The New Vision SACCOS held its annual general meeting last Friday. The highlight for me was that it crossed the sh10b in assets mark last year 17 years after its inception.
I remember vividly seven years ago marveling at another
SACCO who assets stood at sh9b then, while the New Vision SACCOS’ stood at just
under sh4b.
The management reported that members had saved sh4.8b a far
cry from the sh62.4m members had pain stakingly saved by the end of 2005,
the SACCOS first year of operation. The sh118m dividend payout was almost twice
the total savings in the first year. Profit was about a billion shillings.
This are small monies comparted to those the bigger SACCOS
are reporting and hopefully will be laughable when comparing with how the
SACCOS will have grown in ten years, but it would not have happened if a
mechanism for members to pool their money in a convenient and safe way had not
been started.
And that is the key. When people say we are not saving enough as a society its not for lack of money but for lack of convenient mechanism to do so...
Thankfully with the help of SACCOS like at New Vision –
there are more than 2,000 SACCOS in Uganda today, the gap between our monies
stocked away under our mattresses and the formal financial sector can be
bridged.
Apart from banks not being close to the people, I was
surprised to learn that some people don’t save in banks because they are
intimidated by the large banking halls and busy workers. The launch of the
agency banking a few years ago is helping in that direction as well.
The real game changer however is the rise of mobile money. Last
month MTN reported that their mobile money deposits rose by sh300b to more than
sh950b. This trend is nothing to be frowned upon.
It has be said that of all the money in circulation in Uganda
only about 20 percent is in the formal financial sector the remainder – 80 percent
is under our mattress, in our socks and bras. In more developed economies the
revers is more true.
When money is in your pocket it is doing nothing for you or
anybody else, but when your money is in the financial sector it maybe earning
you interest as well as helping other people with need for money. They access
your money by borrowing from the banks.
Essentially the money is working. We can say the less the money in circulation works, by being employed in the formal financial sector, the poorer a country is...
Our low saving rate is one of the reason the lending rates
in our banks are high. Banks make money by lending to government, businesses and
individuals. If we all got our little monies and headed for the nearest bank,
banks would be forced to bring lending rates down, because holding money is a
cost so they cannot allow to seat around. So the banks would have to bring
their lending rates lower to send money out the door as fast as they can.
Believe it or not this is already happening. There is a time when interest rates were as
high as 50 percent and you could not borrow without collateral!
My experience with the SACCO has shown this to be true. While
you have to pay interest on savers money, they cannot borrow all of the money
that comes in. At one time it was discovered that only 40 percent of the
members had loans with the SACCOS.
As a manager you have a choice you either lend more to your
members, more likely by lowering lending rates or you ship the money out, investing
in other things outside.
So SACCOS should be supported mainly through capacity building,
to grow stronger in their capacity to mop our excess liquidity.
SACCOS do not need handouts from government. In fact this may
be detrimental to their effective management. They can grow under their own
steam if they are managed well.
Banks shouldn’t worry. They will cut back on their branches,
leaving a few to service SACCOS and such like small institutions, while
servicing corporate borrowers and the government.
"If I dare to dream, the equity of the New Vision SACCOS grew by 20 percent last year, that means it will double every four years. So 16 years down the road the net asset value of the SACCO will be sh92b!
