Wednesday, December 2, 2015

THE POWER OF CONSISTENT CONTRIBUTION

Last week the New Vision Staff Savings & Credit Cooperative commemorated ten years of its existence.

What started off as a lunch time discussion has blossomed into a company with more than a million dollars in assets and a net asset value of a billion shillings.

Those numbers look like nothing compared to the biggest tax payers in the country (The New Vision SACCO also pays taxes) but it has taken a decade to grow the business with our own resources. Even more noteworthy is that members who did not have two cents to rub together at its inception have accounts that run in the millions of shillings.

At the event the Dunstan Kisule, the CEO of the Y-SaveSACCO, which inspired the New Vision SACCO, gave us a snapshot of what they have achieved in the last 16 years, which was enough to snap us out of our complacency at what we have achieved so far and give us new targets to aim for going forward.

"Cooperative organisations in their various permutations are a powerful tool for pooling resources and deploying them in direct response to the societies that they serve...

But the even more powerful lesson from the Cooperatives is they debunk the fallacy that we do not have the resources amongst ourselves to cause local development. By employing the time and proper organisation we can achieve more in time than we can ever believe possible.

My best SACCO story is the Wazalendo story, the biggest SACCO in Uganda, whose members are the officers and men of the UPDF.

After a decade of operations the 73,000 strong organisation reported total assets of sh130b ( $36m) and shareholder equity of sh67b. This is all the more remarkable because we all know that our soldiers are not the best paid members of our society.

This organisations are formed with a social mission at the center of their raison d’etre but they all make profits, so profits and social responsibility are not mutually exclusive. In fact businessmen are coming around to the fact that revenues and profits are only a by-product of providing a service to society.

And we are not reinventing the wheel. SACCOs dotted the countryside for years, only disrupted by our turbulent past, they are still there trying to make the best of a difficult situation. But their mobilising resources nevertheless, putting to shame people who think there is no money in the rural areas.

"It is a well worn cliché but whose wisdom is irrefutable that when there is collective action the sum total of its effect is more than the sum of the individual parts. They call it synergy, one plus one is not two but eleven...

Decades of donor dependence means that every time we have a need we look outside ourselves, be it as individuals, communities or even nationally when if we put our minds to it most of the resources we need we can mobilise domestically.

But beyond that SACCOS if run soundly take advantage of what Albert Einstein called the eighth wonder of the world – compounding, essentially that benefits (in this case interest) beget benefits begets benefits.

So if one saved a million shillings in year one and there was say a five percent interest on that money every year, it would take fourteen years to double that figure. But for a saver who is consistent adding a million year for those fourteen years a rough calculation suggests they will have accumulated about sh21million – sh14 principle and sh7m in interest.

And we have not even begun to look at the capital gains from the increase in value in members shareholding in the coop, which if the costs are kept down and profits retained aggressively can grow multiple times faster than the savings.

Across the border from us in Kenya where SACCOs have gone largely undisturbed at least since independence, the hundreds of SACCOs peppered around the country control savings of more than $20b or the equivalent of Ugandan economy. But the Kenyans have moved to the next level and are now forming investment clubs with as much vigour as they did the SACCOs in the years gone by.

The SACCOs when well-run serve a useful social service but beyond that as a force for transformation of societies where access to finance is restricted.


They do not need hand-outs, though money injected in well-run SACCOs can produce prodigious returns, what they need is advisory services on how to run them properly and build their capacity in sustainable ways.

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