Members of Kabale-based Lyamujungu Co-operative Financial Services Ltd have resolved to reinvest all their dividends in order to absorb the effects of the COVID-19 pandemic that has affected many financial institutions in Uganda.
The decision was made during the cooperative’s recent scientific Annual General Meeting (AGM) held on Saturday, October 17, 2020.
According to the cooperative’s General Manager, Dicky Byamukama, the successful extraordinary annual general meeting held at Kizinga Church of Uganda, was attended by over 100 delegates and all the board members.
“To observe the COVID-19 SOPs, management was represented by branch managers and senior management staff. We did not compromise on the social distancing aspect either,” Byamukama said.
He confirmed that during the AGM members unanimously agreed to recapitalize Shs 235m dividends as part of their share capital to boost the cooperative’s growth.
“All members appreciated the advice from the supervisory committee where every share had generated 1000 shillings as dividends and they resolved to recapitalize those dividends,” Byamukama explained.
He, however, reported that some members had rejected the idea until the District Commercial Officer (DCO), Erasmus Natumanya advised them on the importance of reinvesting dividends at this material time.
“Definitely it was a big debate but our guest of honour (DCO) added his voice in instilling the purpose of saving dividends.”
He adds that the reinvested dividends will enable the cooperative to settle a loan worth Shs 500mfrom the Microfinance Support Center, of which Shs 350m remains unpaid.
The General Manager noted that the cooperative’s financial activities have been greatly affected by the cross border conflict between Uganda and Rwanda
“Actually we have suffered much since most of our members had businesses in Rwanda which were affected. As a result, many are no longer saving nor are they picking loans for business investments,” Byamukama said.
He says the cooperative is looking forward to acquiring land titles to protect, secure and safeguard the cooperative’s capital assets
“There should be modalities put in place to ensure that all our land gets titles to avoid instances of land grabbing which is a common practice today.”
Kabale District Commercial Officer, Erasmus Natumanya advised that delegates be availed with by-laws to guide them in cooperative legal frameworks.
Robert Asiimwe, a representative from Uganda Co-operative Alliance thanked delegates for patronizing their cooperative.
A leading cooperative
One of the leading cooperatives in South Western Uganda, Lyamujungu Co-operative Financial Services Ltd (LCFSL) started in August 1984 with 16 members.
It was registered by the Registrar of Co-operatives in 1990 under Reg. No 5695 and mandated to operate within greater Kabale District.
Currently, it has 7 branches and four outreaches, with a total of 23,000 members, total savings of Shs 4.1bn, total share capital of Shs 3.05bn, a net surplus of Shs 301m, and a loan portfolio of 8.2bn.
According to its General Manager, Lyamujungu is keen to convert into a Microfinance Deposit-taking Institution (MDI) in the next 5 years.
“Through this new law where Bank of Uganda is to take on some cooperatives in terms of supervision and guidance, we see Lyamujungu getting promoted to a Tier 3 MDI,” says Byamukama.
He urged the cooperators to improve on their savings and buy more share capital to anticipate further institutional growth and support.
“There is need to encourage our members to develop a saving culture in a bid to foster the SACCO’s operations for growth and development.”
He, however, warned its members to desist from multiple borrowing that has resulted in poor loan repayments.
The meeting also recommended that capital expenditures be minimized until the financial environment normalises.
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