Many SACCOs face collapse in 2021- Expert
2021 is likely to see the collapse of many Savings and Credit Cooperative Organisations (SACCOs), Leonard Okello, Executive Director of the Uhuru Institute, has predicted. The institute is a leading provider of business solutions in Uganda, with a special focus on helping cooperatives optimise their operations.
Okello made the remarks last Thursday during a training event for delegates of Lyamujungu cooperative financial services Ltd at Gorilla Hilltop hotel Kabale.
“Right now many SACCOs are being formed due to political pressure as people target election money. I will not be surprised if many such SACCOs collapse in 2021 after the elections are finished,” he explained.
Okello, recalled that a similar scenario had played out in at least one previous election cycle.
“In 2006, many people were asked to form SACCOs but after getting money from the election time, they disappeared. That is my biggest worry about the Emyooga fund at the moment,” he added.
Emyooga refers to a presidential initiative aimed at facilitating wealth and job creation by providing access to cheap credit for specialised enterprises with members organised under SACCOs.
Equipping SACCOs
The two-day training was aimed at equipping members of Lyamujungu SACCO, a leading financial cooperative in Kabale, with skills on good governance and effective management.
Members were urged to be dynamic if their SACCO is to thrive in today’s business climate.
“If you are not dynamic in modern business you will not survive for long. This training will enable members to gain knowledge and skills to grow the businesses with a cooperatives identity,” Okello said.
He also appealed to Lyamujungu’s management to work on being competitive so as to remain sustainable in the cooperative market.
“You are not the only SACCO in Kigezi; yes you have the name, the brand and performance but if you don’t remain competitive you could collapse,” Okello warned.
A distinguished history
Lyamujungu Cooperative Financial Services Ltd is a leading financial institution in Kabale district, with a total of 23,000 members.
It started in 1984 as a church saving group with only 16 members but it now has 6 branches and outreaches in the entire district.
According to Dinah Turyatunga-the cooperative’s Chairperson, Lyamujungu SACCO currently has savings of about Shs 2 billion and with over Shs 9 billion share capital.
Turyatunga says the Uhuru Institute training enlightened participants on appropriate investment practices and promised to transform Lyamujungu SACCO into a multipurpose cooperative.
COVID-19 slump
She however says that some of the SACCO activities were greatly affected during COVID-19.
“We don’t know when COVID-19 will end so we encouraged our members to resume normal operations, and people have started to pick up,” Turyatunga said.
However, she noted that challenges remain.
”For instance, our branches bordering Rwanda were affected because some of our members were trading in Rwanda which closed the border even before COVID-19,” explained Turyatunga.
AGM cleared
She confirmed that Lyamujungu was officially cleared by the Registrar in charge of Cooperatives to conduct their ‘scientific’ Annual General Meeting slated for October 17, 2020 as per the cooperative principle.
“We wrote asking for permission from the registrar and he has already sent us a letter of clearance because we committed to following a ‘scientific’ approach with SOPs in place in regard to COVID-19.”
According to the chairperson, the training was attended by the SACCO’s Board members, senior staff, advisors, delegates, the supervisory committee and vetting committee.
