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Munaku Kaama SACCO tipped on mechanisms to mobilize savings, recover loans

As many cooperatives across the country continue to grapple with the  COVID-19 pandemic’s disruption of mobilization of members’ savings and recovery of loans, cooperators have been tipped on member-centered strategies they can adopt to navigate this challenge.

Key among these, the KCCA Central Division District Commercial Officer, Wilberforce Waliggo said it is important that cooperative managers establish and maintain integrity and professionalism towards members, who according to him are central to the operations and success of the organization.

Waliggo made the comments last Friday during a two-day cooperatives training workshop organized by The Uhuru Institute for Social Development at Kisubi, Entebbe, where over 50 members and leaders of Munaku Kaama Kisubi SACCO benefitted from the financial literacy training.

The District Commercial Officer called upon cooperatives to offer diversity in loan products and charge competitive market prices intended at attracting more membership and business, exercise precaution on credit appraisals, manage proper records and guarantee prudent investment of member’s savings.

“SACCOs must internally mobilize resources so that they can have funds for their members. We also need to emphasize corporate branding and image, because members of the public won’t come and join a SACCO that doesn’t have an office, a clear address and professional staff. And if the rates are very high, people would rather go and borrow from banks,” Waliggo said.

Munaku Kaama, a Catholic faith-based community cooperative society formed in 2009 by residents of Kisubi, Katabi and Sasi sub-counties in Wakiso District, currently boasts of over 3000 members, with a current net worth of Shs 2.6bn and loan portfolio of Shs 1.1bn.

Adapting to the post-COVID era

Although the main activity of the SACCO consists in savings and credit, its leadership says that part of this work was disrupted by the lockdown.

Simon Peter Mukasa, the Vice chairperson of Munaku Kaama Kisubi SACCO says that business has slowed down as a result of the COVID-19-related lockdown, coupled with a drop in member savings, an increase in savings withdrawals and overall financial anxiety.

“Generally there has been a decrease in savings, yet members have been doing more withdrawals. Usually in this last quarter, our savings are much bigger. Last year around this time, we had over 4 billion shillings in savings. But currently, we have 2.3 billion shillings which is a big drop compared to the previous two years,” Mukasa analyzed.

The SACCO Vice President says that currently, the loan default rate is below the 5% threshold, a result he attributes to due diligence during loan appraisals which he says guarantees loan safety.

“Defaults from members arise from poor loan appraisal mechanisms, which once faulty, may lead to high loan defaults and loan recovery challenges,” Mukasa said, adding that Munaku Kaama also relies on a loans insurance policy to ensure loan safety.

Whereas Munaku Kaama charges an interest of 12% per annum, Mukasa says its lending policy is currently being reviewed to promote diversity of the products and ease access to members, reducing the turnaround time.

The group is also reviewing its savings policy, and in a move to increase loan recovery, they are leveraging on technology to enable efficiency and ease loan repayment.

“We have also introduced payment on the mobile money platform. This has worked in promoting efficiency in collection of loans. We started that platform in July, only for savings. We audited it recently and we have transactions of Shs 126m; people are sending in money,” Mukasa said.

Nantongo Grace Ssebutinde, 56, a single mother and resident of Kitaala, Katabi Sub County, who has been a member of Munaku Kaama since its inception in 2009, says loans from the cooperative have enabled her to educate two of her children through University in addition to building rental houses which she wishes to expand further.

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