News & Events

How a SACCO can lend at 13.5% and pay 18% interest on savings

February 17, 2019

On 15th February 2019, 212 SACCO, one of the fastest growing and most profitable SACCO in Uganda, announced that it would pay 18% on savings. The SACCO comprises of staff members of MTN Uganda, Makerere University Business School (MUBS), FutureLink Technologies (FLT), Exquisite and ZTE. This is a SACCO under the administration of FLT. We have had the privilege to be the engine behind this exceptional performance, through our very efficient 3rd party administration.


Well as it paid out 18% on savings, it lent out loans at an interest rate of 13.5%. So how does the SACCO manage to lend out loans at an interest rate lower than the rate it pays out to its members on savings. Below are some interesting lessons learnt.


1.ELECT A COMPETENT DEDICATED BOARD.
Have a dedicated and competent board to direct the SACCO right from the start. Reverting to corporate governance later is more costly, and many institutions usually do not survive that process. This is because many people in positions usually lose objectivity as they fend personal ambitions. SO START WELL.


2. AUTOMATE FOR EFFICIENCY
We have automated most of the processes, including loan applications. For example, the SACCO is purely CASHLESS. This ensures efficiency and transparency which in turn leads to minimal administration costs and quick turn around of client requests, Member improved investment confidence in the SACCO.


3. ACCUMULATE SAVINGS
There are no withdrawals of savings at this SACCO. This means that the SACCO is able to invest in fairly long term ideas, without fearing liquidity challenges. It gives the SACCO access to cheap financing.


4. INTEGRATE REAL ESTATE DEVELOPMENT AND TRADE
By developing real estate for its interested members, and giving out loans to facilitate acquisition, the SACCO earns both profit margin and interest income.


5. OUTSOURCE ADMINISTRATION TO A COMPETENT TEAM.
By the SACCO outsourcing administration, it has managed to keep the cost very minimal. Our 13-year experience working with SACCOs and microfinance institutions, enables us to fast track your institution to the leading position of your industry.


Our SACCO administration will enable you spend only and only if you are making money. At this rate, it is more profitable to save your money with such a SACCO than fix the same amount in a commercial bank. Isn’t this phenomenal?


Please congratulate the board members led by the Chairman Joachim Masagazi. Thanks to the treasurer Peter Ochen and the investment team for all the sober investment decisions.