Tuesday, July 13, 2010


Finance minister Syda Bbumba made her budget speech on Thursday. Leading the highlights were that the economy had grown at 5.8% -- down from 7.2% but still a rate not to be laughed at. She expects the economy to grow in the next year at 6.4%.

Continued economic growth gives a country the best chance of pulling its population out of poverty. So growth is not an end in itself but a means to an end.

So in every budget reading I am looking for signs that the growth is finding its way down to the people. Or should I be looking out for how people are contributing to the growth? The latter sounds more positive than the former.

Roads, classrooms, health units have been built and stocked. Valley dams are being planned for. Exports are up. NAADS is being revitalized. All very nice.

But what really made it for me is the resuscitation of the Savings & Credit Cooperatives (SACCOS). According to Bbumba there are now 1,060 SACCOS countrywide with sh83b in savings and more than sh100b on their loan books.

I love SACCOS because of their power to aggregate tiny resources into meaningful sums and two, because of the empowerment it engenders in its members. Before some one experiences this empowerment the tendency is always to look out for handouts. We tend not to see the diamonds in our own fields and think salvation will be found elsewhere.

Three years ago I found my self at a village SACCO meeting in Kasese. It was attended by a few dozen people – seating on benches, traditional stools or just standing. The executive of the SACCO sat at the front of the meeting at a rough hewn table under a makeshift shed whose cover was a blue tarpaulin held up by four poles.

We just caught the tail end of the meeting. At the end of the meeting the chairman announced that they had collected sh6,500 that day in savings and sh3,700 in loan repayments, this drew some muted applause.

He then received a chit from his treasurer who was seated on his right – I assumed he was the treasurer because he had small pile of coins and the scratched money box in front of him. He stumbled over the numbers but eventually the chairman announced that the coops savings then stood at sh366,800 to which there was more enthusiastic applause.

A look threw the SACCOS’ accounts, contained in a green, weather beaten exercise book, revealed a tale of consistent saving and loan repayments over the eight months of the SACCOS existence.

Minimum weekly savings were put at sh500 with loans being repaid at the rate of 5% a month.

Members said they had used the loans to meet basic needs, but increasingly were using the money to buy inputs for their gardens, pay school fees and stock their market stalls.

I would love to go back and look up that SACCO. I suspect by now their savings have broken past the million shilling mark and the members now have a more optimistic and confident outlook on life.

I belong to a SACCO here in Kampala, which dwarfs our Kasese cousins many times over. But the net results are the same in empowering people and creating that can-do attitude we see little of among our government bureaucrats.

There are no shortcuts, we have to develop under our own steam by, marshalling our meager financial resources, tapping our vast natural endowments and leveraging our own human capital. No country in the history of development has done so through aid.

Our Kenyan neighbours are eons ahead of us. At last count SACCOS accounted for at $20m in savings. They also control assets many times above that number in real estate, business and even shares on the Nairobi Stock Exchange. The ability to mobilise their own resources held Kenya in good stead when the donor community froze them out in the 1990s.

At a very basic level SACCOS introduce financial services to hundreds of thousands who would have no hope of having access via our high street banks.

Access to financial services is critical to poverty alleviation because through them people can build up asset bases either through saving or access to credit, which allows them to buy produce, livestock and land.

We in the urban areas take some of these basic services for granted, but they are the difference between wallowing in abject poverty and making a meaningful life for oneself for the vast majority of the our people.

So Mrs Bbumba keep your eye on this ball. And spare no resources – she pledged sh6.1b to SACCOS in her budget, to keep this growing movement alive, it might be the legacy you will be best remembered for when all is said and done.

Published in June 2010, New Vision

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