KAMPALA – The chief executive officer of Uganda Cooperative Savings and Credit Union [UCSCU], Dr. Sylvester Ndiroramukama has underscored the role of SACCOS in helping communities to fight poverty.
Talking to theCooperator from his office in Kampala, Ndiroramukama said government could take advantage of SACCOS to eradicate poverty in a sustainable manner, saying that SACCO members participate equally and passionately without looking at selfish gains.
“The SACCO business model is one very critical element that provides a solution to poverty eradication efforts by government and it ensures all players are brought in the business on equal footing,” he said.
Citing an example of Kenya, Ndiroramukama said the SACCO sector in the East African country contribute at least 30 percent to the gross domestic product [GDP], but also enhances the positive contribution to the lives of the People.
He said in the 1970s, Kenyans would travel to Uganda to benchmark SACCO operations yet currently, Kenya is ahead of Uganda because the latter experienced political instabilities.
“These countries we talk about have been quite politically stable over the years, with growing economies, that has allowed generational transitions for the success of the sector,” he said.
UCSCU, he noted, is charged with the responsibility to organise, train, and equip the SACCO sector players with the relevant knowledge to run the businesses.
In 2007, the Union was mandated by government to organise and form SACCOS in all Sub-counties, as a government project to eradicate poverty by empowering people from the grassroots level.
Ndiroramukama said several SACCOS were formed, although structural challenges affected their take-off.
Ndiroramukama says they have since embarked on capacity building for the SACCOS members, to enable them run sustainable businesses, but also add value to their members.
“We have trained so many SACCOS and helped them influence changes in the different communities they operate in, which has been our key objective,” he says.
He noted they have trained at least 100 SACCOS in the country over the years, with individual members acquiring skills in SACCO management, lobbying and advocacy, governance and management, planning, and resource mobilisation.
10-year tax exemption
Ndiroramukama says UCSCU championed an advocacy campaign that secured a 10- year income tax exemption for all SACCOS, which he said was a major boost to the development of the sector. The tax exemption runs from July 1, 2018, to June 30, 2027.
He said tax exemption has given sector players a huge financial enhancement to develop their profiles, grow their membership capacity but also impacts the business of their members.
“The exemption would allow SACCOS plough back this would be income tax money, give it out to the members to further develop their businesses,” he says.
According to Ndiroramukama, several SACCOS wanted to achieve business automation in the new era of technology, while others are set to use the savings for infrastructural development, such as building their own office premises.
Ndiroramukama says UCSCU has started an initiative to document all the developments achieved by the SACCOS as a result of using the savings, as a tool of accountability to Parliament after the ten years tax holiday.
“We are documenting the benefits from the SACCOS using their money. We are advising all these SACCOS to document all these benefits so that it gives us an opportunity to account to parliament,” he adds.
Challenges in the sector
Ndiroramukama says the sector is still faced with tremendous structural and operational challenges.
He says challenges of management and governance still stand out as the major causes for the collapse of SACCOS, adding that members are not adequately equipped with the necessary knowledge and skills.
“Some people form SACCOS with the excitement that government will support them. They however fail to maintain the same SACCOS due to lack of liquidity, and thus the SACCOS collapse without achieving their objectives,” he adds.
He also pointed out fraud which was so rampant in the initial stages of the sector as several groups duped communities, saying they were microfinance institutions.
Ndiroramukama however says with regulations now in place, fraud has drastically reduced, with members adopting tight control measures and adhering to internal control systems.
“Many people lost money initially due to fraudulent leaders in microfinance institutions, but with the coming in place of regulations, this has tremendously been reduced,” he adds.
Advocacy for one regulatory regime continues
He says UCSCU is vigorously engaging government to develop a single legal framework through which SACCOS and cooperatives are regulated. He says several regulations are bogging the operations of the SACCOs, which he says has created an atmosphere that hampers their growth and development.
“We are rooting for a single legal framework that would regulate our operations and a single regulator that would understand the uniqueness of our business,” he says.
He argues that all institutions aspiring to help the SACCO sector grow need to appreciate and understand the critical operation of the SACCO business model.
“Running a member based organisation where virtually all members have equal rights in decision making, is not as simple. We need to appreciate that,” he says.
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