About 312 Savings and Credit Cooperative Organizations-SAACOs in Uganda are victims of fraud and poor governance, a report by the Project of Financial Inclusion in Rural Areas-PROFIRA has revealed. PROFIRA monitors the performance of different SACCOS in the country.
According to the report, 64 out of the 453 registered SACCOs in Uganda have collapsed while 312 are struggling due to fraud and poor governance among other challenges. Collins Agaba, the program Manager PROFIRA, says only 77 out the 453 Saccos they are supporting have not suffered any problem.
She says 141 Saccos have at least one problem and the rest have suffered more than three problems. Agaba notes that while compiling the report, they discovered that defaulting on loan repayment, low volume of business and poor financial behaviours among the SACCO members were among the challenges affecting their performance.
She explains that the Saccos are managed by committees that are voted during general meetings, but most of the leaders often lack the knowledge of managing SACCOs and depend on untrustworthy employees who embezzle member’s deposits.
Robert Odur. the Chairperson Board of Directors Ikwera SACCO agreed with the findings by PROFIRA. Odur noted that Ikwera SACCO that started in 2009 with a portfolio of over Shillings 170 million has now reduced to less than Shillings 50 million.
“Shillings 169 million was given out by Ikwera Savings and Credit Cooperative Society Limited in the financial year 2018/2019 but in the last financial year, we gave out only Shillings 62 million as loans. Our clients are not able to repay money on time, the loan recovery is a challenge I think due to coronavirus,” he said in an interview.
Odur, however, noted that the SACCO was able to partner with MOBIS, Uganda Cooperative Alliance, and AMFIU, which he believes will help them to address the challenges. Patrick Bura, the Kwania district Commercial Officer is worried at the rate at which Saccos are collapsing. Abura notes that many people may remain poor in the district if no solution is found to keep the Saccos alive. According to Bura, there is urgent need to rejuvenate the failed Saccos and equip their leaders with management skills or else many people will suffer and even lose their assets in search of financial services that they are meant to offer.
Joyce Acio, a resident of Aduku town council notes that people are likely to run to money lenders whom she says are worse than banks because of exorbitant interest rates they charge. She blames poor governance of the SACCOs on members whom she said are often bribed to elect incompetent leaders.
She explains that when members are employed to run Saccos, they start borowing interest-free loans because no one is supervising them. She advises all Saccos to establish Internal Audit Committees whose task should be to regularly audit the financial institutions to avoid embezzlement.
Basil Anthony Okello Onac, the Kwania District LC V Chairperson calls upon the Ministries of Planning, Finance and Economic Development, Trade Industry and Cooperatives to expedite the process of Strengthening Saccos through the Project for Financial Inclusion in Rural Areas- PROFIRA.