Pooling resources: UCSCU SACCOs raise over Shs 890mln for re-capitalisation

KAMPALA – SACCOs subscribing to Uganda Cooperative Savings and Credit Union [UCSCU] have pooled resources of about Shs 897 million to re-capitalise members as they grow their businesses.

Through the central finance facility initiated by UCSCU leaders, several SACCOs have contributed funds that have enabled some of the young and poor-performing SACCOs to re-capitalise, without necessarily borrowing from the commercial banks whose interest rates are high.

The facility that receives mandatory contributions from UCSCU member SACCOs is run as an independent business venture whereby contributing SACCOs earn some profit from the loans disbursed at a 15 percent interest rate.

UCSCU’s board chairperson, Jalia Bintu Abwooli says the facility is a noble contribution meant to sustain the poor-performing SACCOs, but also an opportunity for the big SACCOs to make additional money off their surplus.

“These SAACOs give us their surplus funds in way of saving, and this money is lent out to the struggling SACCOs who return the money with a small interest rate,” She told theCooperator during the union’s annual general meeting [AGM] at Maganjo in Kampala.

In the year 2021, the facility approved and disbursed loans totaling Shs 610mln, despite the fact that not all member SACCOs under UCSCU have embraced the facility.

With a maximum loan application standing at Shs 500mln, the facility runs a minimum at Shs 5mln.

Out of 343 member SACCOs under UCSCU, the facility has only 36 member SACCOs who are actively saving with the facility and enabling others to access credit.

Among the big players contributing to the facility are; Wazalendo SACCO, Walimu SACCO, Mushanga SACCO, Muhame Financial Services, and Shuuku SACCO, among other notable contributors.

The Facility was initiated following the growing number of SACCOs that were struggling, which would threaten the sector.

Bintu said the facility has also attracted development partners who want their resources channeled through it due to the growing trust, credibility, and good management.

“We have partners that want to associate with the facility now, due to the trust that members have developed into this, this is an all-equal opportunity facility and equal benefits for all,” she added.

Speaking to the participants in the AGM, the State Minister for Trade in charge of Cooperatives, Fredrick Gume Ngobi cautioned SACCO leaders and managers against abusing the little resources saved by the members.

“Once you collect money from members, it’s public money. If you abuse it, we shall come for you,” Gume said.

He commended the UCSCU for its unique approach to helping other members and argued the benefiting SACCOs to always seek support from government facilities for proper financial management to keep afloat.

“We have the Microfinance Support Centre, through which government is committed to helping you,” he said.

Ngobi also cautioned members against deviating from the pre-arranged annual strategic plans for their SACCOs, as this distorts work and creates unnecessary management pressures resulting in shortfalls.

With an annual expenditure budget of at least Shs 153.8mln, the facility projects to attain operational self-sufficiency raising to at least 126 percent.

In the coming year, the facility projects to accumulate at least Shs.193.5mln from items including fees from interest on loans, loan processing fees, and fixed deposit interests.

With the growing number of member SACCOs subscribing to the fund, the facility is projected to raise its liquidity profile to at least Shs 1.3bln by mid-2023 to lend out to more of the struggling members.

The facility also contributed up to Shs 9.5mln in government taxes this year, which is expected to increase to Shs 10mln next financial year.

https://thecooperator.news/bou-readying-to-regulate-big-saccos-pledges-to-work-with-ucscu/

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