GULU- Low engagement in income generating activities among members of Village Saving and Loan Associations [VSLAs] in Gulu City is crippling their growth, according to the city commercial officer, Nixon Komakech.
VSLA is a self-managed savings and credit group that does not receive any external funding. It is also self-capitalized using the Rotating Savings and Credit Association [ROSCA] model, where people can pool their savings and borrow from them.
They became famous following concerns by financial experts that there was an estimated 2.5 billion unbanked adults worldwide.
Komakech who was speaking during an exclusive interview with theCooperator on Wednesday explained that daily income generation makes it easy for members to repay loans they may borrow from the association.
Komakech notes that, “Those who want to do real village saving must be in production for it to work. You must have something you do daily to generate you some money. For example, if you are selling porridge, you know that you will make money every day and save part of the profits from which you can borrow later when there is need.”
He noted that it is important for people to use part of profits from their production to cater for basic needs like school fees instead of borrowing.
“The most common problem we get from VSLAs is members borrowing money for example to pay school fees which they fail to pay back. When you borrow to pay school fees you are not investing, you start to feel like the money has not helped you and you will definitely struggle to pay it back,” he said.
He also discouraged members against borrowing amounts of money that they cannot easily pay back, saying this is another reason many VSLAs in the country are collapsing.
“If you want to borrow and your return period is one month. Don’t borrow more than Shs 100,000 when you can only pay back Shs 50, 000,” Komakech said.
Okun Felix, the chairperson of Kacel Watwero Media VSLA, a saving group for journalists in Gulu City recently noted during the group’s annual general meeting that some of its 30 members had struggled to pay back loans in 2022.
“We encourage members to engage in income generating activities at a personal level so that they can easily pay back loans they borrow,” Okun said.
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