What Savings and Credit Cooperative Organizations are?

These are voluntary associations where members regularly pool their savings and subsequently obtain loans which they use for personal purposes. The objectives of most if not all SACCOs is to assist the society members to undertake income generating activities through provision of credit facilities and offer members complimentary savings and affordable credit services.

They provide financial services such as savings and credit to members sharing a common interest which include but not limited to living in the same area or working for the same employer, belonging to the same church, having attended the same school. They have been beneficial in improving peoples saving culture since they will require you to save an agreed minimum amount every month.

Unlike banks, SACCOs are not profit driven. You become a partial owner the moment you open an account or commit to paying a membership fee. They work in the best interest of their members. Rules and guidelines that govern them can always be changed at any time as long as there is a mutual agreement or if more than half of the members see fit.

Over the years SACCOs have faced a number of short comings that require risk management in order to manage and carry their business to each member’s satisfactions.

Some of these challenges include poor loan recovery, politicization of the SACCO activities, leadership challenge, high labor turnover, inadequate supervision and inability of staff to manage credit.

In this time and era where organized crime and illicit financial flows in the name of money laundering has become the order of the day, it is important that individuals or people seeking to join one do a thorough back ground check. Members should take an extra step in finding out if it is registered at the Ministry of Trade Industry and Cooperatives-MTIC and complies to the rules and regulations. The ministry has so far issued 6,504 certificates to enable SACCOs operate legally.

Under section 36 of the regulatory Act, a SACCO shall not conduct the business of the financial services unless its licensed under the same Act. The Uganda Microfinance Regulatory Authority-UMRA commenced the licensing of SACCOs in 2021. However, some SACCOs continue to operate in contravention under the same Act.

 

 

 

Compiled by

Prima Birungi

Program Assistant

The Initiative Against Illicit Finance- IAIF

 

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