In July I had the opportunity to visit Uganda and encounter the credit union movement in the country. There are approximately 1,400 credit unions in Uganda with 12 million members, known as Saccos (savings and credit co-operative societies), and they are growing, being particularly popular in the western and central regions of the country.
I travelled to the capital, Kampala, to meet with Dr Sylivester Ndiroramukama, CEO of the national representative body, the Uganda Co-operative Savings and Credit Union Limited (UCSCU), who generously offered his time to describes the features of Ugandan Saccos and the role of UCSCU.
Dr Sylivester also arranged for me to visit a local credit union, the Kyebando Co-operative Society Limited, where the Loans and credit manager, Mpiima BobLiving, and Andrew Mugumya, regional co-ordinator at UCSCU, discussed further the challenges and opportunities for Saccos.
I observed interesting similarities and differences between Ugandan Saccos and credit unions in Britain and Ireland. The Saccos also have a model based on savings and unsecured loan facilities, but in an economically poor country, still in recovery from Covid-19 lockdown measures, many credit union members have little or no savings capacity but are desperate for credit in order to start a small business, so the credit unions have a liquidity challenge. Dr Sylivester observed that a strategic objective for the movement is to move to savings – rather than lending-led relationships with members.
Lending in urban environments is complicated by the transitory nature of many people’s residency status – they come to the town or city for employment, may take a loan but if the business does not work out they move back to the countryside or another town, potentially defaulting on their debt. In rural areas, the traditional credit union community knowledge means that members can’t so easily get away from their financial commitments.
Saccos have widened their service offer, with many, such as Kyebando, offering agency banking. As in Britain and Ireland, Saccos face a challenge in maintaining their relevance to increasingly digitally-orientated younger citizens. Mobile money is pervasive in Uganda, enabling people to transfer funds to each other directly, from one mobile phone to another. Critically, it doesn’t require a smart phone or Wi-Fi, neither of which are available to many people, and the telecoms provider acts as the intermediary rather than a bank. Mobile money has been a game-changer for financial inclusion in Uganda and across East Africa. Saccos also offer facilities that enable people to make deposits or loan repayments with mobile money.
Common bonds in Uganda, which started out as orientated to parishes, are now much broader and often overlap – Mpiima at Kyebando said there are 20 other Saccos serving his neighbourhood. Because people are very mobile, as noted above, members of a local Sacco can be distributed across the country. Industrial Saccos are in general larger than community. For example, Exodus Co-operative Savings and Credit Society Limited serves the Ugandan police force, with membership of 42,715 and assets of €8.9m / £7.6m (2021).
As with representative bodies in Britain and Ireland, UCSCU leads on advocacy and lobbying with regulators and stakeholders on behalf of its Sacco members. Also like western European representative bodies, it offers insurance, training and information services. UCSCU has ambitious plans to develop a physical training academy at its head office, supported by the German Sparkassenstiftung (savings bank foundation) for International Co-operation.
I was particularly interested to hear that the organisation runs a central finance facility, pooled funds from Saccos to enable centralised liquidity management, investment and inter-lending to member organisations. A few years ago, Ralph Swoboda wrote a paper about this ‘credit union for credit unions’ model, and Swoboda is currently planning a research project on liquidity, so it was encouraging to find out that UCSCU was managing this successfully. In addition, UCSCU has built and rolled out a core banking system for Saccos, with their appetite sharpened by their experience during Covid lockdown, and is now developing a national management information system. Such technology projects have sometimes proved painful for representative associations in Ireland and Britain.
It was a fascinating day and a reminder to me of the common values and services of the international credit union movement. This was only reinforced by discovering that on a development education programme Dr Sylivester had been mentored by Marlene Shiels, CEO at Swoboda member Capital Credit Union in Scotland.
It’s both important and energising to be reminded of the impact of credit unions around the world, and that this is built on connections between individuals locally, nationally and internationally.
