SACCOs Moot Members’ Reverification to Combat Multiple Borrowing

Managers of Savings and Credit Cooperative Societies (SACCOs) in Sembabule district are calling for strict enforcement of governing regulations to combat multiple memberships in the districts’ SACCOs, saying it is stifling the SACCOs’ growth.

The district is home to at least 33 registered cooperative societies according to its framework paper, but many of them have barely been able to grow to their potential, says Daniel Kintu, the manager of Sembabule SACCO, one of the leading SACCOs in Sembabule Town Council.

Kintu attributes the minimal growth to people holding multiple memberships in several SACCOs – some with competing objectives, with a view of obtaining multiple loans which they later fail to pay back.

“Our observation is that these people registering with us do not do so necessarily to save. The majority are perennial borrowers with a poor repayment culture,” Kintu says.

He argues that as a result, the SACCOs are facing a problem of a high default rate on loans advanced out to their clients.

Now, Kintu says, through their umbrella body, SACCO managers are moving to stop the practice. He told theCooperator that they’re mooting for the full operationalization of the governing laws at the district and regional level to make it impossible for people to hold multiple memberships and take multiple loans in SACCOs.

Already, section 17 of the Cooperative Societies Act 1991, forbids any person to be a member of more than one registered society having the same or similar objects for avoidance of contradiction

But SACCOs have for long been reluctant to implement that particular clause of the law as they seek to maximize the benefits that come with many members.

Kintu says they now have no option. “Our SACCOs are not growing because of this practice,” he says, adding “It is high time we organized and undertook to verify our members and implement the law to the latter to stop the vice of multiple defaulters.”

Kintu’s concerns are shared by other SACCOs in the district. Hussein Tamuzadde, a board member of Mateete Saving society also told theCooperator that their SACCO faced a similar problem, noting that the high number of loan defaulters has forced their SACCO to raise interest rates on loans to make up for the bad loans.

SACCOs according to the Cooperative Societies’ Regulations of 1992, are member-founded microfinance institutions that run on member savings and tend to their financial needs through providing affordable credit.

Simon Peter Ddungu, the Sembabule District Commercial Officer told theCooperator that of late, his office had embarked on vigorous sensitization of cooperators to adhere to cooperative best practices as a way of supporting the growth of their SACCOs.

“These institutions are member-formed and member-owned, the members themselves are responsible of their sustainability. This is what we’re trying to remind cooperators,” he said.

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