In December 2019, Masaka Co-operative Union formed a financial cooperative to boost coffee production capacity in the region.
For the last 70 years, Masaka Co-op union has worked with primary societies involved in coffee production in the greater Masaka region that comprises the districts of Lyantonde, Ssembabule, Bukomansimbi, Rakai, Lwengo, Kalungu and Kyotera.
According to Emmanuel Ssenyonga, the General Manager, the union was started in 1951 to combat oppression of indigenous business people involved in the coffee sector by Indians who dominated trade in the lucrative crop.
“The Union was a hedge against the bad practices of buyers. Indians owned the factories at the time, and because Africans knew nothing, our farmers’ coffee was under weighed and they were paid less than their due,” says Ssenyonga.
In the 1980s, Masaka Union started to supply the export market directly and was thus able to provide farmers a better bargain on their coffee and even give them premium pay.
However, Masaka Co-op Union was, like other unions in the country, hard hit by the wars that rocked the country between 1979-85.
Joseph Kavuma, the Union Chairperson says the Masaka Cooperative Union has struggled to recover ever since.
“All union operations were halted. We even retrenched most of our employees and only remained with a skeleton staff of four people because business was no longer running,” Kavuma says.
In addition, the Union was forced to sell most of its enterprises including ranches and coffee factories to clear the outstanding debts.
Worse still, the Union remained without working capital to resume its normal coffee business.
Restoring through a SACCO
It is against this background that the union decided to set up the Masaka Union Co-operative Financial Services Limited (MUCOFI). Launched on December 8, 2019, the financial cooperative will contribute to the Union’s grand goal of reviving and boosting coffee production in the region.
The Union’s Chairperson hopes that, by providing farmers with affordable credit, MUCOFI will deliver them from the clutches of predatory lenders and enable them get a better price for their coffee.
“Our farmers got tired with private buyers because whenever they had a problem, they would sell their coffee during flowering stage. So we set up a financial Centre where farmers could get ‘coffee loans’ a lower interest rate of about 1.5% per month instead of being cheated by private buyers,” Kavuma explained
According to Bukenya Swaleh, MUCOFI’s accountant, the relatively new SACCO already has 456 members, with a turnover of Shs 1.1bn.
“Our capital base is about Shs 1bn and our loan portfolio stands at Shs 654 million,” said Swaleh
The SACCO has total savings of Shs 83m and members’ share capital stands at around Shs 40m.
However General Manager Ssenyonga says the union is slowly getting back to its feet by using the Shs 17.8bn partial compensation the Union received from government to resume coffee buying and export.
“We hope to facilitate more members and build stronger societies. This means more production and increased exports as a result. This is where we are heading to,” says Ssenyonga.
The Union has also embraced value addition and has started producing roasted coffee for local consumption.
“Right now, we have pilot experiments going on. Over the next five years we expect to introduce roasted coffee beans onto the local market so that we can start consuming our own coffee,” he said.
He called upon government to utilize unions and other cooperatives in providing quality inputs to farmers.
“In the early 1990s, the government used to acquire agricultural inputs through Coffee Marketing Boards and send those inputs to the unions in the districts, which would then dispatch them equitably to the farmers,” Ssenyonga recalls.
This system, he believes, gave government a better estimate of the appropriate inputs required by the farmers.
“This is unlike today where farmers’ inputs decisions are taken either by the NAADS Secretariat or Operation Wealth Creation officials (OWC), which results in wrong input and season timings, and poor quality deliveries.”
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