KAMPALA, November 7, 2025 — In Uganda, Savings and Credit Cooperative Organisations [SACCOs] are widely celebrated for enabling people to save collectively, access affordable credit, and support one another. For many smallholder farmers, traders, and informal workers, these financial intermediaries have become a cornerstone of survival and progress.
These financial cooperatives have opened financial doors once firmly closed by traditional banks. Yet beneath this success story lies a quiet paradox: the same financial support that sustains SACCOs can also limit their innovation, independence, and ambition.
SACCOs in Uganda primarily exist to provide credit, and there is no doubt that credit plays a crucial role in the socio-economic transformation of their members. Loans allow individuals to grow their businesses, purchase farm inputs, and respond to emergencies. Without access to affordable credit, many would remain trapped in a cycle of hand-to-mouth existence.
However, challenges arise when financial assistance becomes too predictable. When SACCOs and their members begin to expect support automatically, they often take fewer risks, show less creativity, and fail to explore new opportunities for growth.
This challenge is particularly evident in SACCOs established under the government’s Parish Development Model [PDM]—an initiative designed to alleviate poverty among low-income households. Many of these SACCOs were set up to receive government funds without requiring members to save first. As a result, members often show limited creativity and commitment to saving.
In my view, future disbursements to these SACCOs should be tied to members’ savings contributions. Such a policy would encourage a savings culture, helping to ensure the sustainability of these community cooperatives when government funding eventually ceases. By that time, members would have built a solid capital base from which they could continue borrowing to support their activities.
Reports from the Association of Microfinance Institutions of Uganda [AMFIU] reveal that liquidity shortages, inadequate follow-up, and the lingering effects of COVID-19 have weakened some SACCOs. A number have resorted to waiting for donations from politicians and other benefactors, often compromising their operational independence due to interference from sponsors with vested interests.
Research across East Africa tells a similar story. While access to microcredit often improves short-term welfare, it does not always lead to sustained business growth. When borrowing occurs without proper guidance or mentorship, it tends to support day-to-day survival rather than long-term expansion. Many cooperative members lack financial planning skills, and as a result, they struggle to diversify their products, leaving them dependent on a single source of income, and on sponsors, a significant financial risk.
The solution is not to stop lending, but to rethink how support is delivered. Cooperatives could combine credit with mentorship, business training, and incentives that reward innovation and savings discipline. By linking loans to measurable progress, SACCOs can empower members to take calculated risks while remaining protected from failure.
This approach challenges a common assumption: that more support automatically leads to greater success. Across Uganda, members frequently refer to the “loan cycle”, a recurring pattern in which borrowing resolves today’s problem but leaves tomorrow’s challenge untouched. Support should indeed coexist with growth, but only when it helps SACCOs and their members to stand more firmly on their own.
SACCOs have transformed countless lives and remain a vital part of Uganda’s economic fabric. To continue driving progress, they must balance generosity with guidance. True empowerment is not about continuous financial assistance; it is about helping people to learn, adapt, and take initiative on their own. If cooperatives embrace this shift, they can evolve from merely providing comfort to fostering lasting resilience and independence.
The writer is anIT Consultant
bekaresmail@gmail.com
https://thecooperator.news/soroti-emyooga-sacco-leaders-tasked-with-recovering-funds/
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