The Wazalendo Sacco, the micro-finance institution for the Uganda Defence Forces (UPDF) is by far the most successful savings and credit cooperative society in Uganda. Having started nine years ago, Wazalendo has grown into a big commercial venture with a membership exceeding 70, 000 and an asset base of more than Ushs100b.
Its success in such a short time is amazing. With loans as the only income generating portfolio, Wazalendo has built a disciplined commercial empire that many financial institutions can learn from.
In Uganda the majority of Saccos have collapsed within two years of operations, mostly due to mismanagement and the failure by members to honour their debt commitments.
Member’s would either borrow money and utilise it for non commercial ventures which deplete the capital base and weaken liquidity flow. Transparency in many cases is not reflected meaning that the executive would work according to their rules instead of following the vision and mission including regulations stated while forming the Sacco.
Many Saccos were formed on social platforms such as villagers coming together. In such situations, Saccos were looked upon as institutions to offer rescue packages in cases for example when a member loses a relative, has a wedding or is ill.
Many did not put into consideration the fact that Saccos can become money generation ventures where an individual can save and invest as he/she plans for a project or venture to improve the quality of life. For instance in many village Saccos, a member would not qualify to benefit unless he/she has lost a relative, is sick or has had a misfortune. This benchmark meant that the Sacco was just a relief fund rather than an investment venture.
Many Saccos have since changed their outlook and are now encouraging members to utilise them as financial ventures where a member can save and borrow to access financing and start small businesses that earn some income for the family.
In Wazalendo members have built houses, land, set up gardens, paid school fees and improved their own education. At the same time they are able to get instant relief in case of emergencies such as death, sickness or a natural disaster.
It must be observed that even the general discipline has improved especially ifyo u asked your neighbour the last time you heard a UPDF soldier was involved in an armed robbery.
Instead it is among the civilians that the crime rate has increased. Cases of murder, robbery and theft have become normal. This can be attributed to diminishing options as the mostly jobless youth find that their options are limited and therefore resort to unethical behaviour as the only option.
In a country struggling to employ its expanding youth amid an increasing population, the government can do a lot to ensure that Saccos are revived and that they actually work.
The huge sums of money devoted to boosting security can be ploughed into boosting farming, industry and savings and credit cooperatives in a period when the country is peaceful. It is these three primary areas that will occupy a huge section of our population.
With the example of Wazalendo, the government can contract this Sacco to reach out to Ugandans and educate them on the benefits that accrue from such societies.
By using our own local model which has proven a success over the last nine years, surely Ugandans are most likely to pick up the idea as we struggle to reduce poverty in our midst.
To the UPDF we say “BRAVO”. There is a lot to learn from the UPDF Sacco.