The Role of Savings and Credit Cooperatives (Saccos) in Improving the Economic Welfare of Households in Kasese District a Case Study of Karambi Sacco

Abstract

Savings and Credit Cooperative Organizations (SACCOs) are usually formed to provide financial services to the economically active poor people, especially in rural areas to enable them improve their livelihoods. Since 1986, the government of Uganda has encouraged the formation of SACCOs as an instrument for poverty reduction in many rural areas. However, the role of these SACCOs in improving people’s economic livelihoods has not been ascertained in many places, including Kasese district and Karambi Sub County in particular where Karambi SACCO is found.

The purpose of this study was to establish the role of SACCOs in the economic welfare of households in Karambi Sub County. Specifically, the study exploredthe role of microcredit in improving household income, examining the role of savings in the acquisition of household properties and exploring the role of financial literacy in household economic decision making.

The study uses a case study of Karambi SACCOs in understanding the role of Savings and Credit Cooperatives (SACCOs) in improving the economic welfare of households.Sixty-seven (67) respondents participated in the study and data was collected through interviews, questionnaire, Focus Group Discussions and observation. Thematic analysis was used in the course of analyzing data basing on the objectives of the study.

The findings of the study revealed that most people have benefited from the services of Karambi SACCOs especially increased income levels as a result of investing loans got from the SACCO in businesses. The majority of the respondents pointed out that the main service offered by the SACCO was loans for project investment. Members had developed a spirit of saving some of the proceeds from the businesses, were able to acquire household properties like motorcycles, land, furniture and household utensils. The saving spirit helped them to expand their businesses, and to meet basic needs like fees, lighting (solar panel) and putting up permanent houses. The financial literacy trainings given to SACCO members also helped them to learn how to save better, invest, and use their earned income properly. However, not all members of SACCOs benefited from their involvement in the SACCO activities. Some members especially those who invested in agriculture sometimes made losses and even sold their properties to pay back the loans. Similarly, the majority of the members had not benefitted from the financial literacy trainings.

The study recommends that SACCOs should develop different loan products in order to cater for the financial needs of different clients. It is also recommended that trainings in financial literacy should be encouraged to all members, and in addition members should also be trained in entrepreneurial and business management skills so that they can run successful businesses and be able to benefit more from microcredit services.

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