Minimising loan defaults: District boss calls for financial literacy training for SACCO members

KABAROLE, APRIL 10 2025: Kabarole District LCV Chairperson, Richard Rwabuhinga, has called for enhanced financial literacy training for members of Kihondo Tukwatanize Savings and Credit Cooperative Society Limited [KITUSACCO] to address the increasing problem of loan defaults.

Rwabuhinga made the call while speaking at the SACCO’s 24th Annual General Meeting [AGM], which was recently held at Kichwamba Technical College in Kabarole district.

“Many SACCOs collapse because members fail to repay loans. There is a pressing need for financial literacy training to help members understand when to take out loans and how to use the funds responsibly. Often, loans are taken when they are not urgently needed and end up being misused,” he said.

He emphasised that loan recovery remains a serious concern for many SACCOs, urging members to take this matter seriously in order to ensure the growth and sustainability of the SACCO.

“When members fail to repay, it prevents others from accessing credit, which in turn hinders the development of the SACCO,” he added.

Despite these challenges, Rwabuhinga praised the resilience of KITUSACCO’s members.

Financial performance and challenges

Nebath Rukidi Mbogo, Chairperson of KITUSACCO, revealed that the SACCO faced a major challenge in 2024, with low loan recovery leading to an impairment loss of over Shs 466.6 million.

“Some members have consistently failed to meet their repayment schedules, which has affected our performance. We have also observed widespread multiple borrowing, leading some members to misuse the collateral pledged to the SACCO,” Mbogo explained.

He urged loan holders to honour their obligations and advised prospective borrowers to strictly adhere to repayment schedules to ensure smooth operations.

“While our share capital increased by 51%, it still remains low compared to the high demand for loans. I appeal to members to increase their share capital to help the SACCO meet the growing demand for loans,” Mbogo added.

Despite these setbacks, KITUSACCO experienced growth in 2024. Membership rose by 32 percent, and the number of active members increased by 37 percent, from 1,624 in 2023 to 2,221 in 2024. The SACCO also posted a profit of approximately Shs 232.3 million.

Mbogo encouraged members to continue growing their share capital and reducing loan defaults to further improve profitability.

He also announced the opening of new branches in Rwamabale [Ntoroko district] and Bundimasoli [Bundibugyo district], where the SACCO is constructing a permanent office that is expected to be completed by December.

AGM Resolutions

During the AGM, members resolved that Shs 130 million of the profit realised in 2024 be allocated to dividends on shares, while Shs 102.2 million would go into reserves to offset remaining losses from previous years.

Members also agreed to reduce the interest rate on loans from 2.5 percent to 2 percent.

New Board Elected

Nebath Rukidi Mbogo was re-elected as Board Chairperson, with Stephen Muthawa serving as Vice Chairperson.

In a competitive race, Solomon Rwabuhinga, formerly on the supervisory committee, defeated former General Secretary Moses Ngamba Muhindo. Jackie Tumusiime retained her position as Treasurer after contesting against Rev. Ivan Twinomujuni.

Other elected board members include Rose Biringi, Stella Tuhaise, and Yona Kathembo.

On the supervisory committee, Rev. Herbert Akoraebirungi was re-elected as Chairperson, with Benedictus Beingana and Mable Hilda Kajobe as members.

About KITUSACCO

Founded in 1972 by employees of the then Ministry of Agriculture under the name “Ukulima SACCO” (meaning “Agriculture” in Swahili), the cooperative was later renamed Kihondo Tukwatanize SACCO.

KITUSACCO’s focus is to provide affordable financial services and mobilise funds to improve the welfare of its members, with the goal of becoming a strong, self-sustaining organisation.

Currently, the SACCO has 10,269 members, a share capital of Shs 546,718,950, total savings of Shs 6.28 billion, fixed deposits worth Shs 319.7 million, and a loan portfolio of Shs 5.77 billion. It has 2,221 active members.

The SACCO has also invested in fixed deposits with other banks and recently acquired a truck to support its operations. With eight branches across the region, KITUSACCO continues to expand its reach and services.

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