Last week the UPDF’s Wazalendo Savings & Credit Coop had
it annual meeting.
According to its financial report they made a profit of
about sh12b, which was 30 percent higher than the previous year when profit
after tax came in at sh9b. Savings almost doubled to sh60b while the loan book
came in sh146b. The 69,000 member group had invested sh80b in their SACCO by
subscribing to the SACCO’s shares.
And all this has been achieved in less a decade.
The devil is in the detail but on the surface of it this is
progress not be laughed at.
"Our soldiers are nearer the worst paid than best paid workers in the economy, but by coming together they are now not only the largest SACCO in the county but, at the rate at which they are growing, it’s not inconceivable they will be a full-fledged commercial bank within the next decade....
The benefits to the soldiers, besides an avenue to save and
invest, are affordable credit to resolve some of their most pressing needs –
school fees, building and agriculture.
On a much wider level the UPDF are showing the rest of us
once again the possibilities around us.
When in 1981 President Yoweri Museveni and his motley crew
of 27 headed into the bush, they essentially took the little they had and
emerged five years later much stronger and obviously much more influential.
Wazalendo, Swahili for patriots, is likely to change the
configuration of the financial sector as they grow and also by their example,
which one can expect will inspire other people to start SACCOs.
What is one of our major failings as an economy? The
inability to aggregate the money we have into amounts that can drive
development.
In 2011 money in circulation accounted for about 18 percent
of total money supply. The rest of the money is being kept in banks. An
equivalent comparison in the UK for instance shows that only about two percent
of the total money is being held in people’s wallets and under their mattresses.
The net effect of this difference show themselves in lower
lending rates and more efficient allocation of resources to the more productive
sectors of the society.
So Wazalendo’s example means that money which had have found
quick release at the nearest bar outside a UPDF barracks is instead being
employed to build houses and set up farms. By lumping it together it more
easily accessible to those who need it for productive endeavour.
Relatedly SACCOS like Wazalendo are reaching out into the
furthest corners of these nation where the high street banks can’t be bothered
to be caught dead.
And secondly, the profits are being distributed locally, as
all Wazalendo’s members are citizens.
This important on several fronts but most importantly it means these
monies are then being reemployed in this economy to create the virtuous
multiplier effect we so badly need. Without naming names many of our banks pay
some tax, some bonuses to their managers but the larger part of their profits
are shipped out to pay off foreign shareholders who then benefit those
economies.
Foreign Direct Investment is important for generating
capacity and even allowing technological transfers. They are not charities so
what they decide to do with their profits is entirely up to them. But what is
stopping us building our own models and appropriating some of this profit for
ourselves?
Even if for example the biggest shareholders in Wazalendo
sometime in the future start taking home billions of shillings, chances are
most of that money will be employed here – investing, paying salaries, donating
to local charities and boosting demand locally.
"A pattern the multinationals are unlikely to do here, after all at the first sign of trouble – a few cans of teargas being sprayed around, they are quick to put projects on hold or expropriate their earnings, until things settle down...
Imagine a scenario with 100 Wazalendos and a few other lower
tier SACCOs and imagine the transformation that would occur in the economy?
The point is, when you look down the history of development
around the world, the more developed countries – many much less endowed than
ourselves in terms of people and natural resources, relied on their own meagre
resources to lift their societies out of poverty.
In fact no country has developed by relying on aid, the kind
of which Africa has received over the last five decades, the patronising kind,
designed to keep us locked in a dependency cycle, our best minds are convinced
we cannot pull out of without the very aid that is perpetuating the vicious
cycle.
"Of course Wazalendo should brace themselves for a backlash. Such attempts at self-sufficiency are frowned upon and they can expect that there will be attempts, overt and covert to subvert their project...
But then again they are big boys, they can take care of
themselves.
