Wazalendo SACCO
Finance
Cooperatives:
The Secret Behind Updf’s Shs.700Bn Savings Scheme: From ‘Grass’ To ‘Grace’
Cooperatives in the Cotton Industry: The Good, The Bad and The Ugly!
An opportunity for Ugandan youth to feed the world and change lives
ON PAGE 11
ON PAGE 4
ON PAGE 16
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VOLUME I issue 1 June 2018 | PRICE 5,000/=
Legal Dilemma Cooperatives confront Dilemma: the elephant in the room’ Cooperatives confront the elephant in the room’
UCA INTERVIEW
INTERVIEW
Technology
In the next few years, cooperatives will be controlling this economy
UCSCU seeks to be the world-class National Union of SACCOs
How is your co-operative performing in the digital world?
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Editor’s note
onward and Upwards #coops4development Previously in slumber mode, the cooperative movement is slowly waking up to the potential that it is and has always been. It is very impressive to see the strides that different cooperative societies are making because this only means a certain league of individuals have understood that it mostly, if not only takes themselves to see the change they desire. After all cooperatives are member formed, member owned, member financed, member managed and member benefactor. As a cooperator myself I couldn’t be happier, because I have never been so certain of a future like I
am right now. And because of this certainty I am humbled to introduce to you the Cooperator magazine that is set to provide accurate and reliable information on the business of cooperatives. I am very excited for the many opportunities that this publication is yet to unleash, however nothing beats knowing my great grandchildren will have a reservoir of information about how we are doing today to inform their decisions then; because you know what cooperating is a life long journey. I am hopeful that the Cooperator magazine will enable the cooperative movement see more autonomy and independence, voluntary open membership, democratic member control, cooperation among cooperatives, member economic participation, education, training and information as well as concern for the community. Like the old adage goes a journey of a thousand miles begins with one step, it is our pleasure to take this first step with you. Enjoy our maiden issue, onwards and upwards!
Meet the team PATIENCE ATIM Managing Editor PATRICK JARAMOGI Chief Editor LEONARD OKELLO Chief Executive Officer JANE AMUGE OKELLO Director Operations DENIS TUKAHIKAHO Technical Advisor ROBERT NDAWULA Online Editor GLORIA KYOMUGISHA Marketing and Communications Officer MOSES MUGISHA Legal Advocate
Patience Atim
twitter.com/thecooporator facebook.com/thecooporator
THE COOPERATOR MISSIOn To stimulate the growth of a strong, productive enterprising cooperative movement contributing at least 40% of GDP to sustainable national green growth. Copyright 2017 theC00perator. All rights reserved. No part of this magazine may be copied or re-distributed without permission from theC00perator. DISCLAIMER: The views expressed in this publication are not necessarily those of theC00perator. Whereas every care is taken in compiling the contents of this publication, theC00perator assumes no responsibility for the statements made by the contributors or advertisers in this publication. 3 | issue 1 June 2018
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coop WEEK
President Museveni to grace this year’s International Co-operative Day due in Jinja on July 7 2018.
President Yoweri Kaguta Museveni handing over a coop award to one of the winners last year
KAMPALA, Uganda: 26th June 2018. In Uganda, this year 2018, the 26th International Cooperatives Day will to be celebrated in Jinja. Many cooperatives, world over celebrate the first Saturday of July of every year as the day for cooperatives. This year’s event to be hosted by the teachers under their umbrella body, WALIMU SACCOs Union will be held at the Civil Service College in Jinja on Saturday, 7th July 2018. In Uganda, a new innovation dubbed the Cooperative Week was initiated by The Uhuru Institute for Social Development to imbibe positive energy and implement the cooperative principle No.7 Concern for Community was launched in June 2016. The initiators of the cooperative week initiative, believed that the time had come to move away from lamenting about past inadequacies and losses, to start positive mobilisation of cooperatives into a new mode as the lead vehicle for inclusive socioeconomic transformation in Uganda. A total of 3882 letters were circulated to all members of parliament, all permanent secretaries and district local government heads of departments, Chief Administrative Officers, District Chairpersons, and Mayors of Municipalities, Speakers of Local Councils,
4 | issue 1 June 2018
Residence District Commissioners, Internal Security Officers, Regional and District Police Commanders. Other letters were also sent to heads of religious institutions namely, Christian Bishops and Muslim Khadis in all 112 districts and all prime minsters of cultural institutions. All letters also had attached the cooperative week concept and programme. Other Mobilisation activities included radio, television and social media announcements. This was made possible by a team of over 123 local journalists and radio talks show hosts who were carefully selected and trained on basic knowledge of cooperatives and key, messages for the cooperative week. For over one month these people stormed the media airwaves with carefully crafted messages promoting cooperatives and calling on all Ugandans to join the cooperative movement for improve personal family income and well being. “We had the team of well trained volunteer Field Assistants and journalists, then we had had a two years training of trainers on cooperatives attended by cooperators, district commercial officers, religious and cultural leaders and community leaders in all regions of the country. The ground
was set for these disciples to change the course of events”, said Leonard Okello the Chief Executive officer of Th Uhuru Institute. Eventually, we had startling results in the first two years of 2016 and 2017. In one day only nation wide blood donations by cooperatives collected a total of 2025 blood units (that can serve 8100 children) across the country that can treat 8100 children according to experts. In 2016 a total of sixteen regional consultative hearings were held in Kabale, Mbarara, Masaka, Kasese, Bundibugyo, Fort Portal, Kibale, Mityana, Mukono, Iganga, Tororo, Mbale, Soroti, Dokolo, Arua and Zombo and a final national consultation meeting generated the 10-point petition which wa submitted to the Speaker of the 10th Parliament of Uganda. Two Ignatius Kangave Musazi memorial public lectures have been held in Makerere University in 2016 and in Mbale 2017. These lectures have become an avenue for interaction between cooperators and policy makers since inception. In Mbale the discussion was about the unique potential of cooperatives as a vehicle for inclusive development drawing from Oxfam international report on www.thecooperator.news
coop WEEK
activities of the cooperative week 2018:
Coop petition parliament
Date: Thursday June 28 Activity: Joint Press conference launch of coop week at the Uganda Media Center
Date: Friday 29 June Activity: National prayers for the spirit of voluntarism, servant leadership and integrity in cooperative movement in all districts. Activity: Islamic Prayers
Date: Saturday 30 June Activity: Seventh Day Adventist
Date: Sunday July 1 Activity: All other Christian faith across all dioceses countrywide
Date: Monday July 2 Activity: Annual Cooperatives blood donation week in 17 Municipalities
Date: Tuesday 3 July Activity: Cleaning of markets countrywide by Cooperatives
Date: Wed 4 July 10:00am Activity: Launch of the coop profiling report at Makerere University main hall. 2.00pm Activity: The I.K Musaazi Memorial lecture at Makerere University main hall
In 2016, 1200 indigenous tree species were planted in one day 87 of the 112 districts of Uganda, the new minister for cooperatives planted a cooperative tree at Ministry head quarters. In 2017 20 cooperatives in 20 districts joined the Plant-a-Coop-Tree competition and the winners will receive their awards in on international cooperatives day in Jinja. According to Mr. William Kitandwe, the Commissioner Co-operatives in the Ministry of Trade, Industry & Cooperatives, President Museveni is expected to grace the event that will be culminated by a series of activities prior to the climax on July 7. Speaking to the Cooperator in an interview, Joseph William Kitandwe said the theme for this year’s celebration is: “Sustainable Consumption and production of Goods and Services.” “Every year we mark the UN International Day of Co-operatives. This year we shall be in Jinja. We would like to thank Uganda Cooperative Alliance, Uhuru Institute, Walimu SACCO, International Cooperative Alliance, among others for coming in support of this day,” said Kitandwe. He said as the country gears to launch the Cooperative Week on June 28 with
series of countrywide activities, there is need for government to increase funding to the cooperative movement sector. “We are still disjointed as a nation regarding the support of the Co-operatives movement. I must admit that we still have a skeleton staff spread the districts across the country. We need serious support to revamp this sector,” he said. In 2016 and 2017 the Cooperative Week was largely implemented by the rather small Uhuru Institute team of about 30 staff all round the country. But this time round, the Uganda Cooperative Alliance wrote all the letters and the WALIMU Teachers SACCO Union has distributed. When asked what was the biggest challenges, Leonard Okello, the CEO Uhuru Institute had this to say: “It is really about changing our mindset in this country from waiting for someone else to solve our problems and lamenting about past failures, to taking charge of our destiny. Sometimes, I think many of us are too comfortable with too little or too fast to blame someone else for our problems” Yet this country is too blessed to be poor by all means. I believe that, the Cooperative Movement is simply back with an unstoppable bang, and the future is bright for as long as we get it right from this point on!”
Date: Thursday July 5 Activity: Plant a - CoopTree for inclusive growth in all schools across the country
Date: Friday July 6 Activity: National Cooperative Conference at the Civil Service College, Jinja
Date: Saturday July 7 Activity: International Cooperative Day celebrations at Civil Service College, Jinja 5 | issue 1 June 2018
Annual Cooperatives blood donation week in 17 Municipalities will take place July 2
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Wazalendo
CDF Gen Muhoozi (R), Brig Kavuma (C) awarding one of the best WSACCO performer Col Begumisa during the recent AGM
Wazalendo SACCO The Secret Behind Updf’s Shs.700Bn Savings Scheme-From ‘Grass’ To ‘Grace’ By PATRICK JARAMOGI
1
KAMPALA, Uganda:
3 Years ago, they begun jokingly, while for some who thought the journey was a far- fetched dream and decided not to be part of the team, can only blame themselves today. This is the success story of the Uganda Peoples Defence Forces 6 | issue 1 June 2018
UPDF Wazalendo SACCO. The success story of the Wazalendo SACCO, the largest single saving well and most organized scheme in the country, and the sixth biggest in the continent, is a pointer that when organized as a group, people can ‘move mountains’.
Like the chairperson of the 67,000 member strong, Bombo based group, Maj. General Samuel M. Kavuma revealed to the Cooperator in an Interview, what initially seems as a farfetched dream can always become a reality with determination. “The
world
should
know
that
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Wazalendo we didn’t form Wazalendo because SACCOs were a fashion. Though it was a leadership idea, we as members had key principles for starting this savings scheme,” said Gen. Kavuma, also the Deputy Commander Land Forces.
“The world should know that we didn’t form Wazalendo because SACCOs were a fashion. Though it was a leadership idea, we as members had key principles for starting this savings scheme.” Gen. Kavuma, also the Deputy Commander Land Forces.
Kavuma said key among the reasons were three factors: to improve the livelihoods of the gallant UPDF soldiers who earn so little in form of salaries, their immediate families and the civilians who work for UPDF. “The second issue was the fact that most officers were borrowing heavily from commercial banks, ‘Baroda Banks’, self -acclaimed money lending groups within the barracks, as well as the sharks, money lenders who all lent out money at very high rates, some interest ranging between 50-100 percent,” he said. “These groups of people, we later realized were not into helping us address our problems, but we ended up working for them instead.” Kavuma said, the third issue was regarding what is mentioned in the Holy Books, the Bible and the Quran, that whatever is born on earth, will one day die. “I always tell my officers when I meet them in the field not to worry about when and how they were born, or when they will die, but more about life after death. Not everyone will enjoy life after death, but only the holy ones.”
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Similarly, he notes, emphasis should be on how to handle life after service (retirement) from the forces. “It’s upon these key factors that we sat down and agreed to start saving and borrowing amongst ourselves that has made us what we are today,” he said. What has made you succeed all these years? Gen. Kavuma explains that unlike other SACCOs, Wazalendo is well organized under strict structures both within Uganda and outside. “It is not an easy task to have all 67,000 members, here and outside Uganda united as one front, but because of the discipline and well organized structures, we have made it possible.” He however notes that any successful SACCO must have five pillars as its core foundation for success. “The first indicator, any SACCO must be member formed. It should be the ideas of members. Secondly, it must be member owned. Wazalendo belongs to us, not the CDF or Commander-in-Chief. It must also be member financed, must be member managed and member beneficiary.” He said that what most people should know is that Wazalendo now with a loan portfolio of shs740 billion and
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Wazalendo
Rentals in Masaka
Cpl. Mugarura Elly of A/Bde
savings of shs70 billion and share capital of shs170b has never got any hand out from the president or from Ministry of Defence. “SACCOs that survive on handouts from the president and politicians can’t be called SACCOs and can’t thrive for long. After the president has given them shs50m or sh20m, they fight to split it and wait for the next hand out, for us that doesn’t happen at Wazalendo,” said the former ADC to H.E President Museveni. He said the defining moment for the Wazalendo SACCO was when the members bought the idea and numbers shot up. “When the majority joined after realizing the future lies here, we knew we were there.” He explains that the philosophy that has driven them over years, is that which remains to use Wazalendo to improve on members’ welfare. Much as he says, Wazalendo, does learn 8 | issue 1 June 2018
a lot from the Cooperatives Apex body, the Uganda Cooperatives Alliance, he says the cooperative movement is not so aggressive enough. “The Cooperatives were doing so well in the 1970s, but some government officials, I say some, don’t realize its huge potential in transforming society. No wonder some had decided to create a tax on SACCOs that we evidently fought.”
“Unlike other SACCOs that have issues with recoveries of loans, Wazalendo gets it’s from the source. Its chopped off right from salaries, so one can’t run with it. We however have challenges of priorities regarding investments for members who have borrowed.” Gen. Kavuma, also the Deputy Commander Land Forces.
He described as very wrong the idea to tax SACCOs. “These are not commercial banks. We don’t give out loans on high interest rates and don’t make profits like commercial banks. What remains after we have recovered our member loans, is called a surplus that we again share as dividends amongst the members,” he said. He said it is wrong to assume that members under SACCOs don’t pay taxes. “When I get a loan from Wazalendo, I am charged income tax because I have earned. When I go out to invest, say purchase of land, I pay tax. So why do you have to tax www.thecooperator.news
Wazalendo the whole group again? That is double, in fact triple taxation,” said Gen. Kavuma. He said, as Wazalendo, they don’t lend money to outsiders, but only their members. “This is a revolving cash mechanism.” What challenges do you face at Wazalendo? Just like any other successful savings scheme, Wazalendo also has its own share of challenges, though which have made them stronger. “Unlike other SACCOs that have issues with recoveries of loans, Wazalendo gets it’s from the source. Its chopped off right from salaries, so one can’t run with it. We however have challenges of priorities regarding investments for members who have borrowed.” He says that with shs740b lent out in 13 years, much development would be visible. “Members come, borrow between shs20m to 100m and end up doing useless stuff with the cash. That is a challenge, because they remain poor,” he said. He said the issue of deserters is another one they are facing and that of death of their forces either in line of duty or naturally. “To address these two factors, of deserters and death, we came up with an insurance policy, dubbed Loan Policy Fund (LPF).” Under the LPF, says Gen. Kavuma, whoever borrows at 9-15 % per annum depending om the inflation and the CB lending rate, is additionally charged 2.5% as LPF. “The members who die before clearing their loans are spared. We look at his/her savings. His/
her share capital, calculate call the next of kin and pay 100%. It is the deserters that we make use of the LPF to clear the outstanding loans.” The other aspect, that he considers a major challenge, is the attitude and or culture of saving. “Most Ugandans don’t love saving. They only think about today, yet it is more worthwhile to think about tomorrow because you are not there yet.” “Then,” he narrates further, “is the issue of enterprise selection. When you borrow, what enterprise should you invest in for the betterment of your future?”
Maj Mark Karate’s tailoring school in Wakiso
The latest technology has not spared them also. With the coming in of the digital age, there is a shift to modern banking that Kavuma says comes with its own challenges such as cyber related crime. “But we have been in position to put in place risk management mechanism to address this,” he said. As they move to celebrate over 15 years soon, Gen. Samuel. M Kavuma, says they are now shifting into huge developments. “In 10 years’ time we shall perhaps be owning Wazalendo Towers, or Mansions. Since we shall have more money and numbers shall have grown too.”
Capt Eng Mary Namyalo of GMH in Seguku
He winds, up after our three hour’s interview with an advice to other SACCOs”: “If you want to be successful like Wazalendo follow the five cardinal steps which are; SACCOs must be member formed, member owned, member financed, member managed and member beneficiary.” Capt Frank Kabonge’s rentals in Bulenga - Inspectorate
9 | issue 1 June 2018
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Are you looking to grow your cooperative? Or maybe you are looking to share ideas with like minds?
A World of Opportunities
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Cooperatives in the Cotton Industry: The good, The Bad and The Ugly! This is the first in a series of value chain reports that thecooperator will bring to you over the coming months as our way of stimulating cooperatives in these value chains towards growing their contribution to an equitable, inclusive and sustainable economic development.
11 | issue 1 June 2018
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cotton By PATRicK JARAMOGi Just over two decades ago, cotton was known as the household income generator. Many Ugandans recall how their parents used the proceeds from cotton sales to finance their education under the Cooperatives societies and unions of the time. In the 1970s and 1980s, Uganda produce over 100, 000 metric tons of cotton per year, but this has since slumped to just 18,000 tons per year in the last five years. The country’s cotton was ranked among the best, earning a premium of US 5 cents per kilo in the global market price. What went wrong?
cotton cooperatives failure to service the heavy loans incurred, and the closure of the Cooperative Bank negatively affected their credit worthiness. Eventually, most cotton cooperatives were unable to get any viable financing facility to revamp their businesses, many close shop, remaining dormant to date.
In an exclusive interview with theCooperator, a former Cooperative Officer in the then Ministry of Cooperatives and Marketing carried us through this history. Way back in the 1960s to early 90s, thousands of Ugandan farmers were organized in clusters of cooperatives spread across the country with monopoly of cash crop markets. In the 1990s, government policy liberalized the economy including the cash crop sector allowing the inflow of foreign direct investors with big money working through local private agents. In the 1980s and early 90s, the Uganda Cooperatives Central Union (UCCU), secured machines from India, that were supplied to thousands of farmers’ cooperatives on loan. The machines, that they later established were being tested on African farmers by the Indians, phased out the original and strong UK made machines completely. “Not so long, the Indian made Nipher started to wear out. During the wars, fighters from the different
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groups looted the machines, like Lorries (Tata), and Iron sheets from the ginneries leaving the loan indebted cooperative unions in total mess,” he said. Government then urged the unions to form joint ventures with the private investors, but this only led to those cooperatives like North Bukedi and Lango Cooperative Unions that tried, losing one or all of its ginneries to the investors.” Moreover, cotton cooperatives failure to service the heavy loans incurred, and the closure of the Cooperative Bank negatively affected their credit worthiness. Eventually, most cotton cooperatives were unable to get any viable financing facility to revamp their businesses, many close shop, remaining dormant to date. “This is the story of the once powerful cotton cooperative Unions such as; South Bukedi Cooperatives Union based in Tororo, North Bukedi Cooperative Union in Pallisa, Teso Cooperative Union, Sebei Cooperatives Union, Lango Cooperative Union in Lira. The West and East Acholi Cooperative Union in Acholi subregion; Madi Cooperative Union in West Nile, Bunyoro Growers Cooperative Union, Busoga Cooperative Union in Busoga. Only Nyakatonzi, West Acholi, & Bunyoro Growers Cooperative Unions have maintained a fairly large cotton business through this difficult period”. A mix bag of recovery efforts and challenges While the cotton cooperatives struggled to recover, government initiated the Cotton Development Organisation to regulate the cotton sector. The cotton farmers would be supported
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cotton by the Union Export Services (UES) to export their produce. This did not work as well as was expected, leading to the emergence of many rival organizations and groups. Investors with big offshore cash flows and venture capital took over the ginneries, then teamed up with CDO to form the Uganda Ginneries and Cotton Export Association (UGCEA). TheCooperator has established that the UGCEA purchase the cotton from the local farmers, add little value to the cotton prior to export mainly to the United Kingdom. Though the UGCEA was supposed to bring all the cotton farmers and ginners under one roof, this has not been achieved, according to our source. The tale of “illegal” levy on cotton Cotton farmers under their different unions whom theCooperator talked to, told us that on top of the official government tax on cotton (CESS) levied at UGX300 per kilogram of cotton sold, they have to pay an additional UGX200 per kilogram of cotton sold that is charged by UGCEA. “We are bitter at this additional levy of UGX200 per kilogram, yet we understand government also releases about UGX5BN annually for development of the cotton sector,” said a distressed farmer. The cooperative unions complained that
when it comes to discussing how the money collected from additional UGX200 levy will be utilized, the farmers who contribute towards this, are thrown out. TheCooperator established that UGCEA has 34 members, who sit every year, without the cotton farmers in attendance. The cotton cooperative unions, strongly believed that they are kept out of this meeting because the UGCEA members share out the levy amongst themselves. Consequently, these disgruntled farmers and cooperatives formed a parallel, Cotton Farmers’ Forum, to among others, unite the farmers, generate consensus on how to compel government to compensate them for the war of losses and demand for fair taxation. As they hoped from pillar to post in search for a solution that works, farmers touched base with the National Enterprise Finance and Marketing Agency(NEFIMA) that shaped them to line. Mr. Madira, the Managing Director of NEFIMA revealed to theCooperator in an interview how long the journey to revive the cotton industry has been. “Then I was doing consultancy work for the United Nations Capital Development Fund (UNCDF)
What Makes your Cooperative Successful
under the Local Governments’ Local Economic Policy,” said Madira. Madira explains that to align the cotton farmers, they were advised by the Ministry of Local Government to form something in line with the Local Economic Policy in order to be supported. “They formed the Uganda Local Economic Enterprise Association, registering it as a company limited by guarantee,” explained Madira. Even then, the Local Government Ministry still referred the association to the parent Ministry of Trade, Industry and Cooperatives. “While at the Trade ministry, they were advised to form a body that would unite them as one under the new cooperative policy. After many consultations, they came up with the Uganda Cotton Cooperatives Union (UCCU). Mr. Etore Joseph who doubles as the Chair of Teso Cooperatives Union also Chairs UCCU, while Philip Y’Pakrwoth serves as its secretary. “We now have 17 unions spread across the different regions of the country with 1500 primary cooperative societies,” said Philip. Look out for more on this cotton series in our next month edition….
order to get along well with each other, it is important to observe the competition and, if possible, make contact. Don’t give up Establishing a cooperative is not always easy. Often it takes a while until the new services are accepted by the region. Thus, it is imperative to not give up to soon. Many successful cooperatives have made the breakthrough only after a few years. Pay attention to your environment
Annual cooperatives blood donation week in 17 Municipalities will take place July 2
As a cooperative manager you have to always be open to new ideas, suggestions and criticism. This applies both to members and colleagues as well as to external peers. One option is to actively seek dialogue with people or to even establish a regular “round table” for feedback
Active members must patronise their cooperative Every cooperative behave like their members. When members believe, own and actively participate in all businesses of the cooperative, success is guaranteed. Such members buy shares, save and take loans from their cooperatives regularly guaranteeing business portfolio growth of 13 | issue 1 June 2018
their cooperative. Donations and handouts are therefore not a good basis, since they cannot be sustainably planned and corrupts the independence of the cooperative. See competitors as your opportunities There are hardly any cooperatives without competition. It can be either another cooperative or another type of initiative. In
Do not be scared by online services The future of cooperatives in the use of practical and intuitive online services. Many tasks of cooperative administration can be done online quickly and simply as well as often in collaboration with each other. Digital technologies allow cooperatives to act faster and more flexibly. www.thecooperator.news
analYSIS
The Legal Dilemma: Cooperatives Confront the elephant in the room The cooperative movement is at cross roads with the legal regime once again. Historically the movement has been governed under several laws including:
According to the official International Cooperative Alliance (ICA) definition, “A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through jointly-owned and democratically-controlled enterprises based on the values of self help, self responsibility, democracy, equality, equity and solidarity”.
1946 cooperative Ordinance which was largely colonial influenced eliciting mix reactions with the pro-colonial government cooperatives for it while proMusazi cooperatives were suspicious and saw it as a trap and a way of domineering the African farmers. The 1952 cooperative Ordinance – Negotiated by the Musazi partnership group and influenced by Sir Cohen’s liberal approach to governance issues, it was largely cooperative development friendly and contributed the most to exponential and organic cooperative development. The 1963 cooperative Act – Influenced by the excitement of self rule and the drive towards African Socialism, this law was in every way
designed to deliver Uganda’s first 5-year development plan. It aided the sector’s development leap which sadly was short-lived, wrecked by corruption and selfish ambition by board members and the managers who were using the cooperatives as stepping stones to their political ambitions. The 1970 cooperative Act - Birthed from the recommendations of the Shafiq Arian Commission of inquiry putting a lot of power in the hands of the cooperative minister and working with cooperatives more like government parastatals to the detriment of cooperative independence and autonomy. The cooperative Societies Act cap 112 (1991) - Proposed by Uganda Cooperative Alliance on behalf of the cooperative movement; was welcomed by government. The law is fairly balanced on the roles of government and the cooperative movement but lacking in conflict management and fairly inapt in many respects as the times have changed hence the need for amendment and repeal of certain sections. Government
Jane Amuge Okello (Researcher, Wealth Management Specialist & Entrepreneur)
14 | issue 1 June 2018
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ANALYSIS proposed down by government in what is Cooperative Societies Amendment bill 2014 and is yet consult the public, nonetheless UCA, Actionaid and Uhuru Institute for Social Development have consulted on it 20 districts reaching out to over 1000 cooperators. The amendments and repeals are still silent on the issue of conflict management. While cooperators were gearing for the reforms in the Cooperative Societies Act, the enactment of The Tier 4 Microfinance and Money Lenders Act, 2016, and the amendment Micro Finance Deposit Taking Act 2003 threw a spanner in the works. The Tier 4 Microfinance and Money Lenders Act, 2006, applies to Tier 4 microfinance institutions which comprise of Savings and Credit Cooperative societies (SACCOs) among other institutions. The new law creates the Uganda Microfinance Regulatory Authority (UMRA) which is responsible for licensing SACCOs. At the same time, SACCOs whose voluntary savings exceed Uganda Shillings 1.5 billion with institutional capital above 500 million shillings must obtain their license from the Bank of Uganda as provided for by the Microfinance Deposit- Taking Institutions Act, 2003 and the large SACCOs regulations that are currently under formulation. Despite being the principle legislation on cooperatives, the Cooperative Societies Act Cap 112, henceforth, has less regulatory force over SACCOs. In fact, it will only apply in a limited manner on such issues like registration and governance. Accordingly, SACCOs are now governed by three different laws i.e. the Cooperative Societies Act Cap 112, the Tier 4 Microfinance and Money Lenders Act, 2016, and the Microfinance Deposit- Taking Institutions Act, 2003 alongside their respective regulations. Under the new regime, a SACCO must be licensed in order to provide financial services to its members which is limited to accepting savings from and providing loans to members. Without a doubt, SACCOs are the most vibrant and the commonest form of cooperatives in Uganda well ahead of those engaged in agricultural marketing. Besides, cooperatives that are not entirely financial in nature also offer some financial services. This means that a multi-purpose cooperative that among other services offer savings and credit to its members must obtain license from either UMRA or BOU. Generally, the new regulation covers almost all the cooperatives societies in the country Equally, the powers of the Registrar of cooperative societies who is a public servant under the Ministry of Trade Industry and Cooperatives are critically diminished. 15 | issue 1 June 2018
Without a doubt, SACCOs are the most vibrant and the commonest form of cooperatives in Uganda well ahead of those engaged in agricultural marketing. Besides, cooperatives that are not entirely financial in nature also offer some financial services. This means that a multi-purpose cooperative that among other services offer savings and credit to its members must obtain license from either UMRA or BOU.
Whereas all forms of cooperatives must first register with him/her under the Cooperative Societies Act Cap 112, it is clear that minus SACCOs, he/she will largely be less active if not redundant. This is due to the fact that the bulk of the remaining functions like licensing and regulation are now handled by either UMRA or BOU. Regulation of financial cooperatives in Uganda has been long overdue. However, in trying to protect interests of members, the law seems to use the same measures that are applied to profit-oriented financial institutions like commercial banks. Cooperatives by nature are welfare rather than profit oriented and therefore require a sort of customized industry-based regulation. In the Uhuru Institute for Social Development led research report on the Legal, Business Knowledge and Ethical Status of cooperatives in Uganda, cooperatives appear lost, agitated and stripped. The cooperators raise questions on a mirage of issues that the cooperative legal regime presents including: Why the government of Uganda swiftly adopted the recommendations of a regulatory framework from World bank yet the movement would benefit from a cooperatives’ promulgated law through the amendment of the Cooperative
Societies Act Cap 112 (1991). Critics however blame the cooperators for not engaging government with concrete proposals in pursuit of the desired legal regime citing that crucial representation of the movement in the process of the drafting the new laws were either absent or inexperienced. Cooperators and industry experts further identify issues in the mixture of SACCOs, Microfinance institutions, Money Lenders and Self help groups with the worry that the Uganda Microfinance Regulatory Authority has limited capacity in handling all these unique financial formations. Specifically, the Cooperatives have identified some treatments to their finances as contravening to cooperative identity. They prefer an amendment of the Cooperative Societies Act to include all types of cooperatives under the Ministry of Trade Industry and Cooperatives. Multipurpose cooperatives are reluctant to engage UMRA citing an overstretched mandate. Cooperative are equally stressed by the licensing fees and contributions to the SACCO Savings Protection & SACCO Savings Protection Funds as well as the provision to transfer unclaimed balanced to UMRA after 5 years. Whereas these fees are justifiable, cooperatives prefer them lowered. On the unclaimed balances transfer, cooperatives recommend a regulation that guides on how this money can be used within the cooperative to cushion liquidity positions and promote investment. Behind this background therefore, there is need for genuine dialogue between the various actors that the Tier 4 Microfinance and Money Lenders Act, 2016, has brought on board on one hand and the cooperators on the other, to jointly and severally come up with comprehensive solutions that will support SACCOs to self-regulate themselves in the interest of their members. This will in turn reduce the burden and the cost of regulation by UMRA and BOU creating a win-win situation for all the stakeholders. There are efforts by Uganda Cooperative Alliance and Uganda Cooperative Savings and Credit Cooperative Union to engage government on how best to deal with this elephant in the room. By Moses Mugisha (Lawyer and Interim Chairperson of the Alliance Africa Legal Committee, Member of the ICA Global Legal Committee) And Jane Amuge Okello (Researcher, Wealth Management Specialist & Entrepreneur) www.thecooperator.news
youth
Cooperatives: An opportunity for Ugandan youth to feed the world and change lives
D
ue to their abundant energy, sizeable population, zeal to be champions, innovative minds, technology savviness and flexibility to create networks, the role of youth in driving Uganda’s socio-economic transformation through agribusiness can not be overstated. Albeit only 12 % of the youth want to become farmers yet agriculture is one of the leading sectors in Uganda accounting for 23% of the GDP, 30% of total exports and 65% of raw materials for local industries, (The Uganda Youth Survey Report 2017).
grows coffee, processes, packs and exports premium instant coffees to fair trade markets in Europe creating jobs for youth at every stage. In Mbarara, the youth visited Kazire Health Products Ltd the next day. The company working with cooperatives as out growers of raw materials they use for healthy herbal juices ranging from Citrus, Mangoes, Aloe Vera, etc. On their way to Bushenyi the youth were greeted by the rolling hills of Ankole clad with patches of Banana plantations and
fenced off livestock enclosures with dairy cattle and local Ankole cows lining the way. Another landmark in Bushenyi were organised SACCO banking halls providing financial services to members many of whom are local farmers. At Rwashamaire, the youth met Mr. Dick Bujingo a young man who resigned his job in Kampala to set up and manage his family dairy farm which is doing very well. They were excited to learn that Dick was a member of the Rwashamaire Farmers SACCO where he does all his banking. As the caravan went through Ntungamo, the youth
In August 2017 the AgriProFocus youth community led youth from across the country to an agri-business caravan, to learn from other youth agripreneurs. The caravan which had a series of activities started with an interactive mindset session at the Pope Paul Memorial Centre in Kampala to deal with the barriers that impede youth from investing in agribusiness as well as identify opportunities that they can take advantage of. In a convoy of four buses the caravan left Kampala to our first stopover at Kibinge Coffee Cooperative Society, where we met young enterprising managers and staff. Kibinge 16 | issue 1 June 2018
@Kibinge Coffee Cooperative Society Coffee Seedlings Nursery
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youth farming with agro-tourism earning him about USD$100 everyday from agrotourism only.
@Pope Paul Memorial Centre Departure Photo
The Caravan Climaxed into a National Youth Agribusiness Policy dialogue where youth made several recommendations including the promotion of parish level primary cooperative societies, agricultural research to improve breeds and fights disease, revamp agro-marketing infrastructure include subcounty level stores, regional silos and cold storage etc. They also launched a campaign dubbed Feeding the world changing lives within which they committed to: Engage in Contract farming to ensure that youth profitably work with large processors and exporters in cooperatives which will enhance bulk production.
were amazed by pineapple and eucalyptus woodlots which present opportunities in horticulture and agroforestry. Agro tourism was key as the youth saw the various tourist opportunities all through the journey; the caravan also provided room for show casing skill in drama and arts boosting the spirit of cooperatives in their body mind and soul of the youth. Kirere Green Africa Agency mixed farm availed one of the best caravan experiences as the youth learnt how to make money from a small piece of land. The young agripreneur they visited was making money on three acres of land where he had priggery, passion fruit and tree tomatoes, potatoes, etc. Delta Bees Honey Ltd an apiary run by the 29 year a young man also brought live the opportunity a eucalyptus plantation and apiary can offer the youth. A visit to the Presidential Banana Development Initiative, where banana juices, flour, porridge, biscuits are produced and research on banana cultivation and value chain is done was. The facility produces evidence that cooperatives are the best vehicles for sustainable agribusiness. The Mubuku Irrigation scheme with a settlement of people from all over Uganda ceiled the arguments for cooperatives in development. Through the cooperative the maize farmers have weathered the tough economic times and are now in the process of building again. In Fort Portal the youth interacted with a young lady IT expert who has taken to back yard gardening to supply vegetables to local hotels and a market in Kampala.
Kabarole Research Centre, KRC, animal feeds research unit where they are developing feed concentrates for livestock in the country. It was exciting to note that all the scientists at this research unit where very young people making a difference improving the livestock value chain with such a huge potential. The caravans last field leg was at the 10 acre Big-Lad integrated farm where a young man has integrated crops, livestock,
Formalising proper business registration, observing compliance to the policies and regulations that support trade in agribusiness and open doors to international trade. Focusing on specific agribusiness value chains like Apiary, Nursery bed operations, Silage making, value addition, to improve quality standards, value addition and processing better commodity prices, reduces waste in farming. The 2017 youth in agribusiness caravan proved the power of experiential learning and that cooperatives were the best vehicles for promoting youth in agribusiness
@Erickson Bujingo, Diary Enterprise (TIDE) PDTF farm, Rwashamaire
@Kazire Herbal Products Factory, Mbarara.
Another interesting visit was that to the 17 | issue 1 June 2018
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OPINION
Cooperatives today: Myths and realities WRITER’S BIO The writer is the Chief Executive Officer, The Uhuru Institute for Social Development, a social business supporting cooperatives in Uganda. He is also a member of Nafasi MultiPurpose Cooperative Society Ltd.
In Uganda cooperatives started in 1913 as farmer’s associations in protesting the colonial government policy that blocked African farmers from marketing their cash crops. This policy exposed African farmers to unfair and discriminatory crop prices and other forms of abuses.
T
he idea of cooperatives is as old as humanity itself. By our very nature human beings like to associate and cooperate in order to achieve more, get recognition and marshal a large capacity to deliver better quality, quantity and generate wealth. In African society our extended family context is based on the spirit of “Ubuntu” driven by as sense togetherness; “you are, because, we are”. Ubuntu demands from everyone, a life of solidarity and mutual support for personal, family and community good it celebrates ones’ individual success as the whole community success. The creation of cooperatives based on the seven principles is not far from what Ubuntu stands for in African our societies, except for lack documentation. In Uganda cooperatives started in 1913 as farmer’s associations in protesting the colonial government policy that blocked African farmers from marketing their cash crops. This policy exposed African farmers to unfair and discriminatory crop prices and other forms of abuses. These cooperatives were based
18 | issue 1 June 2018
existing economic activity of cash crops namely Cotton, Coffee, Tobacco, and Tea. The cotton cooperatives expanded very fast in Buganda following public support of the Kabaka Daudi Chwa II of Buganda and other local leaders like IK Musazi. Following large scale grassroots advocacy, the colonial government issued the 1956 Ordinance handing to cooperatives a lot of opportunity in cotton ginneries, coffee haulers, transport and marketing. This policy decision ignited the growth of cooperatives beyond cash crop farming only. Since Uganda’s independence in 1962, cooperatives expanded into finance following the establishment of the cooperative bank in 1964 through which the farmer’s cooperative union received crop finance from government and cooperators did their banking. By the late 1970s cooperatives had grown into agro-input supplies, consumers, saving and credit unions, housing etc. Lately cooperatives have expanded to all areas of businesses bring an end to the general public perception that cooperatives are for the days of old and only in cash crop farming only. www.thecooperator.news
OPINION possibility of transforming into a global cooperative of her clientele etc. If and when this is actualized, cooperatives will become a global imperative. Simply put, cooperatives can establish business in any sector of the economy and their potential is enormous. Soon or later, who knows, we may find ourselves face to face with other social media based cooperatives like a Facebook Cooperative etc.
Helping out at Mubuku Irrigation Scheme
Since the 1990s to date, the growth of savings and credit cooperatives have caused penetration of the cooperative movement into all sectors of the economic and elite demographic cluster. The military and all other security services, the civic service, CSOs and private sector have all joined the cooperative movement. From the informal village saving and credit groups to huge nation wide SACCOs Union, the elite have finally joined the cooperatives big time. But the missing link is that these SACCOs have limited themselves to credit to solve subsistence household financial needs missing out on the enormous business opportunities. One such investment opportunity, is agro-processing industry and consumer marketing, which would enable natural interaction between the educated and often urban based elite and the rural based peasants in delivering socio-economic transformation. Such natural interaction would mean that the elite SACCOs set up agro-processing plants and open farmers supermarkets 19 | issue 1 June 2018
for the rural products such fruits, grain etc. Such would guarantee market for farmers and expand opportunity into commercial farming that government is strongly recommending. Internationally, cooperatives are growing big in the social service sector, like education, health, digital migration, consumers marketing, housing etc. This is evidence that cooperatives are not just the for peasant farmers only. In recent times we have witnessed the emergence of new forms of cooperatives such as multipurpose cooperatives investing in more that one business investment line, mechanics cooperatives, electricity, butchers, women’s market vendors, cooperatives. In Uganda the general perception on cooperatives for young people is this myth that cooperatives are a thing for old people of the olden days. This perception in unaware of the new emerging realities in the cooperative front in social media. For instance, Twitter is currently debating the
The above growth trends notwithstanding, cooperatives face several challenges that require some serious attention. Locally, many cooperatives are struggling with enterprise selection, access to and becoming competitive in the market. This because of limited market information and weak marketing infrastructure, marketing skills, product development and packaging, limited capital to capture the market. Without dealing with the marketing question cooperatives with remain in the periphery of successful business. To successfully compete in the modern market cooperatives can no longer remain in the analogue world, they urgently require to go digital to increase up to date analytical market information to members and to the sales teams. Todays, cooperative are working in a very competitive environment requiring innovativeness, aggressive entrepreneurship, efficient planning, monitoring and evaluation systems, integrity, transparency, and accountability. Like is the case in the rest of the country, cooperatives in Uganda are equally suffering from the cancer of corruption and abuse of office, putting at risk the opportunity for building competitive cooperative businesses. Corruption in cooperatives must simply stop, if the future is to be bright! There is a growing phenomenon of dependency on external support or even setting up cooperatives to attract external money rather organically grow to build a strong cooperative. The culprits here are politicians who are looking to establish cooperative as voter block chains, donors who are giving foreign aid to expand areas of
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OPINION influence and NGOs trying to expedite disbursing funding for various community development projects. All these categories of people strongly believe they are doing their best to support vulnerable communities to improve on their household income and wellbeing. Such well meaning strong philanthropic beliefs often blinds them from noting the risk of destroying the self help philosophy of member owned, members controlled and members utilize cooperatives business models. Like in other development aid sectors, this external money factor has generated new forms of cooperatives which have very little cooperative character about them except for the title, “cooperative society�. Such are the NGO project founded cooperatives (NGO-Coops), government founded and aided cooperative (G-Coops), politicians founded cooperatives (P-Coops) and Donor founded cooperative (D-Coops) of today. Their life style, life time and business performance directly correlate with the availability of external charitable financial support. It is not uncommon to hear of very large number of cooperatives registered but on the ground very few are actually functional, as confirmed by the recent Uhuru Institute cooperatives profiling study in 50 districts of Uganda. This new emerging trend is dangerous, but can be definitely be fixed through a conscious recognition of cooperative principles, philosophy and their application in development. The above does not mean that external support is an entirely no go area for cooperatives, rather it means that when one chooses to support cooperatives theirs should be more about mindset change towards positive self-consciousness, putting in place supportive policies, laws and regulations, cooperative training and business development skills, coaching, mentorship, and enabling business networking. It should be about promoting member participation rather than directing their engagement. It must always remember that cooperatives are social businesses and not charity entities and support them to do business with a social impact. In a developing country context, where the larger part of the population have low income levels and knowledge base, it will be very difficult to successfully nurture cooperatives without cooperation and support of governments. But these governments have to adopt the developmental state ideological posture, and are conscious of their strengths and limitations to enabling cooperatives become competitive rather than babysitting their entire growth path. 20 | issue 1 June 2018
Plantng a tree to signify the launch of Feeding the world Changing Lives
In a developing country context, where the larger part of the population have low income levels and knowledge base, it will be very difficult to successfully nurture cooperatives without cooperation and support of governments.
No doubt, there is hope for cooperatives and a huge potential for them to mobilise ordinary citizen into a united productive peaceful, prosperous and happy people. Cooperatives have the potential of becoming the fulcrum of national unity because they demonstrate in practice the potential of seeing economic value in every person and community as opposed to the negative sectarian tendencies that has be-deviled Africa for long undermining the continents potential to becoming the center for global transformation. World over many countries are adopting cooperative business models to enable socioeconomic transformation for equitable and inclusive development. Cooperatives is the future especially in this developing economies where the state still ahs e very important role to play in nurturing citizen economic organizing for wealth creation and prosperity. To all cooperators, we must stop lamenting about our painful history, develop a positive attitude and start where we are, with what we have, keep going and never give up. The future is bright out there!
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For more information, contact us on Plot 1 Katalima Crescent Naguru P.O. Box 27794, Kampala (U) 0414 581453; 0783656771 clientservices@Coop360profiler.com 22 | issue 1 June 2018
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finance
Are Cooperatives Bankable Institutions? Some of the beneficiaries of Piki-Credit. L-R Ssebuuma Meddie, Turinawe Emmanuel, Mukizza Benon, Ssemakula Mansulu
By Denis Tukahikaho
D
KAMPALA, Uganda:
ue to their unique ownership structure, cooperatives traditionally depend to three sources of capital; contributions from paid up members (internal equity), loans (debt), and outside investors (outside equity). The initial source of funding for a cooperative is often capital contributions provided by the founding members (e.g. each founding member contributes an amount as a membership share). The initial funding provided by founding members is also known as equity capital. Equity capital reflects the member’s ownership stake in the cooperative. 23 | issue 1 June 2018
Over decades, co-operatives have relied on a unique ownership model to gain access to member capital but however the recent financing approaches have made traditional financing models less popular It’s important to note that, the finical services industry in Uganda is major dominated by Banks and the traditional banking system has not appreciated the bankability of Cooperatives and the mind set has been that are not profit oriented and therefore not compatible with banking lending objectives, make profits and payback 1. The Cooperative is new and the demand for funds is growing and
members need immediate services and yet to grow member’s equity from sale of shares and retained surplus takes long time 2. It has got an opportunity to invest in shorter or long term investments with motivating returns beyond the market rates and this it requires huge capital 3. Due to innovation and technological trends, paradigm shift creates a change in a business model and turnaround time. This requires additional working capital and internal resources are not sufficient 4. The nature of the Cooperative activities especially the producer www.thecooperator.news
finance Cooperatives, there is a time lag between when members produce, bulk, store and wait for high prices. The Cooperative needs more money to partly pay members and in most times internal resources are not sufficient Despite being competitors, financial institutions have found their way to appreciate that cooperatives are bankable institutions but how ever cooperatives have to keep in mind when dealing with banks • Notorious high-interest rates that can go higher during the loan’s lifespan. • Interest rates on savings are very low. • Except for interest rates, banks make money on various fees they withdraw from your account. Be ready to pay insurance fees, minimal amount fees, accrued interest fees, processing fees, account maintenance fees and so on. With some banks, you even have to pay for paying your loan off early. They call this ridiculous fee “early repayment charge”.
Are Cooperatives Institutions in Uganda?
inclusion initiatives, increased market for agricultural products, technological shift and increased literacy levels. Members of Cooperatives especially financial cooperatives hold multiple accounts in their SACCOS and Banks for one reason or another and despite being served in their cooperatives they need Banking services as well. It is imperative to note that the Agency Banking model is an option where banks can trade with Cooperatives in serving their customers and therefore this becomes an investment vehicle to Cooperatives that are Bank agents. Also by Banking standards it’s not sustainable for a commercial bank to operate branches in every corner
The Agency banking model, by all standards majority Ugandans are becoming more bankable due to financial 24 | issue 1 June 2018
1. They have the cooperative advantage in managing local costs 2. They have strong sense of ownership by members 3. They can operate in areas with less infrastructure 4. They are social business and have capacity to invest back into communities they operate in better than Banks.
Bankable
Membership and risk management. What makes cooperatives strong are the numbers and because they operate in the same area, credit administration becomes cheaper and without forgetting that average lending is small due to many customers. Therefore, commercial Banks should appreciate that Cooperatives can reach mass population at lower costs and Banks have the opportunity to lend to individual cooperatives through whole sale lending and they retail to their members, the other challenge to Banks that gives cooperatives Bankable opportunity is managing portfolio at risk. In 2017 Banks were challenged by non-performing loans and reduction in lending volumes and this is because Commercial Banks try to lend to indivual members, they are widely spread and they do not understand them better, the biggest opportunity Cooperatives have is traceability of members on what they do and how they do it for better credit management and in this case Commercial Banks can have quality credit portfolio through cooperatives.
of the country due to high cost of operations, that’s why of recent past Banks like Barclays Bank and DFCU have registered a number of branch mergers, and the climax of it is a Bank like Standard Chartered Bank closing a branch in Mbarara the upcoming capital city. What does this mean? That Cooperatives have to fill the vacuum using the agency Banking model
The few cooperatives that receive commercial Bank loans suffer the risk of loan structuring where by most cooperatives have their loan portfolio concentrated in Agriculture sector and cash flows are seasonal and commercial bank strictly require monthly loan payments and therefore for Cooperatives to borrow from Commercial that dominate Ugandan money market, they have to undergo loan interest restructuring which is not desirable.
The agricultural sector evidence shows that the underlying factors that led to the collapse of many cooperatives are related to the years of political instability, the inability of the unions to compete on a liberalized market, the accumulation of huge debt, and poor management. In contrast, few cooperative unions managed to survive so due to the presence of strong agricultural base, leadership and proper management. Their Bankability in gaining access to external financial support, undertaking efforts to develop new markets and marketing channels, maintaining a strong asset base, and retaining a strong membership contributed to their survival. This historical back ground shows that agricultural cooperatives should provide farmers with a strong incentive to actively participate by providing benefits such as improved linkages to markets, fair and competitive prices, payment of dividends and other social assistance. Today in Uganda Cooperatives control over 70% of the national agricultural output, the agricultural value chain has to be financed both internally and externally and best opportunity by external financiers like banks is to understand the value chain and funding requirements. Agricultural sector needs huge capital investment to tackle advanced farming methods and meet technology requirements in value addition www.thecooperator.news
finance The cost of that service, in fees and interest rates charged and the secondary consideration provided that the product and service are delivered in a consistent and timely fashion and Innovations in cooperative finance will continue to occur. Cooperative leaders today bring a much broader perspective to the way cooperative operations are conducted. Younger members and potential members are less likely to embrace traditional cooperative principles. Instead, they will focus on a straightforward businesslike approach that rewards only results. Financial innovations in existence today challenge some of the traditional cooperative principles. The future holds exciting challenges and opportunities for today’s cooperatives. Professional
and conservative fiscal management, prudent ‘action by boards of directors, and timely, relevant, and straightforward communication with members will be the keys to success Conclusion Cooperatives continue to change the methods and resources used to finance operations. These changes are a result of increased competition in the financial markets, capitalization innovations, changes in the structure of the Farm Credit System (the Banks for Cooperatives in particular), and deregulation in the banking industry. Competition, enhanced by further banking deregulation, should continue to intensify. Cooperatives are
increasingly becoming large businesses and, thus, occupy an important segment of the middle market towards which many commercial banks target their services. In a more competitive environment, product and service innovation become major marketing tools. Commercial lending institutions are increasingly tailoring lending services to cooperatives. This has led the Banks for Cooperatives to expand their lending services and develop innovative products. The expertise and long history of lending to cooperatives will help the Banks for Cooperatives preserve their position as the major financing resource for cooperatives, but they cannot take this circumstance for granted.
The Writer is a Ph.D. candidate (Environmental Studies), Holds a master of laws Oil and Gas (Energy and Policy), Executive MBA (SME), BBA (Financial Services) and Diploma in Quantitative Economics. He has over 15 years of Banking, Micro Finance and cooperatives Development. Email, denningyoung@gmail.com , LinkedIn, Denis Tukahikaho, Skype, Denis Tukahikaho Ph.D. Facebook: Denis Tukahikaho
Diamond Trust Bank to Partner with Coop360 Network members in steering the rural agency banking model By Cooperator Reporter Rural farmers grouped under the Village Savings schemes are set to smile soon as Diamond Trust Bank (DTB) rolls out its Agent banking to the rural areas. DTB has since joining the agent banking system recruited 380 Agent across the country. Speaking to the Co-operator, the DTB Chief Executive, Varghese Thambi said the bank will associate with the 360 Network cooperative members across the country to benefit from the scheme. DTB has 39 branches spread across the entire country. The CEO said the bank offers Mobile Banking, ATM, Call center, Internet Banking and now Agent Banking. “We shall use the Agent banking to offer cash deposits, balance inquiries, statements and withdrawals as well as account opening right in rural areas,” he said. He said that associating with 360 network will offer a perfect foot print for affordable banking services in rural areas. He explained that the services allow DTB clients to operate accounts 25 | issue 1 June 2018
@Erickson Bujingo, Diary Enterprise (TIDE) PDTF farm, Rwashamaire
with no minimum balances at all. “The clients will access their accounts through their handsets. They can withdraw money from the bank via their mobile phones and similarly deposit in their banks using their phones,” he said. He said the perception that opening bank accounts is a burden is wrong, adding that “at DTB, account opening is easy. One needs to either have a national ID, passport or driving permit or a recommender who has an account with us.” He said the bank also has the Pay Easy
system where merchants grouped under the cooperatives can easily sell their merchandise. This system is linked to the Airtel and MTN mobile money enabling merchants to get money right in their palms. The partnership also broadens opportunities for the cooperatives to loans at lower rates from the bank. “Currently we have about 8 million account holders in the country. But with agency banking, we hope to work with over 10,000 agents who will help the communities to access their bank account right from their vicinity. www.thecooperator.news
UCA INTERVIEW
In the next few years, cooperatives will be controlling this economy very happy with it however some of the sections of this law have been overtaken by events and need to be amended to meet the current challenges. Currently there is an issue where SACCOs are being taken away from the cooperative society act to be regulated by Tier IV Microfinance Institutions, Money Lenders Act 2016 and the Microcredit Deposit Institutions (MDI) Act. However, as the cooperative alliance we want SACCOs to be regulated in order for them to have discipline and sanity but our concern as the apex body is for these two laws to be good enough not to affect the operations of registered cooperatives.
A
Mr. Asiimwe Ivan, the Secretary General Uganda Cooperative Alliance (UCA)
siimwe Ivan, the Secretary General Uganda Cooperative Alliance (UCA), spoke to the Cooperator about the association, legal framework, taxation, cooperative identity and the future. A Certified Public Accountant, CPA Ivan Asiimwe is the General Secretary of Uganda Cooperative Alliance (UCA), the umbrella organization for all cooperatives in the country. Cooperative society act CAP 112 mandates UCA as the apex body of all registered cooperative societies in the country. It was started by the cooperative societies in 1961 to do capacity building, lobby and advocacy, resource mobilization, arbitration among other cooperative development work. Uganda Cooperative Alliance is purely owned by cooperatives. Legal frame work of Cooperatives in 26 | issue 1 June 2018
Uganda A cooperative is an autonomous association of persons united voluntarily to meet their social, cultural and economic needs, and aspirations through a jointly owned and democratically controlled enterprise. A cooperative is member owned, used, controlled and benefiting the members. This is why the legal framework regarding a cooperative society must operate within the definition and values for cooperatives. Any law that does not recognize the principles and values of a cooperative is in itself a nullity and will affect the performance of a cooperative. As the cooperative alliance we request the legal fraternity and government legal arm to make sure that the laws regarding cooperatives do not contradict these principles and values. Currently we have the Cooperative society act cap 112 that was enacted in 1991 and we are
We are asking government that, much as the law is in place there are issues that we pushed as a cooperative governing body that have not been addressed especially, cooperatives and the apex body were not consulted widely which is causing these gaps in the laws. These laws are not focusing on cooperatives but rather private companies and the moment these are not differentiated you are likely to hit a dead end. Let government respect structures in the process of making these laws then we shall have a good legal framework and cooperatives. Taxation We appreciate the role played by government and believe taxation is key for government to run its business of providing services to the people, because they need money and this should be generated from citizens. However, it is key that any tax should not kill the business but rather support the business. Cooperatives need to pay tax but they need to be taxed as cooperatives and not companies, the tax authority (Uganda Revenue Authority) should first of all understand the ideology of cooperatives and how they operate in order to avoid double taxation, this has been our main concern. For example, a SACCO is member www.thecooperator.news
UCA INTERVIEW
On 30th April 2018, Uganda Cooperative Alliance Ltd (UCA) held a consultative dialogue at the UCA Headquarters in Kampala that attracted representatives of SACCOs, SACCO unions, Legal fraternity, Media representatives, Development Partners and other Civil Society organizations.
owned, used and controlled this means the income of a SACCO is generated by its members which has got an implication on taxation. A company is a separate legal entity from its owners. Whereas for a SACCO it is a cooperative ideology because it is being used, controlled, benefiting and owned by the members, any taxation on a SAACO has an implication on its members. Our message to government and the tax authority is to understand the cooperative ideology, and to create tax subsides the way it is doing to investors so that more Ugandans are involved in the social economic transformation of this country . Cooperative Identity As an apex body we really love our identity as cooperatives. A cooperative is owned, used, controlled and benefiting the members, that is our identity and we want to identify with our cooperatives. As a body we want to see a transformed cooperative movement in the next 5 to 10 years, but we need to rethink and have strategic intervention. We want to ensure that we invest heavily in cooperative information, training and education for the members, committees and management staff. This is catered for in the legal framework, we need cooperatives to grow with its members. We want the young generation to identify with the cooperative ideology that is why as UCA we are working closely with the National Curriculum Development Centre to develop cooperative education at secondary school level. You cannot develop a country like Uganda when people have not been trained, natured to work together. Individualism and capitalism cannot help Africa transform but rather a cooperative model.
27 | issue 1 June 2018
As a cooperative apex body together with government we need to devise ways of up scaling the cooperative colleges from certificates and diplomas to degree awarding institution. We also want to have cooperatives with a business mindset not those set up to tap money from politicians and government. We need to create cooperatives that are sustainable and raising their own money.
medical workers among others.
Are cooperatives behaving in a way they should be?
Since 1999 we are yet to receive a liquidation report from government on the closure of the cooperative bank that was formed in 1964 as a financing arm of cooperatives but we are optimistic on this. As cooperators we have come back together and come next month we will be launching a countrywide feasibility study which will inform our decisions on forming a Cooperative Bank.
Some are but others are not. Our message as an apex body is for cooperatives to stick to their ideology and values of member ownership and control. We need to ask ourselves, why is it that cooperatives of the 60’s were very strong compared to those of today? It is because they were business oriented and formed out of a need and not compelled by politicians as is the case today. This means that cooperators must be in the business of production and productivity in order to have a common stake to build on. Where do you see the cooperative industry in the next 10 years? Cooperatives in the next few years will be controlling this economy, I’m very happy with the vibrancy that is around with everybody wanting to associate with cooperatives which hasn’t been the case in the previous years. Before cooperatives were majorly in cotton, coffee, tea and tobacco but today cooperatives have trickled down to all sectors of the economy like energy, mining, tourism, transport and professionals like the accountants, army, police, prisons,
As UCA, in the next few years we see a changed economy where the country will be in the hands of Ugandans having strong and vibrant cooperative societies. We also see interlinking of cooperatives extending products and services. And the Cooperative Bank?
We are also looking at a cooperative that is strong enough to engage government on policy matters which has not been the case in the recent past. We are looking at a more consultative and modern way of engaging government. How are Cooperatives tackling the unemployment in Uganda? We should stop the blame game, let us help government to solve this problem. We can mobilize and sensitize professionals to form cooperatives and unions and bring their skills and knowledge together, by this we shall have created more jobs for doctors, engineers and other professionals. Instead of having Chinese constructing our roads and dams we can have our own doing that in the near future.
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INTERVIEW
Uganda Cooperatives Savings and Credit Union seeks to be the worldclass National Union of SACCOs The Co-operator Chief Editor Patrick Jaramogi had a chat with Mr. Ndiroramukama Silvester, the Chief Executive Officer of the Uganda Cooperatives Savings and Credit Union (UCSCU) here is the excerpts
Mr. Ndiroramukama Silvester, CEO Uganda Cooperatives Savings and Credit Union (UCSCU) during the interview
Question: What is UCSCU? Answer: Uganda Cooperatives Savings and Credit Union (UCSCU) is a union of SACCOs in Uganda. It is duly registered and was registered by the registrar of cooperatives way back in 1972. Our Registration number is 2725. We are formed, owned and controlled by registered Societies called SACCOs that deal with Credit and Savings. Today we have 1269 registered members countrywide, this has been increasing over time, since we started with just 30. Question: What are your achievements in the last 5 years?
key
Answer: Before I talk about what we have achieved in the last five years, the Co-operator readers need to know what drives us, and this is our vision. Our vision is to become a world class National Union of SACCOs in Uganda. So, whatever we do, is motivated by this vision. We are also guided by a strategic plan. We have thus achieved a lot, one, the increase of members from the original 30, to the current 1269 which implies that many people, now appreciate the importance of cooperatives. Nowadays, it is not only cotton, coffee or tea growers, but even groups such as soldiers (Wazalendo), Teachers (Walimu), Police (Exodus) are now on board as cooperatives under different SACCOs. Our mandate is capacity building to the different SACCO groups countrywide. UCSCU has conducted many trainings for both our members and non -members who intend to join the SACCOs. 28 | issue 1 June 2018
The members have been trained in rural finance management, book keeping and value addition. Some of these SACCOs have become so big that they are now set to be regulated by the Central Bank, as per the law guiding the sector. Currently, we have 39 members who are eligible for this regulation. In order to appreciate the achievements, you need to see the growth of the members, the growth of the share capital, savings and loan portfolio. Question: What is your view regarding the new legal tax regime on SACCOs? Answer: We are still opposed to the issue of government taxing SACCOs. We at UCSCU believe that SACCOs are not for profit entities, but rather bodies trying to help communities live better lives. Government had given SACCOs a 10year tax exemption that expires in 2027. So when the issue of taxing SACCOs came up, we did our best to ‘fight’ it. We lobbied and used our members to assure government that taxing SACCOs would be detrimental to the development of the groups. Through our advocacy, we were able to prompt government to retain the tax exemption as earlier agreed. We are optimistic, that during the coming years, the money that would have been used to pay taxes will be channeled to other development sectors.
Question: Where do you see yourself in the next 5 years? Answer: Like I said earlier, we at the Uganda Cooperatives Savings and Credit Union see ourselves guided by our dreams in the next five years. We will work with other unions in neighboring states like Kenya, to try to re- establish ourselves. But, in a nutshell, we see ourselves increasing in numbers like the Wazalendo SACCO. Among the key achievements, it is important to note that UCSCU acquired a new building adjacent to our Maganjo head office that we shall turn into a fullyfledged training center for our members. We shall also be into big estates in the coming years. Question: Any challenges that you face worth sharing with our readers? Answer: Like other organizations or SACCOs, we also face challenges, among them is the fact that 50% of our members are still so weak to support themselves. We are also limited to provide awareness and advocacy to our members due to inadequate funding. Then there is this syndrome of always thinking of free things, handouts, coupled with the bad culture of not desiring to save. The issue of the legal regime, like I had hinted on earlier is another bad one for us. Much as we need a law, we don’t need a law that will work against us. The current laws also need to be harmonized and amended for the good www.thecooperator.news
IntERVIEW
Walimu SaCCos Union hosts Cooperative week 2018 with pomp and color Every year during the first Saturday of July, Cooperatives worldwide mark the International Cooperatives day while in Uganda we celebrate the annual Cooperative week. This year, the main hosts are teachers under their umbrella finance body, Walimu SACCOs Union. the Walimu SAccOs union/87 chairman, Stephen Nabende during the interview
S
peaking to the Cooperator, the Walimu SACCOs Union/87 Chair, Stephen Nabende says they were selected as this year’s event host due in Jinja due to their visibility, and development corporate affairs. “The Ministry of Trade, Industry and Cooperatives realized our strengths regarding how we have managed to grow so fast in just two years and asked us to be the event hosts,” said Nabende. In two years, Walimu has been able to register a total of 157 teachers’ unions across the country. He said the teachers, who now number 98,000 countrywide have been empowered to engage in income generating activities such as agro forestry, poultry, bee farming and small scale industries. “The teachers have now been empowered to supplement on their meagre incomes. This has boosted their morale and helped improve on the performance in the education sector,” says the National Chairman. He notes that the greatest achievement of the Walimu SACCO is the increase in the number of teachers’ unions getting interested. He says so far they have received 23 applications from
various teacher SACCOs pending approval to join Walimu. With a loan portfolio of shs.18billion and savings of shs.57m as per June 2018, Nabende says the sky is the limit. The share capital of Walimu stands at shs.62m though Nabende says they are still faced with challenges of loan recovery from teachers. “Recovery is still a big challenge because government hired a private firm, PCA to collect these funds on our behalf.” He says PCA takes up to four months before submitting the recovered cash, something that he says interferes with their loan programs. Asked to list some of their best performing members, Nabende named Mengo and Luwero Teachers Unions as among the shining ones. He also lists the Entebbe Municipality SACCO that has added value to the mushroom farming, Toroma Teachers SACCO based in Katakwi that is engaged in moringa production and Busana SACCO that is dealing in bee farming, as other outstanding SACCOs. At the backdrop of this all, Nabende notes that the culture of inadequate saving among the teachers still remains a hurdle. “Teachers need to appreciate that SACCOs are all about
saving. We can only give you money after you have saved. Otherwise where does the money come from?” he mused. ‘The criteria is, first save and be given.” Most teachers, he notes are not well conversant with managerial skills and book keeping skills. He however observes that with the training of their members, most teachers are beginning to appreciate the beauty of saving as a group. He says Walimu put in place a benchmark of saving of shs200,000, minimum per year per SACCO. “We then inject this money in treasury bills and fixed deposit so as to accumulate over time,” he explained. As they plan to expand in terms of numbers, Nabende says Walimu will soon start estates development to benefit their members. “We want our teachers to own personal homes. Walimu will buy land and construct houses for the teachers. And for us when we say we shall buy land, we shall indeed buy, we don’t promise what we can’t deliver.” As the cooperatives gear up for the International Cooperative Day, Nabende’s call to his members who are the hosts, is to come up in big numbers at the Civil Service College in Jinja to grace the event.
THE REPUBLIC OF UGANDA
MINISTRY OF TRADE, INDUSTRY AND COOPERATIVES
FROM THE IVORY TOWER TO THE PEOPLE: A Challenge to Uganda’s Intelligentsia Today Keynote Speaker: Prof. Dr. Patrick Ndebesa Mwambutsya
29 | issue 1 June 2018
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coop day statement Cooperative banks contribute to stability thanks to their proximity to their clients and provide access to finance at local level and are widespread even in remote areas. Utility cooperatives are engaged in rural access to energy and water, and many of them are engaged in leading the energy transition to energy democracy. Worker and social cooperatives across diverse sectors (health, communications, tourism, etc) aim to provide goods and services in an efficient way, while creating long-term, sustainable jobs – and they increasingly do it in a planet-friendly way.
2018 #coopsday: Sustainable societies through cooperation
O
n 7 July 2018, cooperators around the world will celebrate the International Day of Cooperatives. Through the slogan Sustainable societies through cooperation we will show how, thanks to our values, principles and governance structures, cooperatives have sustainability and resilience at their core, with concern for community as the seventh of their guiding principles. The International Cooperative Alliance is encouraging its members to use the hashtag #CoopsDay and the Cooperators guide to spread the word. “We represent 1.2 billion cooperative members. There is no other economic, social and political movement in the world that in less than 200 years has probably grown as much as we have. But growth is not the most important thing. We consume, produce and use the resources that the planet gives us but in solidarity with the environment and with our communities. That is why we are a key partner for the United Nations Sustainable Development Goals,” says the President of the International Cooperative Alliance, Ariel Guarco. Sustainable societies are ones that reflect the environmental, social and economic limits to growth. By their very nature, cooperatives play a triple role: l As economic actors they create opportunities
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for jobs, livelihoods and income generation l As people-centered enterprises with social goals they contribute to social equity and justice l As democratic institutions, they are controlled by their members, playing a leading role in society and local communities. While a recent report by PwC showed that two in five firms are still either ignoring or having no meaningful engagement with SDGs, cooperatives are leading the way. Cooperatives have a unique contribution to make to delivering all the Sustainable Development Goals and their associated targets. In 2016, the International Cooperative Alliance launched the campaign www.Coopsfor2030. coop to show cooperatives’ commitment to the UN’s Sustainable Development Goals and celebrate the cooperative contribution to making the world a better place. Cooperatives have experience in building sustainable and resilient societies. For example, many agricultural cooperatives work to maintain the longevity of the land where they grow crops through sustainable farming practices. Consumer cooperatives increasingly support sustainable sourcing for their products and educate consumers about responsible consumption. Housing cooperatives help ensure safe and affordable dwellings.
“On the International Day of Cooperatives, we are going to show the world that it is possible to grow with democracy, equity and social justice. That our societies cannot continue wasting resources and excluding people. That we must improve the present and preserve the future for the next generations. And that we are proud to be part of this movement. A movement with values and principles. A movement committed to social justice and environmental sustainability,” says Mr Guarco. How can you celebrate #coopsday? l Pledge your cooperative through the www.Coopsfor2030.coop campaign to show its commitment to the SDGs l Use #coopsday hashtag, logo and related material you can find on the Cooperators guide to post videos and photos on social media and online l Organise a celebration that showcases your cooperative’s contributions to sustainability and send us your plans at luengo@ica.coop, we will include it in an interactive map l Share case studies showing how #coops build ‘Sustainable societies through cooperation’ We will use this information to create a global map of the events that will take place on this special day. High level event to mark #coopsday “Sustainable societies through cooperation”, the 2018 slogan and the theme “sustainable consumption of goods and services” reflects the United Nations Sustainable Development Goal number 12 which is ‘Responsible Consumption and Production’. SDG 12 is being reviewed by the 2018 High-level Political Forum for Sustainable Development (HLPF): “Transformation towards sustainable and resilient societies”, and cooperatives have much to contribute to delivering this target. In July, a high-level event will be organised by COPAC in New York to show how cooperatives build sustainable and resilient societies. During the HLPF in July, UN Member States will review progress towards achieving the following Sustainable Development Goals: 6 (clean water and sanitation), 7 (clean and affordable energy), 11 (sustainable cities and communities), 12 (responsible consumption and production) and 15 (life on land). www.thecooperator.news
fruit production
Teso farmers set to start reaping ‘big” as fruit plant starts production, amidst infights over name
“The world should know that we didn’t form Wazalendo because SACCOs were a fashion. Though it was a leadership idea, we as members had key principles for starting this savings scheme.” Gen. Kavuma, also the Deputy Commander Land Forces.
I
By PATRICK JARAMOGI
SOROTI, Uganda:
n 2015 when President Museveni presided over the ground breaking of the Soroti Fruit Processing factory, (now called Teso Fruit Factory) I recall vividly his message to those present then. “Fruits have more demand and generate more money than coffee. You have now planted 7m trees but that is not enough; they are just one quarter of what is needed, because this factory is going to consume it within a short time”, he said. Today, though, there are over 10 million trees. Last month (May), the Minister for Trade, Industry and Cooperatives, Hon Amelia Kyambadde visited the factory located in Arapai sub county in Soroti to ascertain how far the works had reached. Her findings were ‘good’. And she announced that the plant would start production by August. After her visit, the Cooperator Magazine took up the 297 km journey to the plant in Arapai to ascertain what exactly is on ground and to also chat with a few farmers to fact-find whether they are ready for the plant that starts operation in just about 60 days.
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Indeed, as I landed at Arapai, I recalled again what President Museveni said as he broke the ground for this giant factory. He said then: “It is very difficult to get entrepreneurs to build a factory because Uganda doesn’t have people with such capacity.” No wonder, the Government of Uganda had to partner with the South Korean Government, through the Korea International Corporation Agency (KOICA) to fund the USD10m project. The Uganda Government through the Uganda Development Corporation (UDC) that financed the project owns 40% shares while the Teso Tropical Fruit Growers Cooperatives Union (TETFGCU) owns another 40% while KOICA owns 20%. The factory was built by KOICA who signed the memorandum of understanding with GOU through UDC. Prof. Kyung- Woo-Han, the Korean consultant who was instrumental in the factory designs revealed to the Cooperator that the Korean government had injected in USD$.7.4m as counterpart funding.
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fruit production “We would have completed this plant way back, but due to design changes, it delayed and shot the costs to an additional USD1m,’ he said. Prof. Kyung said the plant stands in a land totaling 216000 square feet, while the building (plant) seats on a 3500 square feet space. Kyung noted that apart from the Korean Government providing machinery, they had also trained the personnel to work in the plant. “In May with support from UDC, and government, a total of 25 managers had already been recruited. The plant will operate in three shifts churning out 6 tons of concentrate per hour. “We shall have a staff of 57 to operate the orange concentrate plant, while 75 will handle the mango concentrate production per shift,” he explained. He said the plant will produce fruit concentrates and ready to drink juices produced from oranges, mangoes, papaya, water melon, lemon and pineapple. “One shift will last 8 hours. Each system has a combined multi machine to handle a fruit at a single go,” he said. He said so far, they had signed MOUs with (TETFGCU) to supply the plant. It needs to be clear that the plant was due to be completed in 18 months and start operations by 2016. Two years down the road, it is yet to commence operations. According to the Teso Tropical Fruit Growers Cooperative Union, over 30,000 farmers have so far been trained to grow the high yield fruits needed for the plant. The species include: Valencia, Hamline and Washington Navel. What’s on the ground
All is not lost, despite the long wait. We can reveal here that smiles are high, among the faces of many Teso farmers, now that, the mangoes and oranges that used to rot, and be eaten by the birds, will cease. When Trade minister visited the plant, test runs were made and all seemed well. “We are now set to commission the plant in August 2018,” she said amidst applause.” Hon. Amelia Kyambadde revealed to us that President Museveni, who broke the ground for the factory construction in 2015, will be the one to commission the plant in August. The Teso Fruit Factory Project Coordinator and UDC senior economist, Yudaya Kadondi, said after three months of testing the plant, they will start full scale commercial production. Though, the Cooperator saw no signs of fruit collection at the 360- ton storage facility, assurances were made that they are on ready and had already made arrangements with farmers regarding the required supplies needed to feed the plant. What will be produced at the factory? According to Prof. Kyung, the consultant that designed the plant, the plant has a cold storage plant that can accommodate 360 metric tons of concentrates. The fruits, he said will be supplied by the over 120 farmers under the (TETFGCU). “Unlike other fruit juice processors that produce Tetra Packs, Teso Fruit factory will produce the global acclaimed spout standup ready to drink packs,” he said.
He said that it needs an additional USD$1m (UGX3.6b) to set up a tetra plant for ready to drink yet the world is now shifting to the easy to install Spout stand. He said the plant will produce both concentrates and ready to drink juices that will be sold in neighboring Kenya, Rwanda, Tanzania and South Sudan. “Our cold rooms can go up-to between 22-25 degrees, meaning we can have the fruits fresh for some time,” he said. What if the supplies are not met? This is perhaps the hardest question, a reality that most investors dodge and feel uncomfortable answering. But for Prof Kyung, they seem to have planned in advance. “Initially even before we begun construction works, we asked government if fruit supplies would be forthcoming and we got assurance of that. But we, as designers of the plant, also thought of plan B, just in-case things don’t work out,” he said. Prof. Kyung, though he decided to keep it a top secret, said UDC has put mechanisms in place to make the plant highly competitive in terms of purchase of fruits from farmers. “We may even be forced to purchase fruit from Kenya or Rwanda so as to meet target. But among all, we shall try to be so competitive in the market,” he said. He said as consultants they had observed that Teso area is dry and needs irrigation so as to have two seasons of production. “I discussed that with the Hon. Amelia Kyambadde (Trade Minister) and hope it’s considered since we have some money to the tune of USD500m for that ready,” he
Prof. Kyung-Woo, Han, a consultant with the Korea International Cooperation Agency (KOICA), explaining to the Minister of Trade, Industry and Cooperative, Ms Amelia Kyambadde, the status and condition of the Soroti Fruit Processing Factory - Courtesy photo
33 | issue 1 June 2018
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fRuIt pRoductIon said. He however said that should all other factors fail, then they will revert to plan C. Under this plan, says Prof. Kyung, the plant can still be transformed to produce dairy products such ice-cream, yoghurt and cheese or even turned into a bottled water plant. “I designed the factory in such a way that should the fruit production fail, then we can resort to dairy products or bottled mineral water. Since we have already drilled the well and ready for production.” The Cooperator findings on ground notably indicates that much as there was a perception of presence of fruits like oranges and mangoes, the ones present may not likely be bought by the plant. Also some farmers in the districts of Amuria, Katakwi, Serere, Bukedea, Kumi and Ngora accused the Teso Tropical Farmers Group of biases. “We may have gardens of mangoes and oranges, but we are told only members of Teso Tropical Fruit Growers Cooperative Union will be considered first, this to me is a challenge,” said a farmer. Similarly, other issues that may affect the plant is the fight over the name. initially it was called Soroti Fruit Factory, but has since been changed to Teso Fruit Factory, much as Prof. Kyung finds the name not a big issue, the locals seem to be torn apart between those supporting Soroti Fruit Factory and Teso Fruit Factory. Perhaps, when the plant starts operations, in August, huge ready to drink juice producers like Coca Cola, Britania Allied Industries that have been importing concentrates from Kenya and India respectively, may resort to the locally produced concentrates so as to add value to our local farmers and improve on their livelihoods. According Joram Opian, the Teso Tropical Fruit Growers Cooperative Union Chairperson, farmers in Teso and surrounding areas are set to reap big in terms of fruit supply to the plant. He says unlike now where the farmers are selling a 100kg bag of oranges at hs30,000, they will supply at shs50,000.
dId YOU KnOW?
kenya: Using cooperatives to restore order to maize industry Identifying farmers is the first strategy towards enhancing sanity to the cereals and maize sector. County governments should take the lead in registration of farmers in line with Crops Act 2013 and AfA Act 2013.
STRATEGY ONE:
STRATEGY FOuR :
The counties should have a record of all farmers with the acreage of maize farms. This will sort out the current abnormal demand for fertilizer, as well as delivery of excess maize to the National Cereals and Produce Board by cartels.
To establish a commodity exchange to ensure trading is solely influenced by market forces. Deliberate intervention by the government to protect farmers may from time to time be done but in a structured manner. With registration of farmers, cooperatives or associations in place, warehousing receipting system in place and commodity exchange operational, the challenges facing farmers will be minimised. Strategy Five is for the government to formulate a policy that will compel all millers to engage maize farmers in contract farming.
STRATEGY TWO: To organise farmers into crop-specific cooperatives or associations. These will enable farmers to leverage on the strength of numbers and make access and distribution of inputs easier and on target.
STRATEGY THREE: To sort out the sale of maize in a rush, hence, causing a glut in the market. Parliament should urgently enact the Warehouse Receipting System Bill to provide a legal process for farmers to warehouse their produce in registered storage facilities. Farmers will then obtain a legally protected receipt, which is recognised as an instrument of title. This will enable them to use the receipt as collateral to obtain cash for their immediate financial needs. The maize shall remain the property of the farmer and he/she will dispose of it at the time of his choice, when the prices are reasonable or favourable.
Kyegegwa rural electricity cooperative society limited is the sole distributor of electricity in rural areas in central service territory of Uganda covering Mubende, Kyegegwa, Kyenjojo, Mityana, Buikwe, nakasongola, Kyankwanzi, Kiboga, Wakiso, Luweero, Mukono and Mpigi district. — www.krecsltd.org 34 | issue 1 June 2018
The beer industry has contracted barley farmers and now sorghum growers. If this strategy is employed so that at least 70 per cent of the miller’s needs comes from contracted farmers, the price fluctuations will not be as volatile as currently experienced.
STRATEGY SiX: To enhance post-harvest management and logistics. Restructuring the NCPB should be concluded and recommendations implemented. The NCPB should be allowed and supported to operate commercially. The government should pay approximately Sh7 billion owed to the NCPB so it can operate optimally. The board should also be financed to install at least two maize mills, one in the North Rift and another in Nairobi, so excess produce can be milled and sold to consumer-friendly prices. This will stabilize maize meal prices and ensure continued liquidity of the board. The counties should be encouraged and even allocated grants by the national government to build and operate at least one silo in every sub county. They need to procure and install dryers, both stationary and mobile, to aid farmers in reducing post-harvest losses, which is currently at a high of 20 per cent of the total annual harvest. Let’s not give up but strive to fix the structural challenges in the maize value chain.www.thecooperator.news
Ideas Shaping decisions
www.thecooperator.news 35 | issue 1 June 2018
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PICTORIAL
Okoro Coffe Cooperative Regional Consultation
Coop week blood donation
IK Musazi Lecture, June 2016
At Mubuku Irrigation Scheme in Kasese
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PICTORIAL
At Ericson Dairy Farm in Ntungamo
Some of the beneficiaries of Piki-Credit. L-R Ssebuuma Meddie, Turinawe Emmanuel, Mukizza Benon, Ssemakula Mansulu
At Delta Bees in Bushenyi
Prime Minister Hon. Ruhakan Rugunda addressing Cooperators at Coopweek 2017
— Mr. Leonard Okello 37 | issue 1 June 2018
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tEchnoloGY
MaRKEt InfoRMatIon
Social Media, Mobile, Big data and Governance:
how is your co-operative performing in the digital world?
D
BY ROBERT NDAWuLA
igital technologies are changing the lives of customers and patrons. Social Media provides them with a new voice. Mobile devices and online platforms alter what people expect from businesses. And ‘big data’ is giving organizations the opportunity to understand and fully engage with their stakeholders – whether these are members or customers. In light of this, it is important to ask how your co-operative is using digital tools. It is equally important to explore how your coop is performing in these four areas: Social media, mobile and digital customers, Big data, and Governance. Social media impact Social media is not a one-stop solution. The digital revolution is developing so quickly that it is essential for businesses to stay on top of developments and trends. In a fast-moving world, it is easy to get left behind. Like other business entities, Social media can help co-ops build their brand. It empowers you to go beyond corporate messages and communicate specific and everyday activities directly to customers, members and the wider public. Co-operatives, particularly those with a membership that includes employees or suppliers, may want to use social media as a means of getting closer to members. In 38 | issue 1 June 2018
smaller co-ops, social media tools enable members to talk and collaborate more regularly. In larger co-ops, where direct engagement is often limited, social media offers a new opportunity. In case you want to publish longer and descriptive content, you may want to publish a Blog aside your website. Digital innovations Mobile technology has had a big impact in the finance and banking sector. With mobile banking on the rise, there are now more points of contact with customers and members than ever before. For financial co-operatives, mobile has clearly begun to change the relationship with customers and members. You may want to create web and smartphone apps to respond to your customers’ wishes for easy access to their accounts. While the development of mobile platforms may be most obvious for the financial co-ops, it is impacting agricultural cooperatives too, enabling farmers to connect with one another and their co-op, and run their businesses more efficiently. Agricultural co-ops should also adopt a system of engaging with members via mobile technology in different ways, from simple operations such as checking weather forecasts and the price of grain, to managing data about livestock, plots and finance on the farm. Digital governance If patrons and consumers have become
more digitally connected, so have cooperative members. For many larger co-ops, the use of digital tools is an effective way to give members a sense of proximity to the business. This is of most pressing significance for big cooperatives which cannot provide simple or regular ways for members to meet or physically interact with the co-operative. But it is just as important for smaller co-operatives, giving members more opportunities to engage and interact with the business and with one another. A crucial ingredient of member democracy in a co-operative is an informed membership that can be in regular communication with the executive and governing bodies. Many co-ops have identified social media as a means of communicating with members. For many, the flow of information is oneway – from co-op to member – but twoway interaction is also possible. Co-ops should also adopt the use of digital tools to allow members to vote online and facilitate discussion and decision-making among board members. Digital tools, it seems, are proving an important part of co-operative governance. The importance of digital tools is even more significant for the future. Whether it’s engaging with customers and members, running daily operations or governing the co-op, digital tools will play a vital – and increasingly important – role in the future of co-operatives. www.thecooperator.news
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