UGANDA – Stanbic Bank Uganda Limited has launched a US$100 million savings and credit cooperative (Sacco) fund aimed at transforming the rural communities of Uganda.
Under the new product, Saccos shall get unsecured loans of up to USh200 million (US$55,827) for first-time borrowers and USh400 million (US$111,655) for repeat borrowers with a satisfactory repayment history.
General-purpose Saccos shall access the loans at 12.5 per cent interest rate per annum while the agriculture based Saccos will get loans at 10 per cent interest rate.
Patrick Twinamatsiko, the head of Sacco business at Stanbic, said the fund would help increase the number of bankable Ugandans as it drives to serve 119 Saccos serving a million members around the country.
“Even when people do not hold accounts in different banks, almost each member of our community is affiliated to a certain registered Sacco,” said Patrick.
“We now want to find them where they are and help improve financial inclusion in the country to drive economic activity. All the Saccos need is proof of demonstrable credit and financial behaviour from any commercial bank with which they bank.”
Patrick said the Sacco sector had been challenged by poor management, rudimentary record-keeping methods, poor saving culture as most people save to spend, not to invest.
“Before rolling out the programme, we noticed that most Saccos had a poor saving culture, were very far, feared the high costs of maintaining a bank account and the banks are very far from their rural communities in which they are situated, and rudimentary means of servicing banks, etc,” added Patrick.
To address these shortfalls, Twinamatsiko said all the countrywide partner Saccos would be provided with financial literacy and governance training, digital skills transfer of using updated financial software to digitize their operations and also provide insurance for their operations, among others.
Modester Shisa, the manager of Busiu Sacco, said the loans from Stanbic had helped their 3,964 members to recover from the brunt of the pandemic since it left most businesses and the Sacco itself on the brink of collapse.
She added that the Sacco had received two sets of credit between May and December 2021, amounting to USh200 million (US$55,827).
“During the lockdown, most of the members almost ‘ate’ their stock as they tried to out a living after the collapse of their businesses. The loan facility from Stanbic has helped our members to recover from the pandemic as we are now able to reschedule loans and also offer top-ups to those that need the money,” she said.
Shisa explained that the loan facility had helped the Sacco to drop their monthly interest from 2.5 per cent to three per cent, with an anticipation of dropping it further to two per cent as the climate stabilizes.