Opinions & Commentary

OPINION: Uganda needs more of producer and marketing cooperatives and less of SACCOs

By James Abola

In the 1950s when Africans realised they were firmly stuck at the bottom of the economic ladder, they started forming cooperatives. All over the country, there were producer and marketing cooperative societies that reduced the cost of agricultural production for peasant farmers while increasing their income through better bargaining power.

When the societies joined and formed unions, they got stronger bargaining power as well as pride in their work. To address the challenge of availability and affordability of credit, the unions formed a bank that served them well until this was changed by the ruling government.

The death of the Cooperative Bank Limited in 1999 accelerated the death of Cooperative Unions and Cooperative Societies across the country. For some reason, the government started campaigning for the formation of Savings and Credit Cooperative Societies (SACCOs) about 10 years ago.

The government promoted SACCO model requires a group of say teachers or veterans or car washers to form the cooperative society. Once the society is formed, then government can give a grant or low interest loan to it for onward lending to members.

There are few differences between the cooperatives of the 1950s and the 2010s. The 1950s societies were value creating groups of people. They used the society to source for production inputs at a discount and to bargain for good selling prices for their produce. Today’s societies operate like money distributing entities. Most members join SACCOs to borrow money instead of growing wealth.

The 1950s societies were largely the initiative of the members and the societies joined to form unions which handled national and international business for the co-operators. Today’s cooperatives work like stand-alone entities.

The benefits of working as a cooperative are still needed by the poor citizens of Uganda today. What is needed though are more of producer or marketing cooperatives and less of SACCOs. There are many benefits when the cooperative is initiated by members instead of government officials.

James Abola is a business and finance consultant. Email: james.abola@akamaiglobal.co.uk

Source: Daily Monitor

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