What is a SACCO?

A SACCO is an acronym for Savings and Credit Cooperative Organizations.

It is owned, governed and managed by its members who have the same common bond: they

may be working for the same employer, belonging to the same church, labor union, social

fraternity or living/working in the same community.

A Savings and Credit Cooperative’s membership is open to all who belong to the group,

regardless of race, religion, color, creed, and gender or job status. A SACCO is unique,

democratic, member driven and self-help cooperative organization.

In a SACCO, members agree to save their money together and offer loans to each other at

reasonable rates of interest. Interest is charged on loans, to cover the interest cost on savings

and the cost of administration.

SACCO members are the owners and they decide how their money will be used for the benefit

of each other.

Savings and Credit Cooperatives are democratic organizations and decisions are democratically

made. Members elect a board that in turn employs staff to carry out the day-to-day activities of

the SACCO.

The number of board members is between nine and fifteen. Members also elect a supervisory

committee to perform the function of an internal audit.

SACCOs are legal bodies registered under the Uganda Cooperative Statute of 1991 and

Cooperative Societies Regulations of 1992.

SACCOs are economic institutions doing business in order to grow, survive and become

sustainable.

The minimum number of members required to register a SACCO under the current law is 30

people. However for purposes of accessing external support, a minimum of 300 members may

be the basis for selection.

Why Form a SACCO?

To have easy access to Safe and Sound Financial Services in a Convenient and sustainable

manner

WHAT YOU NEED TO KNOW BEFORE FORMING A SACCO

Not to force anybody to join, only sell ideas and convince

Keep minutes of the discussion and meetings held

Formulate a Simple plan

Document all processes taken, decision agreed upon and strategies laid out

Keep a full list of the people (names and addresses) that have enlisted as members

Keep an up-to date and correct record of money received from any interested person

Minimize expenditure and operate with transparency

Study and understand all relevant laws and regulations that govern the cooperative

business namely

The 1991 Cooperative Statute

The 1992 Cooperative Societies Regulations

The draft by laws of the SACCO

Target numbers to be raised before a SACCO opens for formal operations.

Why Form a SACCO?

To have easy access to Safe and Sound Financial Services in a Convenient and sustainable

manner

Why Join a SACCO?

Savings are mobilized locally and returned to members in the form of loans. The money

stays and works within the members.

Unlike other places where interest rates may not be negotiable and already pre -

determined, SACCO interest rates are set by the members themselves depending on the

circumstances in the community they live.

SACCOs encourage members to save as a way of building a resource base for credit.

SACCOs educate their members in financial matters by teaching prudent handling of

money, how to keep track of finances and how to budget.

SACCOs pay dividends on shares to their members once the SACCO is established and

profitable. Members therefore take pride in owning their own SACCO.

Money borrowed to members in a SACCO is money mobilized by themselves from different

sources.

SACCOs perform a critical and unique function as financial intermediaries. They mobilize

significant volumes of personal savings and channel them into small loans for productive

and provident purposes at the community level.

Each member of a SACCO is an equal owner of that SACCO and is entitled to one vote at the

annual meeting, regardless of how much money he or she has deposited in the SACCO.

SACCOs promote a social bond and unity among members in the communities they live.

What SACCOS offer Members?

Shares:

Every potential member must purchase a minimum share as determined by the SACCO making

each member an owner of the cooperative. Once the share has been fully paid up, all other

contributions will go towards savings.

Savings:

A member’s monthly contribution is usually split between various types of savings accounts.

Savings unlike shares are withdrawn on demand. Each SACCO determines amongst its members

what the minimum savings per member will be.

Loans:

Members are encouraged to save toward loans. Loans are ratio based on member’s savings and

shares. Individuals who have established their credit worthiness through regular savings and

are able to show ability to repay a loan can earn the privilege of borrowing these savings in the

form of a loan. Some loans are made for productive, income generating activities, a business

idea; other loans are made for provident purposes such as schools fees, funerals and weddings.

Quick/Emergency loans:

Emergency loans are short-term quick loans available to members to meet unforeseen

circumstances, not budgeted for.

Steps of Forming a SACCO

Steps 1

Community members with a common bond come together to discuss.

They identify their needs and problems and discuss how to address and solve them.

Some of their needs can be solved by accessing financial services by establishing their own

financial institution

Step 2

Formation of a task force committee to steer, propagate and sell the idea to other potential

members of the community.

Step 3

Task force mobilizes other potential members and enlists their support to participate in

formation of a SACCO.

Step 4.

A general meeting should be convened to deliberate on the idea. Several stakeholders can

attend. Step 5

At the meeting, sensitization on the need for starting a SACCO is done.

Step 6

An interim committee is elected from the people in attendance. Interim committee holds office

until the first AGM is held. This meeting also deliberates upon the following;

Area to be covered by the SACCO

Name of the SACCO

Qualifications for membership

Share capital and membership fees

Location of the cooperative society offices etc.

Step 7

Interim committee obtains the required stationery and start collecting money from people

interested in becoming members of a SACCO.

Step 8

Interim committee arranges for more training and public awareness generation and

sensitization of potential members in order to recruit more members.

Step 10

Interim committee in collaboration with technical support providers’ e.g. UCSCU and District

Commercial Officers (DCOs) draft by laws for the SACCO

Step 12

Interim committee should be processing registration papers with The Registrar of Cooperatives

Step 13

When registration has been done, call first general meeting to elect committee members