Asiimwe said.
Despite the governance concerns, Chairman Bongonzya reported that the SACCO recorded relatively strong financial performance in 2025.
“The SACCO registered mixed performance during the year, but overall, our results exceeded most of the targets set in the strategic plan, except for membership growth,” he said.
He added that the SACCO’s portfolio yield currently stands at 28 percent, below the targeted 38 percent, largely due to loan defaults.
General Manager Herbert Ahimbisibwe attributed the institution’s recent Resilience Award to improved member profiling and data verification.
“When we analysed our membership records, we discovered that some members had died while others were inactive. Cleaning up the records helped strengthen our performance indicators and contributed to the award we received today,” he said.
The meeting concluded with a unanimous resolution from delegates that any SACCO leader who defaults on a loan must immediately step aside to protect the institution’s integrity and ensure it remains member-centred.
Background
Founded on April 17, 1998, by 30 members, Shuuku SACCO was established to provide affordable financial services aimed at improving members’ livelihoods.
The SACCO currently has 15,973 members, total assets of Shs 25 billion, share capital of Shs 3.57 billion and a gross loan portfolio of Shs 22 billion. It also recorded a significant increase in surplus, with total dividends rising to Shs 1.14 billion compared to Shs 533.9 million in 2024.
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