80% of Uganda’s population, which is about 32 million people, has no access to the commercial banks! This financial exclusion leaves the poor relying on informal ways of savings and access to credit.
Take a case of one of our farmer, she is a typical example of a poor Ugandan rural farmer. She owns 10 acres of land but due limited access to finance she can only afford to farm on half an acre. That means she earns $750 per year instead of $15,000. This farmer represents stories of many rural farmers in Uganda who have no access to banks.
Saving and credit cooperative societies, known as SACCOs are the existing solution. These are community member based informal financial institutions existing all over rural Uganda. They’re over 5000 SACCOs with a total membership of 20 million people, 50% of the Uganda’s population, saving and borrowing through SACCOs instead of banks.
The problem is many SACCOs are soiled with corruption and mismanagement, operating using paper-based records and lacking the means to track their member’s financial records efficiently. Many SACCOs and unions have been mismanaged by their leaders, funds misappropriated and many of these institutions have actually closed down. Hence customers have lost their little savings and the access they have had to a seeming banking service. For farmers for instance, this has left their dreams of getting loans from these institutions to buy improved seeds, fertilizers and other services to improve their farming and livelihoods.
The Ugandan government reports that an average SACCOs loses over $20,000 every year to fraud.