SAVING AND CREDIT COOPERATIVE SOCIETIES AND POVERTY ...
Transcript of SAVING AND CREDIT COOPERATIVE SOCIETIES AND POVERTY ...
SAVING AND CREDIT COOPERATIVE SOCIETIES AND POVERTY AllEVIATION
IN MOYOK SUB COUNTY, KWEEN DISTRICT IN EASTERN UGANDA
BY
CHEROP SilAS
1163-05014-08890
A RESEARCH PROPOSAl .. SUMITTED TO COllEGE OF ECONOMICS AND
MANAGI:i'JIENT IN PARTIAl FUlFillMENT FOR THE AWARD OF
A BACHELOR [)fGREE IN BUSNESS ADMINISTRATION IN
KAI't1PA!..A INTERNATIONAl UNIVERSITY
.. SEPTEMBER 2018
DECLARATION
I CHEROP SILAS Hereby declare that the research proposal on the topic of the
contribution of SACCOs to the alleviation of household poverty is my original work
and has never been presented before to any institution of high learning for any kind
of Award whatsoever.
CHEROP SILAS
DATE.J . .l.[D./2.0.(8. ... ... ....... ..
APPROVAL
The research proposal by Cherop Silas registration number 1163-05014-08890 on
the topic of the contribution of SACCOs to poverty alleviation has been under my
supervision as the University supervisor and is ready for submission to the college of
:::omi~s ... ".d ..... ::~~--:Ka:::.'~~e-~!~~q;:.i. Mr KASOZ GEO~ SUPER R
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DEDICATION
I dedicate this research proposal to my beloved father Mr Arapmwotil Alfred
Mustoror and my Mother Mrs Chekwoti Priscila. This research is also dedicated to my
brothers and Sisters; Kakwam Douglas Timothy, Chebijira nelly, Chemutai Emma joy,
Mutai Davis, Chebet Job and Chesang Meshach
Dedication also goes to my friends Sikoria Shedrach, Chemutai Joel, Cheruto Dan
Chebet Metrine and Chebet Alice.
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ACKNOWlEDGEMENT
I acknowledge with thanks to the Almighty God for granting me his kind protection,
love and guidance in the course of my proposal.
I wish to also acknowledge with gratitude my parents for the supporting me
financially without which the accomplishment could be achieved.
I am so much indebted to my supervisor Mr Kasozi Geoffrey for kind assistance and
guidance throughout my proposal whose contributions with no doubt made this
research proposal a success.
I finally extent great appreciations to my friends Chebet Alice, Cheruto Dan and my
colleagues for the contributions they submitted to my which were imperative to
make this research become true.
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TABLE OF CONTENTS
DECLARATION .................................. .. .. .......................................................... i
APPROVAL .................................. ... .... ........................................................... ii
DEDICATION .............................. .... ... .................................... ........................ iii
ACKNOWLEDGEMENT ...................................... ...... .... ..... ... .... ........................ iv
TABLE OF CONTENTS ............................... ..................................................... v
LIST OF TABLES .......................................................................................... viii
ACCRONYMS ................................................................................................. ix
ABSTRACT ................................................................................................. .. . X
CHAPTER ONE .......................................................... .. ... ... ..... .................... . 1
INTRODUCTION AND BACKGROUND ....................................................... 1
1.0 Introduction ............................................................. .. ...... ....................... 1
1.1 Background of the study .......................................................................... 1
1.2 Statement of the problem ...................... .. ................................................. 4
1.3 Objectives of the Study ..................................................... .. ..................... 5
1.3.1 General Objective: ................................................................................ 5
1.3.2Specific objectives of the study ............................................................... 5
1.4 Research Questions: ................................................................................ 5
1.5 Scope of the study: ......................................................... .. .. ..... ........... ..... 5
1.5.1The time scope ...................................................................................... 6
1.6 Significance of the study: .. .... .... ............................................................... 6
1.7 Conceptual framework ............................................................................. 7
CHAPTER TWO .... ........................ ........................................................ ....... 7
LITERATURE REVIEW ...................... ................................... ........................ 8
2.0 Introduction ............................. .... .......... .... .. .... ..... ..... .. ................ ... ........ 8
2.1 The Concept Of Poverty ................ .. .............................. .... ...... .... ... .... ..... . 9
2.2 Poverty Status Report November 2017 .................. ...... .. .. ..... ................... 10
2.2.1 Table Showing The Trends Of Poverty Status At National Level .............. 10
2.3 THE CONTRIBUTION OF SACCOs ............................................................ 10
2.4 FACTORS INFLUENCING THE FORMATION OF Saccos ....... ....................... 16
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2.5 Conclusion ............................................................................................. 19
CHAPTER THREE ...................................................................................... 20
METHODOLOGY ........................................................................................ 20
3.0 I ntroducl:ion ....................................................................................... 20
3.1 Research design .................................................................................... 20
3 .2 Study population .................................................................................... 20
3.3.1 Random sampling ............................................................................... 21
3. 3.2 Purposive method ............................................................................... 21
3.4 Sources of data and tools ....................................................................... 21
3.4.1 Primary sources .................................................................................. 21
3 .4.2 Secondary sources .............................................................................. 21
3. 5 Research instruments ............................................................................. 21
3.5 .1 Interview method ................................................................................ 21
3.5 .2 Questionnaire ..................................................................................... 22
3.5 .3 Observations ....................................................................................... 22
3.6 Data Analysis, Processing and Presentation ............................................. 22
CHAPTER FOUR ........................................................................................ 23
PRESENTATION OF THE ANALYSIS AND DISCUSSION Of FINDINGS. 23
4.0 Introduction .......................................................................................... 23
4.1 BACKGROUND INFORMATION RESPONDENTS ........................................ 23
4.2 :THE CONTRIBUTION OF SACCOS IN MOYOK SUB COUNTY .................... 27
4.3 : FACTORS CONTRIBUTING THE FORMATION OF SACCOS ....................... 30
4.4 RELATIONSHIP BETWEEN SACCO'S AND POVERTY ALLEVIATION ............ 33
CHAPTER FIVE .................................................................. '· ...................... 36
SUMMARY, CONCLUSSIONS AND RECOMMENTATIONS ....................... 36
5.1 Summary of major findings ..................................................................... 36
5.1.1 Findings on personal information of respondents .................................. 36
5.1.2 Findings on factors which influence the formation of SACCOs ................ 36
5.1.3 Findings on the contribution of SACCOs ................................................ 36
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5.2 Conclusions ........................................................................................... 37
5.3 Recommendations ................................................................................. 37
5.3.1 Target the younger generation from the research findings, .................... 37
5.3.2 Retaining the older generation ............................................................. 37
5.3.3 Training .............................................................................................. 38
5.3.4 Education ........................................................................................... 38
5.4 Areas of further research ........................................................................ 38
APPENDENCIES ........................................................................................ 41
APPENDIX 1: QUESTIONAIRE ................................................................. 41
APPENDIX:2: INTERVIEW GUIDE FOR THE SUB COUNTY SACCO
MANAGER ................................................................................................. 44
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LIST OF TABLES
Table 1; Gender of respondents ............................................................................... 23
Table 2; marital status ............................................................................................ 23
Table 3: Age bracket (yrs.) ...................................................................................... 24
Table 4: Highest level of education .......................................................................... 25
Table 5:Period of joining the SACCO ........................................................................ 25
Table 6: Is there any change since you join the SACCO? ........................................... 26
Table 7: If yes, how has it change your family? ........................................................ 26
Table 8. What is the state of those who are not involved in the SACCO? .................... 27
Table 9: Government funding .................................................................................. 30
Table 10: Relatives or friends can influence the formation of SACCOs ........................ 31
Table 11: Family background influences the formation of SACCOs ............................. 31
Table 12: The church influence ................................................................................ 32
Table 13: The government law ................................................................................ 32
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BMAU
NDP
MDI
MFI
MTTI
PEAP
SACCO
SMEs
SPSS
UBOS
UN
woccu
WB
ACRONYMS
Budget monitoring and accounting unit
National Development Plan
Micro Deposit- Taking institution
Micro finance institution
Ministry of Tourism trade and industry
Poverty eradication action plan
Savings and credit cooperatives
Small and medium enterprises
Statistical package for social scientists
Uganda Bureau of statistics
United Nation
World Council of Credit Union
World Bank
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ABSTRACT
The objective of the study was to examine the impact of savings and credit
cooperatives (Sacco's) in poverty reduction, state of poverty, the factors influencing
the formation of Sacco's, and the relationship between Sacco's and poverty
alleviation in Moyok Sub County. Using a cross sectional research design in which
both the quantitative and qualitative methods were utilized to find out the impact of
Sacco's on the alleviation of poverty. Questionnaires alongside face to face
interviews were administered to 133 respondents who were staff and clients of
Moyok Sacco's.
It was found out that Sacco's renders services such as provision of loans and credits,
savings mobilization, investment advice, provision of employment opportunities,
promotion of entrepreneurship poverty eradication and provision of essential
services among others. This has helped them succeed in improving customer
satisfaction and profitability, improving the social welfare of its clients, improved the
lending capacity alongside their annual growth rate.
As a way of improving the success of saving and credit cooperative societies, the
study recommends among others; the need for Sacco's in Uganda to increase
outreach by providing cost effective but affordable financial services to the poor and
critically improve governance, human resource development, and systems
development mainly through internal control, business plan, and marketing strategy
and concentrate on their original developmental and social objectives other than
exclusively focusing on their financial performance.
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1.0 Introduction
CHAPTER ONE
INTRODUCTION AND BACKGROUND
This chapter gives a brief background of the study. It includes the problem
statement, the purpose and objectives of the study, research questions, scope and
significance of the study.
1.1 Background of the study
The pioneers of modern cooperation emerged in working- class environments in
European Industrial cities of the 19th Century. In the 1840s,the first to industrialize
countries (Great Britain and France),pioneers of co-operative invented models of the
consumer cooperative and the labor cooperative to defend and promote the
interests of working-class families in the face of the social disasters caused by
industrial revolution.
The second generation of the pioneers of modern cooperation emerged, in certain
European rural environments in the late 19th century. In the 1860s, these pioneers
created the models of agricultural cooperatives and savings and credit cooperatives
inspired by the success of the consumer cooperatives formula in Great Britain and
based on old traditions of rural solidarity aimed to meet the primary economic
needs, which went unsatisfied. Agricultural cooperatives then enabled families of
farmers and livestock raisers to organize their own supply systems of agricultural
inputs and market their products and no longer depended on merchants and
businessmen in the cities. The SACCOs helped them to stop depending on
moneylenders and to find the credit necessary to modernize their agricultural
cooperatives (Mwakajumiio, 2011).
SACCOS IN AFRICA
In Africa, the idea was brought by a Roman Catholic priest, in Jirapa, a town in
Ghana, in 1955. Father John McNulty from Ireland had studied in C:;lnada where he
learnt about savings and credi.t co"operative societies.
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Father McNulty helped the· Jirapa villagers to form a Savings and Credit Co
operative. The co-operative assisted the members to address their financial
problems which they couldn't individually. Father McNulty trained about 60 people,
who were the first successful savings and credit co-operative pioneers on the African
continent.
The success of Jirapa savings and credit co-operative spread throughout Ghana and
by 1968, the savings and credit co-operatives throughout the country came together
to form the Credit Union of Ghana , which was set up to promote, organize, service
and co-ordinate the activities of savings and credit co-operative in Ghana.
(Aiila&Obado, 1990)
According to the World Council of Credit Unions (WOCCU) 2015 statistical report,
there are
51,013 credit unions in the world, having a total of 196,498,738 members and a
total penetration of 7.8% Penetration rate which is calculated by dividing the total
number of reported credit union members by the economically active population age
15-64 years old (World Council of Credit Unions (WOCCU) , 2016).
The largest markets in Africa by number of members as of December 31st 2015 are
Kenya (4,183,220), Senegal (2,231,117), Ivory Coast (1,705,712), and Benin
(1,597,233) (WOCCU, 2012).
SACCOS in Uganda
The formation of the Savings and Credit Cooperatives in Uganda had three main
influences according to Lubwama (1995):
These were Campbell, the Church and the Government influence.
Campbell influence
Mr. Campbell drafted Uganda's cooperative ordinance 1946, together with the rules
and bye laws. He had been a registrar of cooperatives in Srilariker, his experience in
that country influenced the formation of SACCOs in Uganda. He initiated a departure
from general impression by the colonial government and other opinion leaders that
debt didn't constitute a serious problem in Uganda.
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The title THRIFT and LOAN rather than Savings and Credit was originally used until
the late 1960s (Kabuga and. Batarinyebwa 1995:230)
Lastly the Campbell influence ied to the formation of first Savings and Credit
Cooperative. This was the African Civil Servants Co-operatives Thrift and Loan
Society Limited of Kampala.
The church influence
The growth and rapid expansion of SACCOs was by the efforts of church clergy
especially the Catholics who got involved in encouraging their followers to actually
participate in the Programme. The idea was to help people establish lasting socio
economic structure and to encourage self- help, self -reliance and initiative (Kabuga
and Satarinyebwa, 1995:232)
The government influence
When the department for cooperative development launched the Agricultural
cooperative credit scheme in 1961, consideration was given to the introduction of
the rural savings scheme. This was based on the rationale that credit without
savings is of little value. It is like putting a cart before the horse (Kabuga and
Batarinyebwa, 1995:232.).
According to neo classical growth theory by Harrods Dammar and Robert Solow's
economic model, savings are not an end in themselves however they play an
important role sustaining growth and development. Through savings there will be
capital accumulation leading_ to investment hence economic growth and ultimately
development. Coupled with above a high saving economy accumulates assets faster
and thus growth faster than those low saving economy [Lipsey and Chrystal 1995].
The United Nations human development report 2009 reported that the proportion of
Ugandans who at absolute poverty was estimated to 35% compared to 2005 there
has been an improvement as it was estimated at 44%, however by the end of 2011
the number of people living in absolute poverty rose to 38 percent. The pelrine and
katabalya 2018 assert that people are poor because they do not have money to save
and invest-reportedly there has been low savings in Uganda especially in rural and
serni urban areas whereby the end of 2017, 81 percent was saved in cash or in kind
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7 percent in ROSCAS, 6 percent in banks only 4 percent in savings and credit
cooperative societies and 2 percent in micro finance institutions/micro deposit taking
institution
One strategies of poverty eradication action plan (PEAP), a national planning
framework, it's the need to stimulate savings with the nationals by developing a
framework for the development of long term financial services suited to the needs of
small and medium term enterprise. This led to the introduction of the micro finance
framework (Mbabazi 2006). Savings and credit cooperatives (SACCOs) are part of
the micro finance industry in Uganda, they are formed by the local people pooling
their savings and other resources together and providing appropriate financial and
non-financial services to the members. All members of the (SACCO) are co-owners
of the cooperation and have equal privileges, opportunities and responsibilities
(Mbabazi 2006).in the micro finance industry, SACCOs alone can collect and
intermediate deposits from the members, though not from the general public. A
number of SACCOs have come in response to the poverty eradication action plan
(PEAP).
Moyok Sub County is located in Kween district where the researcher will carry out his
research, the main purpose of the study is to find out the contribution of SACCOs
in Moyok Sub County. The researcher will determined the factors influencing the
formation of SACCOS in Moyok and the state of poverty in Moyok, the researcher will
cover the staff of Moyok, the beneficiaries and the non-beneficiaries of the SACCO
1.2 Statement of the problem
The budget monitoring and accounting unit [BMAU) policy (2018), reports that the
government of Uganda established a number of programs to reduce the level of
poverty like NAADS Program, prosperity for all, the poverty alleviation department
(i.e. income generation, food security, home improvement, value addition and
marketing and savings and credit) and national development plan (NDP) which are
to extend funds to the communities by post bank through SACCOs. In response to
this, many sub counties in Uganda which did not have formed SACCOs among them
is Moyok Sub County did not have chance to benefit from these programs while
those which had formed them earlier are positioning themselves in an attempt to
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benefit from those programs. Currently almost every sub county has at least one
SACCO in alleviating poverty
However according to the Uganda bureau of statistics (UBOS) report (2017) it has
been noticed that despite the ability to attract members, the level of household
poverty still remains a big challenge and this has left a lot to be desired. The
problem is probably caused by lack of awareness or due to lack of access to the
SACCO as most of them is concentrated in urban, corruption by those who know
more about the SACCO. When savings mobilization remains poor the funds available
for on lending are less and consequently no income generating activities is taken on
hence the vicious circle of poverty and no savings among individuals in Moyok sub
county.
1.3 Objectives of the Study
1.3.1 General Objective:
To examine the contribution of SACCOs in alleviating household poverty in Moyok
sub county.
1.3.2 Specific objectives of the study
i. To find out the state of poverty in Moyok sub county
ii. To identify the fa<.:tors influencing the formation of SACCOs
iii. To find out the relationship between savings and credit cooperatives and
poverty alleviation
1.4 Research Questions:
i. What is state of poverty. in Moyok Sub County?
ii. What are the contributions of SACCOs in alleviating house :rold poverty?
iii.. What are the factors influencing the formation of SACCOs?
1.5 Scope of the study: '
The study area was Moyok Sub-county. It covered the views of Moyok households
and the community members on how SACCOs improved on their livelihoods
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1.5.1 The time scope
The time scope was from June - august 2018.This is because the time scope is
preferred as it is long enough to provide a comprehensive range of ideas that was
used to determine the contribution of SACCOs in alleviating household poverty in
Moyok Sub County in Kween district.
1.6 Significance of the study:
The study will help the people of Moyok to know whether the SACCO is helping
them to alleviate poverty or not
The study of SACCO helped the people of Moyok Sub County to realize the
benefits of SACCOs
It will help the people of Moyok to know the state of poverty status
It will guide policy makers and the government to spearhead the formation, re
structuring, strengthening and development of SACCOs from an informed view
point.
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1.1 Conceptual framework
Dependent variable (DV)
SACCO's
Microfinance
NAADS
National
Development
Plan (NDP)
Government
NGOs
csos
Independent variable(IV)
POVERTY AllEVIATION
Increased incomes
Improved health
Reduced levels of illiteracy
Improved standards
Intervening variable (IV)
Source: primary data
The conceptual framework above shows a described relationship between and
among concepts and variables such as dependent, independent and intervening
variables. Dependent variable is the one whose changes result from outside causes
(variable that is influenced by another variable). Independent variables are the ones
whose changes or pressurize others to change. Intervening variables becomes the
one which comes in between the dependent and the independent variables to
influence the other variable D.V (Nduguru 2007). This confirms that government,
NGOs and CSOS have become the factors which have provided favorable conditions
by which Sacco's have alleviated poverty in Moyok sub county.
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CHAPTER TWO
liTERATURE REVIEW
2.0 Introduction
This chapter reviews the related literature of the previous studies that was carried
out by the different scholars in order to have better insight of the problem Sacco's
Savings and credit cooperative societies is a group of people who have a common
bond live in the same community or society save money together and lend to one
another at agreed interest rate time and conditions. it is a democratic unique
member driven and self-help union (Marcus Beth and Caroline 1999).SACCOs are
also defined as legal entity established by the voluntary membership of private or
public purpose of depositing their savings and providing credits to its members (URT
2004)
Uganda cooperative and credit union limited (1999) defines a savings and credit
cooperatives (SACCOs) as an organization where investors put together their
resources in order to obtain their own needed financial services. The union argues
that SACCOs provide financial sector development by integrating formal financial
system with people of low income, diverse ethnic identities and from remote
locations. That it also helps in poverty reduction by providing savings and credit
cooperatives as an association that provides its members with a convenient and
secure means of saving money and obtaining credit at reasonable rates of interest
Namara (2001) defines savings and credit cooperatives as a type of organizations
that provide financial services to its members registered to take on voluntary savings
and in turn use them for lending to its members whereas the Uganda cooperative
union limited (2005) defines SACCO as a group of people who join together and pool
their resources and make loans to each other at reasonable rates
KABUGA and Batarinyebwa (1995) wrote that the major objective of SACCOs is to
promote the socio economic interest of its members by creating a convenient saving
atmosphere to members and providing them with access to credit for productive
purposes. The other objectives are: to provide advisory services on financial matter
and training facilities to members (AkPOHOR, 1993)
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According to MTII- register of cooperative societies (2009), SACCOs are registered
by the commissioner of cooperative who works under the ministry of tourism trade
and industry (MTII).SACCOs grow reasonably high rates annually for instance in
2011, SACCO members are growing at nineteen percent from (1522-1805);, in 2013,
they grew at 28 percent from (1805-2313), 34.2 percent in 2015 (form 2313-3101)
and in 2016, they grew at 38 percent.
2.1 The Concept of Poverty
Poverty is a wider concept, it can be defined and measured by different people, and
it remains to be a local and international socio economic problem in both developed
and developing countries. Poverty is a historical phenomenon affecting people in
different areas. Poverty also refers to the to lack of powerlessness( Marburg
1999).poverty also refers to lack of education skills or tools to acquire income assets
as well as of accounts to modify the situation( van lierpo et al 1991).poverty should
be seen as the process leading to deprivation and vulnerability (misana 1995)
Poverty is commonly measured by household income and poverty line: people who
earn less than one dollar per day are termed as the poor. On income poverty
prevailing to those people with little bit of money but does not have access to social
services such as schools and hospitals, poverty also categorized into two forms
absolute and relative. Absolute is a state when individuals are not in position to
acquire basic needs of life while relative poverty is the ability of an individual to meet
ones basic needs but cannot meet the desired need for example low life
expectancy, high mortality rate among children, illness and low level of
education(Jhingan 2004)
(WB 1997), it revealed that lack of access to credits readily understandable in terms
of absence of collateral that the poor can offer conveniently financial institution.
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2.2 Poverty Status Report November 2017
Trends in poverty status 1992/3 to 2016/17, absolute poverty in Uganda has
decreased considerably in the past two decades. In 1992/3 more than half of the
population 56.4% was leaving below poverty line. This rate has dropped significantly
to 19.7% in 2016/17; the share of the population in poverty fell by 19% points. This
translates into annualized poverty reduction rate of nearly 2% per annum. There
was a reduction of 4.8% points over the three year period 2013/14 to 2016/17.this
declined in poverty at the national level is statistically significant and robust to choice
of poverty line. Uganda has suppressed the millennium development goals(MDGs)
target of halving the proportion of people living in extreme poverty by 2017
sustainable margin and the country is comfort on track to achieve the vision 2040
target of reducing the poverty rate to 5%.
2.2.1 Table Showing the Trends of Poverty Status at National level
year Population Poor in 0/o Insecure 0/o Middle 0/o
in millions millions non- class in
poor millions
1992/1993 17.4 9.8 56.4 5.8 33.4 1.8 10.2
1999/2000 21.4 7.2 33.8 9.4 43.9 4.8 22.4
2002/03 25.3 9.8 38.8 10.1 39.9 5.4 21.2
2005/06 27.2 8.4 31.1 10.9 40.2 7.8 28.7
2009/10 30.7 7.5 24.5 13.2 42.9 10.0 32.6
2016/2017 34.1 6.7 19.7 14.2 43.3 12.6 37.0
2.3: THE CONTRIBUTION OF SACCOs
Theoretically, SACCOs plays an important role in fighting against poverty, it enables
borrowers to generate income which helps not only the business activity expand but
also contributes to household income and its attendant benefits on food security and
children's education. SACCOs generate employment opportunities for more than
150million people in the world and provides opportunities for the development of
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people in rural and urban areas (katushi et al 2017). SACCOs helps to build
confidence and empowerment, it helps the poor to increase their incomes and it is
also a powerful instrument for self-empowerment by enabling the poor especially the
women to become agents of change.
In Bolivia and Central America micro finance (SACCOs) is a means to reduce poverty
and over dependence among small farmers and craftsman in urban and rural areas
to improve their farm activities, it also helps in decreasing unemployment, alleviating
poverty and increasing economic growth of a country economy in Indonesia
(Robinson 2001)
Bikki and Joselito (2012),micro finance facilities can provide a range of financial
services including credit saving and insurance to the poor enterprises and
households, it offers the potential for growth and helps safeguard poor households
against extreme vulnerability, loans, savings and insurance help even income
fluctuations and maintains consumption levels.
Increased incomes
The study done by (Hulme and Mosley2015), revealed that in Bangladesh the
growth of income borrowers always exceed that of control group. Increase in
borrower's income larger for better off borrowers in Bangladesh. It showed that
there is an increase in income from 28percent for borrowers and 14.5 for control
groups, an estimate of 8% crossed the poverty line.
Remenji and quinones (2016) also revealed that household income of families with
access to credit is significantly higher than for comparable households without credit.
The study indicated that Indonesia 12.9% annual average rise in income was
observed while 13% was reported.
Women empowerment
Zaman (2016) found that micro credit such as SACCOs contributes in mitigating a
number of factors which contribute to vulnerability, it provide emergency assistance
during disaster and contribute to female empowerment and this can improve women
status.
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Robinson (2017) revealed that in African sub regions of Ethiopia and Nigeria in
2015-2016, SACCOs enabled women groups to consolidate their efforts to eradicate
a common aspect of poverty in their community. In Ethiopia it allowed a group of
small entrepreneurs to match funds and start buying their raw materials in bulk
leading to sustenance of savings
Food security
Mk Nelly and dun ford (2004) revealed that the most positive result of micro finance
(SACCOs) observed from household suffering food stress. In this case 55% of
participants are less likely to sell of animals and are more likely to selloff their
animals and are more likely to take out loans as copying strategy than 32.2% of
non-participants
(Chen and Donald 2002) found that the average daily expenditure on food was 21%
higher than client household; in contrast saver only households enjoy only a small
dietary margin over noon client house hold, average daily expenditure on food was
only 5% in noon client household
Increased production
Khandker (1998) argue that production value of annual production of program
villages was more than twice that of non-Program me villagers
Marcus Beth and Caroline (1999) also found that availability of credit prevented
some borrowers from having to sell their produce at below market rates to land
owners and merchants to obtain an advance in the lean season thus increasing their
incomes. The study also revealed that credit was enabling people to develop
agriculture or other enterprises close to home and reducing the need to mitigate for
seasonal work.
Anupam (2004 SACCO'S) found that through credits farmers obtained inputs and
increased their production, it also showed that credit promoted and increased
agricultural output with credit equity.
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Increased market returns
Branch (2002), observed that low income people will sustainably increase their
voluntary savings deposits if provided with security, convenience and market
returns. Security is ensuring safety of members funds; convenience is the ease in
which members savings are made available to them in time of need and market
return refers to the competitive interest earned that encourage savings.
Improves youth livelihood
McCormack (2015),asserts that to improve the savings in Uganda, which at present
is described as the worst in sub Saharan Africa, the country capital market
Authority(CMA) must take the fight to schools, the youth and households, it is
believed that, students can save and indeed they are never too young to start.
According to Collin McCormack (2010) in support of the capital market authority's
stagey, teaching people how to save is a step by step process, the first step should
be giving child /individual a reason to save.
Ann Kyohairwe (2016), reinforced that SACCOs should target the youth and children,
since the older generation has generally negative perceptions about saving given
their past experience with commercial banks and insurance companies. It is
expected that with current approach of encouraging the youth to start savings, in a
period of five to ten years, the ratio of savings to GDP will have gone up. And in the
process, it will reduce the heavy dependency on foreign saving for investments.
Offers quality services to individuals.
Wright (2000) concludes that the improvement of the savings amongst SACCOs is
dependent on successful micro finance programs that start with clear objective to
set up permanent institutions or system designed to provide financial services on a
long-term sustainable basis. This objective implies several key things good quality
financial products or services, delivered by an appropriate institution on a profitable
basis to satisfied clients who continue to value and use those services.
Micro finance banker report (2017) indicates that a SACCO must make sure that the
products satisfy the needs and wants of the clients by focusing on the good feature
of the products. These products features address convenience, low cost transaction,
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and ready availability over time, fit to client's needs, reasonable price and return,
safety and security. This is in agreement with Wright (2017) thus; the products were
developed on the basis of research on savings motivates and preferences of rural
people that demonstrated that a savings facility should combine.
Carry out research
The Uganda cooperative alliance report (2017), asserts that SACCOs ready to start
mobilizing voluntary savings from the public need to do research based promotion to
attract savers. Market research on savings may help in identifying what clients want
and what their priorities or concerns are to deposit their money with a SACCO.
Some may value security for their money then the interest rate on savings, others
may value liquidity. The marketing strategy should be pegged to clients concerns.
As earlier noted that individual willingness to save increase when there is assurance
of a return, obwona (1998) asserts that in order to ensure real return on savings, it's
essential to have macro -economic stability and a positive rate of interest. Macro
economic stability creates confidence, promotes positive real return and therefore,
fosters private savings.
Provide employment
Employers can help foster savings by use of a payroll savings plan through which
predetermined amount is deducted from the employees' monthly salary, or set aside
in a special account from which withdrawals are not allowed until maturity date.
Making savings automatic and withdrawals difficult eliminate the temptation to
spend all of current earnings or squander accumulated savings (Fofana 2014)
Bailey (2016), indicates that savings is the key benefit that a SACCO members gets
from the organization. A member of saving scheme is also eligible for a loan. They
are intertwined with saving. A member will borrow from an organization, invest to
get enough money to cater for their needs and boost their savings potential
Ahimbisibwe (2016) observed that SACCOs have provided free sensitization,
education and training on savings. SACCOs have initiated programs through which
they sensitize, educate and train members of the communities on a range of issues,
14
ranging from saving products and services to business practices, health and HIV
among other social issues. She adds that SACCOs have provided an incentive for
loan payers, client and borrowers who service their loans faithfully as they induce a
feeling of ownership in the members.
According to Baileys (2016), study the exchange visits with more developed SACCOs
or micro finance institutions, are educate on the importance and benefits of saving
organizations.
The agency for technical cooperation and development report (2017), SACCOs have
provided beneficiaries with local access to cash thus reducing their associated
transport costs and the security risks involved with cash payments on project sites.
Furthermore, by inciting inhabitants to open savings account with SACCOs and by
providing training sessions, the SACCOs develop a savings culture which in turn
could improve cash management as well as savings knowledge and behavior in
Uganda. The presence of cooperatives improves the availability of credit and saving
facilities, reinforcing population's access to the local financial system. Beneficiaries
now have more opportunities to access credits.
Obwona (2016), argue that SACCOs are a source of direct employment for the
members and the staff of the SACCOs and indirectly impacting the Jives of many
households who depend on the members and staff of the SACCOs. This has helped
those members to earn some incomes and hence be able to save. Phillip (2003)
adds on that SACCOs have enabled the savers to acquire the capacity to build low
cost, yet high quality, housing units, and to buy vital household items, and put their
children through affordable good school system.
In his study, Obwona (2001) concluded that SACCOs to a small extent have
facilitated the inculcation of a culture of savings in the lives of people and
discouraged nonproductive expenditures.
Phillip (2015) postulates that to achieve a better growth in the savings among
Ugandans there is need for an effective savings service by all financial institutions
involved in mobilizing savings, SACCCOs inclusive. The term effectiveness applies to
the objectives and the extent to which these are achieved. The word effective
15
describes realization of the objective; an objective is a desired future state that the
organization attempts to realize.
Ducker (1983), states that the presence of explicit objectives provides several
important benefits for the organization, namely: source of motivation and
commitment; guide to action and standard of performance.
SACCOs encourages saving regularly and encourages their members regularly and
effectively accumulate savings for expected and unexpected demands, savings
service is effective when it allows borrowing at a rate below banks/formal financial
institutions lending rate can be used as collateral for loans, earns some interest and
foster individual development. Therefore, according to Phillip (2003) and Ducker
(1983), one way of improving the savings culture is by having an effective saving
service.
2.4 FACTORS INFLUENCING THE FORMATION OF SACCOS
Facet BV, (2000) saving can also be maintained in group setting whereby capital
savings are mobilized through deposits in a savings and credit cooperatives
(SACCOs). savings in a SACCO provide an important source of money that can be
pooled together and which members can borrow, members can also save by
acquiring assets inform of land, buildings and cash deposits hence influencing the
formation of SACCOS
Zeller et al 1997,Mutenyo (2005).cash at hand is divisible and highly liquid but have
drawbacks of yielding no interest, easily borrowed by relatives or friends and readily
consumed or lost, abstinence from consumption is one of the way of influencing
savings in SACCOs
Rutherford 1997.yet other may save so as to meet social obligation such as
weddings, funeral, dowry and other recurrent cultural festivals and to enhance their
social standing in communities can influence the formation of SACCOs among
individuals.
Plateau 2000 who shows that there exist strong social norms in Africa which
necessitates that an individual provides support to friends and relatives if he is asked
16
of money and has cash at hand, people may also save to start a business venture
and this has influenced the formation of SACCOS
Lim and Townsend 1998 Morduch 2014, others save in order to deal with
unforeseen problems in future and this influences the formation of SACCOs
Dell Amore 1983, people save for different reasons, some save to better their
conditions in future by investing the savings into higher earnings assets. It is
universally observed that rural households in developing countries depend largely on
precautionary saving to insure against various incomes.
Suina(2014). Domestic savings can be considered as whatever people can put away
after meeting their basic living expenses saving income not spend.
Agricultural cooperative theory
Cotteri11(1996) argues that expanding agricultural cooperative marketing theory to
differentiate product markets indicated that cooperatives can perform as competitive
yardsticks for consumers in oligilipics economy can easily influence the formation of
SACCO.
Campbell influence
Mr. Campbell drafted Uganda's cooperative ordinance 1946, together with the rules
and bye laws. He had been a registrar of cooperatives in Srilanker, his experience in
that country influenced the formation of SACCOs in Uganda. He initiated a departure
from general impression by the colonial government and other opinion leaders that
debt didn't constitute a serious problem in Uganda.
The title THRIFT and LOAN rather than Savings and Credit was originally used until
the late 1960s (Kabuga and Batarinyebwa 1995:230)
Lastly the Campbell influence led to the formation of first Savings and Credit
Cooperative. This was the African Civil Servants Co-operatives Thrift and Loan
Society Limited of Kampala.
The church influence
The growth and rapid expansion of SACCOs was by the efforts of church clergy
especially the Catholics who got involved in encouraging their followers to actually
17
participate in the Program me. The idea was to help people establish lasting socio
economic structure and to encourage self- help, self -reliance and initiative (Kabuga
and Batarinyebwa, (1995:232)
The government influence
When the department for cooperative development launched the Agricultural
cooperative credit scheme in 1961, consideration was given to the introduction of
the rural savings scheme. This was based on the rationale that credit without
savings is of little value; it is like putting a cart before the horse (Kabuga and
Batarinyebwa, (1995) and the government has influenced this due to the existence
of the following factors:
);> Availability of common goals: There has been an availability of common
business ideas among many Ugandans therefore leading to the formation of
cooperatives. A good example is the public transport sector where majority of
people aspire to conduct business. This has led to the formation of SACCOS
(Savings and Credit Cooperative Society) like the Bugisu Cooperative among
others.
>- Employment: Unemployment has been an economic problem in Uganda for
a long time as many young people are unemployed and therefore the need to
create cooperative societies in order to benefit from their ideas. These small
cooperative societies benefit by getting business starting capital from the
Youth Enterprise Fund among other financial institutions. Through the
societies many people have secured employment
);> Cooperative society's law: The governing law of cooperative societies has
been favorable to many people compared to the other forms of business
units. Members of a society can get loans at favorable interest rates and the
amount of loan given is also favorable.
);> Government funding: The government supports majority of cooperative
societies especially youth societies by giving them monetary fund's to boost
their growth which affect the economy positively.
18
2.5 Conclusion
This chapter will generally explore the contribution of SACCOs in Moyok sub-county,
factors influencing the formation of SACCOs and the state of poverty in Moyok sub
county. From the above it can be concluded that, cultivation of the saving and credit
cooperatives can be made successfully after realization of the fact that, people
whether in rural or urban areas, high or low income can save when they are guided
and encouraged through groups in SACCO and given reasons why it may be
necessary for them to save, when poor households desire to save meets a safe and
easily accessible opportunity to do so, their capacity to save, their commitment to
saving and the amounts they save are remarkable considered among individuals in
Moyok.
19
CHAPTER THREE
METHODOLOGY
3.0 Introduction
This chapter deals with the methods and tools the study used in data collection and
analysis. It describes the research design that was used by the researcher i.e.
sampling and sampling design, Data sources, processing and the challenges that the
researcher faced in the study . ..;-
3.1 Research design
The study used an explanatory research design because it seeks to explain why
there are still low levels of savings despite the introduction of saving programs like
SACCOs whose number one purpose of creation is to mobilize savings from
individual members.
3.2 Study population
The study population included the staff, the beneficiaries and non-beneficiaries from
the SACCO, the SACCO especially those who are in the savings department and the
members of Moyok savings SACCO. The study population which engaged in this
research was a total population of 200 (two hundred) people.
Sample design
a. Sample size
The sample size that was used in the study was determined by applying
solvin's formula below
n=N/1+N (e) 2 where
N is population
N is sample size
E is sampling error
1 is constant
n=200/1 + 200(0.05)2
20
n=200/1 +200(0 .0025)
n=200/1 +0.5
n=200/1.5
n=133
Thence sample size =133
3.3.1 Random sampling
Purposive sampling technique was bound to be employed when selecting the
members of Moyok savings SACCO. This was done to avoid biasness.
3.3.2 Purposive method
Was applied when selecting staff because there was a need to specifically get
information from those members of staff who deal directly with the savings.
3.4 Sources of data and tools
Data for this research was collected from both primary sources and secondary
sources.
3.4.1 Primary sources
This involved the data collected directly from the research area using questionnaires,
observation and interviews.
3.4.2 Secondary sources
This involved the data collected from written materials for example from libraries
and internet sources.
3.5 Research instruments
3.5.1 Interview method
This was one of the methods that were used mostly through visiting each
respondent personally, it involved interviewing and recording the information
received preferable. This method allowed explaining and repeating the question if
not clearly understood by the respondents for the accurate information or the
results.
21
3.5.2 Questionnaire
Under this method, there was a set of related questions designed to collect the
information basing on the respondent answering. It was majorly closed ended
question in order to allow free choices to respondents this method was used since it
is cheaper to administer the respondent who are scattered over a large area.
3.5.3 Observations
This method was used because it allowed the researcher to physically wittiness some
faults especially on child abuse victims being studied. It was important since it was
to serve in the situation where the respondents were not willing to reveal some
important information. Beside, this method was much cost effective.
3.6 Data Analysis, Processing and Presentation.
After the data was collected and gathered. Then data was examined to detect
errors, omissions, contradicting and un-reasonable information. This was done to
ensure accuracy, consistency and uniformity in the information for analysis and then
presented inform of tables showing frequencies and percentages.
22
CHAPTER FOUR
PRESENTATION OF THE ANAlYSIS AND DISCUSSION OF FINDINGS
4.0 Introduction
This chapter presents the findings of the study. The chapter highlights; the
background information of the respondents, the state of poverty in Moyok sub
county, the contribution of SACCOs in alleviating poverty in Moyok sub county, the
factors influencing the formation of SACCOs, discussion of the different responses to
the key questions.
4.1 BACKGROUND INFORMATION RESPONDENTS.
Table 1; Gender of respondents
Gender Frequency
Male 73
Female 60
Total 133 .
Source; Pramary data
Percentage
54.9
45.1
100.0
Table 1 shows that 54.9 percent respondents were males and 45.1 percent were
females. This shows that though Moyok SACCO target both the male and female
members, the males tend to benefit more than the female this is because the
females claim to make themselves busy with housework and that's why the male are
more willing to save than the females in the SACCOS.
Table 2; marital status
Marital status Frequency Percent
Single 65 49
Married 53 39
Widower 10 8
Divorced 5 4
Total 133 100.0
Source: primary data
23
Table 2 shows that 49 percent of the respondents who benefit from the SACCO are
the singles. This is over and above the 39 percent who are married. This means
single individuals have a high ability to save and the reason forward was because
they have no many family responsibilities and needs as compared to those who are
married.
Age distribution of respondents
Table 3: Age bracket (yrs.)
Age bracket (yrs) Frequency Percent
11-20 17 13
21-30 66 49
31-40 33 25
41 and above 17 13
Total 133 100.0 .
Source: Pnmary data
Table 3 shows that 49 percent of they who save and benefit from the SACCO fall
under the age group of 21-30, followed by the age group of 31-40, 11-20 and 41
above. This implies that the age group of 21-30 is very eager to save does why they
benefit more than those who fall above 31-40 in an interview that the researcher
was informed that these individuals have gone through school and have knowledge
about saving benefit. The age distribution of the respondents was included in the
study questions as age has great impact on the savings mobilization of the individual
as stated by Ann kyohairwe (2005).
24
Highest level of education
Table 4: Highest level of education
Level of education Frequency Percent
UCE 56 42
UACE 10 8
Tertiary 60 45
University 7 5
Total 133 100.0 .
Source: Primary data
Table 4 above shows that most of the members of the SACCO are tertiary
institutions and Uganda certificate of education: represented by 45%, this means
that for an individual to join the SACCO, he/she must have basic income generating
activities like jobs and business. The level of education was included to help the
research find out the ability of the respondents to interpret information given to
them concerning savings.
Table 5: Period of joining the SACCO
Period Frequency Percent
1 yr. back 20 15
2 yrs. back 31 23
3 yrs. back 32 24
Above 3 yrs. back 50 38
Total 133 100.0
Source: Primary data
Table 5 above shows that only 38percent of the respondents joined the SACCO in
the period above 3 years back and this is the highest of the members per period. It
can also be observed that the number of members joining the SACCO per period has
been improving solely over the years. In the interviews the major reason given for
the slow increase was that the community is generally reluctant to save with the
25
SACCO' the period of joining the SACCO helped the researcher to know whether the
number of members that join the SACCOs is improving overtime or not.
Table 6: Is there any change since you join the SACCO?
Response Number of respondents Percentage
Yes 90 68
No 43 32
Total 133 100
Source: Primary data
Table 6 above shows that 68% of the respondents agreed that there is big change in
poverty reduction among households in the SACCO while 32% of the respondents
disagree that there is no reduction in poverty levels meaning that SACCOs helps to
reduce poverty among individuals in Moyok Sub County.
Table 7: If yes, how has it change your family?
Response Number of respondents Percentage
Positive 70 53
Negative 40 30
No change 23 17
Total 133 100.0 .
Source: Pnmary data
Table seven shows that 53% of the respondents agreed that there is a positive
change whereby individuals can afford paying school fees, 30% of the respondents
disagree that there is a negative while 17% of the respondents said there is no
change in poverty among individuals showing the greater percentage of the
individuals with a positive change.
26
Table 8.What is the state of those who are not involved in the SACCO?
Response Number for respondents Percentages
Poor 31 23
Very poor 67 51
Better off 35 26
Total 133 100
Source: Primary data
Table eight shows that 50% of the respondents agreed that they are very poor as
evidenced by poor housing, 26.6% are better off though they have not join the
SACCO while 23.3% are poor especially non participants in the SACCO.
4.2: THE CONTRIBUTION OF SACCOS IN MOYOK SUB COUNTY
Under this section the researcher interviewed an individual who gave ail the details
of the SACCOs; it also explains the contribution of SACCOs
What is your name?
The researcher interviewed one of the member in the SACCO called Mr. Chemonges
David who said that the SACCO started in 2010 with 15 members but now it has
raised up to 250 people which is a great achievement in Moyok.
What is your title in the SACCO?
The researcher went ahead to ask the title of the respondent and he said he is the
manager in charge of giving loans to its members and non-beneficiaries from the
SACCO, he also further went ahead and said that those who belong to the SACCO
get loans with a lower interest rate.
For how long have been serving in the SACCO?
the interviewee said he has been serving for eight years since the SACCO began and
he said they have been registering progress since they started but he pointed one
challenge as delay by people to pay back the loan given to them in time and these
has affected the SACCO from progressing.
27
What is your view about the SACCO?
The researcher was told by the interviewee that they have a plan to write more
proposals to the government asking for funds to supplement on their domestic
savings collected by individuals in the SACCO, they also said that members need to
be cooperative and work with the local leaders so as to achieve their goal of
increased savings among individuals so as to boost the development of the SACCO
as well as improving on the peoples welfare within Moyoksub county, they also said
that those who are not involved in the SACCO should start contributing their funds
towards increasing savings in the SACCO it can be achieved through reducing on the
interest rate of those who save the SACCO thus contributing to its success.
CONTRIBUTION OF THE SACCOS IN MOYOK SUB COUNTY
This part presents the contribution of SACCOs in Moyok Sub County in Kween district
in eastern Uganda.
~ Increased incomes, it was found that SACCOs helps to increase peoples
incomes and these revealed by the respondents of Moyok sub county who
said that it is very easy to acquire a loan with a low interest rate and has
enabled the members to accumulate more investments hence increasing
peoples incomes as evidenced by Remenji and Quinone (2000), who revealed
that those who are involved in the SACCO has more incomes than non
participants.
~ Women empowerment, it was found that when women involve in forming
groups which can help them to limit on the factors which exposes them to
vulnerability like lack of income in their households can be solved through
forming SACCOs and these was revealed by women in Moyok who
appreciated the founders of the SACCO, it was evidenced by Zeeman 2000
who revealed SACCOs helps to mitigate factors which causes vulnerability to
women which causes poverty.
~ Food security, it was found that SACCOs helps to reduce on the problem of
food insecurity as it was answered by the respondents in Moyok, they said
that it helped them to acquire loans with low interest rates during seasons
28
when the price of food is high as well as selling food to individuals at low
prices especially those who are members of the SACCO has greatly reduced
on the problem of food insecurity hence reducing poverty among households
in Moyok sub county, it was evidenced by Mk Nelly and dun ford who
revealed that individuals will sell off their products to acquire loans which help
them to purchase food during days of food scarcity.
J;> Increased production, it was found out that SACCOs leads to increased
production especially when individuals acquire loans with low interest rate
then members are able to purchase farm inputs in time for example fertilizers,
pesticides and pumps which help farmers to improve the health of their crops
hence increasing production in their farms, they also said that the SACCO
helps to purchase their excess products in time and these has encouraged
most the members to produce in large quantities hence increasing production
in peoples farms as evidenced by chandler · 1998 who revealed that peoples
incomes can be increased and these can lead to excess production.
J;> Improves youth livelihoods, it was found out that SACCOs helps to
improve youth livelihoods and these was revealed by the youth who were the
beneficiaries of the SACCO and they said it has helped them to acquire loans
at low interest rates and these has helped them to start off small scale
business hence boosting their livelihoods, they also said that it has assist
them share off their ideas which can boost development among them.
> Offers quality services to individuals, it was found out that SACCOs
offers quality service s to its clients and members for example one of
respondent said that loans are given at low interest rate with enough time
given to them to pay back has greatly lead to quality services given to
individuals thus a good contribution to its clients.
Have the SACCO yield results in alleviating poverty?
The respondents revealed that those who are involved in the SACCO has
experienced a high decrease in poverty as evidenced by a big percentage of
individuals who can acquire all the basic needs of live and affording paying school
29
fees of their children while non-participants in the SACCO has continued to rotate all
the poverty line.
4.3: FACTORS CONTRIBUTING THE FORMATION OF SACCOS
Under this section the researcher considered five levels of response for analysis of
the data, That is; strongly agree, agree, not sure, disagree and strongly disagree.
Then frequencies were Computed to find how many respondents agreed or
disagreed with certain questions.
Table 9: Government funding
Response Frequency Percentage
Strongly disagree 20 15
Disagree 10 7.5
Not sure 40 30
Agree 18 13.5
Strongly agree 45 34
Total 133 100.0 .
Source: Promary data
Table 9 shows that 30 percent agree and 30 percent respondents are not sure that it
is the government who influence the formation of SACCOs .These members who are
not sure of what influence the formation of SACCOs since they are ignorant about
their existence in the sub county while 15% Of the respondents strongly disagree
that it is not the effort of the government which influences the formation of SACCOs ·
and 7.5% of the respondents disagree with the statement that the government
influences the formation of SACCOs.
30
Table 10: Relatives or friends can influence the formation of SACCOs.
Response Frequency Percentage
Disagree 35 26
Not sure 13 10
Agree 50 38
Strongly agree 35 26
Total 133 100
Source: Primary data
Table ten shows that in total 38 percent of the respondents agree that friends and
relatives influences the formation of SACCOs while 26% Of the respondents strongly
agree that it is the influence of the relatives and friends influences the formation of
Sacco's and 26 disagree with the statement that friends and relatives influences the
formation of SACCOS among individuals in Moyok sub county.
Table 11: Family background influences the formation of SACCOs
Response Frequency Percentage
Strongly disagree 10 8
Disagree 27 20
Not sure 42 32
Agree 27 20
Strongly agree 27 20
Total 133 100 .
Source: Pnmaoy data
From table eleven above, it was found out that, 32 percent of the respondents are
not sure because they found their parents in the SACCOs. When they were asked
about their opinion about the older generation's attitude towards the formation of
SACCOs, they requested for more time to asses these because the majority of these
members were new at the SACCOs .The statement have contradicted with the
results obtained by re-affirm Ann Kyohairwe (2005) .This implies that the youth still
have the biased mind and the youth in moyok are still in school so they have small
31
time and they are very committed with their studies and these has made it hard for
them to analyze what really influences the formation of SACCOs.
Table 12: The church influence
Response Frequency Percentage
Strongly disagree 15 11
Disagree 18 14
Not sure 30 22
Agree 30 22
Strongly agree 40 31
Total 133 100 .
Source: Pramary data
From table twelve, it can be noted that most of the respondents (31 percent)
strongly agree to the statement that the church can influence the formation of
SACCOs for example the researcher was told that it was the Christians formed
groups and later tuned it to a SACC0,22% of the respondents are not sure on
whether the church influenced or the government,22% agree that it is church that
influenced the formation of SACCOs in moyok while 14% of the respondents
disagree with the statement that it is the church which influenced the formation of
SACCOs in Moyok meaning therefore that the church has a greater percentage in
influencing the formation of SACCOs in Uganda.
Table 13: The government law
Response Frequency Percentage
Strongly disagree 15 11
Disagree 18 14
Not sure 30 22
Agree 30 22
Strongly agree 40 31
Total 133 100
Source: Primary data
32
From table thirteen it was found out that 31% of the respondents strongly agree
that the laws formed by the government to encourage the public to form SACCOs
has greatly forced the people of Moyok to form one,22% of the respondents agree
that was government laws influenced the formation of SACCOs in Moyok,22% of the
respondents are not sure of its formation ,14% disagree with the statement while
11% of the respondents strongly disagree with the statement that government laws
influences the formation of SACCOs and these was responded by the non
beneficiaries from the SACCO and shows that its government laws which influences
the formation of SACCOs since it covers a biggest percentage from the respondents
in Moyok.
4.4 RELATIONSHIP BETWEEN SACCO'S AND POVERTY ALLEVIATION
This was carried out using two ways: according to correlation and according to
regression methods;
i. The relationship between Sacco's investment and poverty reduction
according to correlation method.
The study established a significant relationship between Sacco's investment and
poverty reduction as demonstrated in the table of correlation matrix between Sacco's
investment and poverty reduction. Sacco's investment in this study means using
money to make money. The findings imply that when Sacco's beneficiaries forego
current consumption for an increase future level of consumption for the resulting
effect will be poverty reduction. The correlation coefficient (R) between Sacco's
investment and poverty reduction is positive 0.324 indicating that an increase in
Sacco's investment corresponds to significant poverty reduction. This result is
supported by vicious cycle of poverty. That high investment results into high
productivity, high income, high savings and high consumption.
Similarly the study by Nurkse(1953) supports this result that the investment can lead
to high productivity, employment and income opportunities and increased availability
of wage goods, Thereby reducing poverty by raising mean income and consumption.
33
Pearson correlation matrix between Sacco's investment and poverty
reduction
Sacco investment Poverty reduction
Pearson correlation 1 .326
Sig (2-tailed) .133
N 133 133
Pearson correlation 0.326 1
Sig (2-tailed) 0.133
N 133 133
ii. The relationship between SACCOs investment and poverty reduction
according to regression method
Table below demonstrates the result of regression equation of microfinance. Sources
variables on poverty reduction whereby the coefficients of R-squares, F-statistics and
standard error estimate and T-statistics indicates that the variables fit well in the
equation. The coefficient of Sacco's loans was 0.068 indicating a positive relationship
between the Sacco's loans and poverty reduction. The result indicates that Sacco's
loans have a positive impact in poverty reduction given that the beneficiaries use the
loans in productive activities. On the other hand Sacco's savings have a positive
coefficient 0.657 implying that Sacco's savings and poverty reduction move in the
same direction meaning that the there is a positive relationship between Sacco's
savings and poverty reduction. Therefore both Sacco's loans and savings have
positive impact in poverty reduction. In order to reduce poverty among societies,
Sacco's need to encourage more savings and extend more loans to beneficiaries.
These findings are in agreement with the studies done by Adugna(2000) and
Hossain (1989) who commended those loans by Sacco's enables poor people
overcome their liquidity constraints and undertake some investments leading to
increased income and self employment. However the findings by Nathan and
Banga(2004)have shown that Sacco's is a key policy strategy for poverty alleviation
although the services tend to be biased in favor of women and yet poverty cuts
34
across gender. Mazunder and Wencong(2013) in Bangladesh using multivanate
regression model found that one unit increase in loans amount result in 0.055
decreases in poverty. This indicates that microfinance loans have strong contribution
in poverty reduction.
Regression coefficient for microfinance variable.
Independent variable Estimated value of co T.values
efficiency
Sacco's loans 0.068 0.493
Savings 0.657 4.77
Value of R2 0.50
Adjusted R2 0.435
Value ofF 17.149
Standard error estimate 15.309
35
CHAPTER FIVE
SUMMARY, CONClUSSIONS AND RECOMMENTATIONS
5.1 Summary of major findings
5.1.1 Findings on personal information of respondents.
I found that through SACCOs both the male and the female individuals have
participated, however the SACCO puts more emphasis on the males. The findings on
the age indicated that the old and older generations 41 years and 40 do not benefit
from the SACCOs, the poorest age group of 21-30 registered the most respondents
it is worth nothing that there are few members of the SACCO who are above the age
40 and the major reason given for these was that the older generation is biased.
I also found that among the members of Moyok, most of them where singles and
the savings tend to reduce when the youth gets married. the major reasons given
for these trend was that when someone gets married the family obligations and
needs needed reduces his/her savings. It should also be noted that the number of
people joining the SACCO though slowly it's increasingly over the years.
5.1.2 findings on factors which influence the formation of SACCOs
There were also other factors that influenced the formation of SACCOs in Moyok but
were not under the control of the government.
These included the level of government support, the ability and willingness to save,
and the level of informed individuals about the benefits of SACCOs.
5.1.3 Findings on the contribution of SACCOs
The study found out that Savings and credit cooperatives do have a great
contribution where by 30 percent of the respondents answered positively the
statement asking them weather the SACCO has helped them to increase their
incomes through savings. However, it should be noted that though the contribution
of SACCOs to members is great, SACCOs needs to provide education, sensitization
and training. Probably this is the reason for the general slow rate increase in
SACCOs.
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5.2 Conclusions
From the findings it can be concluded that the savings and credit cooperatives are
influenced by factors the willingness of individuals to save in the SACCO which has
the highest percentage of responses /allowed by income levels of the members in
the SACCO, the ability and willingness the government to fund the existing
SACCO. It can also be concluded that there are other extraneous variables that can
influence the formation of SACCOs: I found out that family size, age, income level,
education level have strong significant influence on the formation of SACCOs, study
and from table 12 indicates a very high tendency to strongly agreeing to whether
the respondents see any reduction in poverty since they joined the SACCO. From the
findings it can now be concluded that SACCOs have increased peoples incomes
through savings, promotes women empowerment since their percentage was about
40%, reduced food insecurity in Moyok for example around 70% Of the respondents
agreed that since members get seeds on credit, this helps them to plant in advance
thus reducing on the problem of food insecurity in the area. It's concluded that
cultivation on the contribution and putting more effort on the factors influencing the
formation of SACCOs in Uganda at large may be successfully.
5.3 Recommendations
5.3.1 Target the younger generation from the research findings,
The younger generation tends to be ignored .therefore, it can be recommended
that SACCOs target these people as they have no bad memories about saving and
hence their willingness to save will always be high as long as they are taught the
reasons of savings.
5.3.2 Retaining the older generation
The SACCOs should mobilize adequate capital to meet all the financial needs of all
the members' especially high earners so that they can stay in SACCOs. This can be
achieved through having varied investment portfolio-treasury bills, securities as
opposed to the current and limited ones of only extending credit.
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5.3.3 Training
The researcher recommends that trainings on savings is a vital strategy to improve
people's standards of living as well as increasing their incomes .Equally important is
development of new savings products ,compulsory savings and rising of saving rate.
Others are targeting of small scale business proprietors with business loans in these
area of jurisdiction.
5.3.4 Education
Further still, the government and those involved in SACCOs should educate people to
learn to borrow only when it is extremely necessary. This is because borrowing for
the sake of it, may lead to misuse of funds leading to draining of the -would-have
been saved resource .The government should educate people in communities
generally, about the basic principles of controlling expenditure namely:
i. Be quick to receive money but pay as late as possible. This principle will help
on to control the way he/ she spends.
ii. People should set priority of what to spend on.
iii. Match expenditure with their incomes. SACCOs should adopt a dynamic and
aggressive policy to encourage savings by enhancing public confidence in the
micro finance industry, providing cost effective schemes for small depositors
and more importantly they must be seen by the public to be concerned not
only with balancing their books but also with promoting members welfare and
prosperity.
5.4 Areas of further research
>- There is need for academician to research on credit risk and management and
performance of SACCOs.
>- There is need to research on the influence of the influence of governance on
Sacco's performance and development
>- There is also need to determine the correlation between the savings
mobilization and the rate of emergence of SACCOs.
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REFFERENCES
Ahimbisibwe A. (2007). The effects of SACCOs on the investment culture of the
rural people/ Ntungamo: Makerere University
Bagonza/ M.(2001).Achievements and challenges of micro finance.
kampala:Makerere university
Branch1D.(2002) savings and development. Milan Italy. Felicetambusi. Business
publishing group
Duca1 T.(2003) Monetary economics in developing countries. londoon and basing
stoke: the company.pp.20
Francies1k.w.(1969). Credit unions are people.USA:CUNAinternationa11 inc
Kbuga1C. and batarinyebwe1P.K(1995).Cooperatives: past/ present and
future.kampala:Uganda cooperative alliance LTD.
Kagumya 1B.(2004).Micro finance credit policy and performance of small scale
business.kampalaa: makerere university
Kasi1J.(2003). Rural finance and poverty alleviation.washington D.C.USA: food policy
research institute.
Lipsey/ R.G and chrystai1K.A (1995). An introduction to positive
economics18thedition.oxford university press.Macimillian press limited
McCormack1J.R et al(2005). Personal finance/ USA;IJWin Homewood
McMcormack1T.(2005).financial management. NEW Delhi;Vikas publishing House
PVT I limited.
Musinguzi1M. and Mirembe1P. (1998). World Bank report. The new vision
Mwakajumilo (2011) modernized agricultural cooperatives
Alila&obado (1990) the activities of savings and credit cooperatives
Lubwama (1995) the influence of Sacco/s in Uganda
Mr.campbell(1946) Uganda cooperative ordinance
39
Kabuga and Batarinyebwa (1995) self reliance and initiative
Mbabazi (2006) introduction of micro finance framework
Budget monitoring and accounting unit policy (2017)
Marcus Beth and Caroline (1999)
Uganda cooperative and credit union limited1999
Agricultural cooperatives. (Mwakajumilo, 2011)
The thrift and loan 1960s (Kabuga and Batarinyebwa)
Classical growth theory by Harrods dammar and Robert Solow's economic model
Financial management and training facilities (Arkpchor 1993)
Bikki and Joselito (2012) micro finance facilities
Uganda cooperative alliance report (2017)
Kahandker (1998) production value
Increased incomes study by Hulme and Mosley (2015)
Household's income by Remenji and Guinones (2016)
Collin McCrimack (2010) on capital market authority strategy
Saccos target on youth by Ann Kyohairuel (2016)
Micro finance banker report (2017)
Saving maintenance by facet BV (2000)
Savings and credit cooperatives by Namara (2001)
Savings and credit cooperatives by father John McNulty 1995
Influence on Sacco's by Lubwama (1995)
Anapam (2004) Sacco's on farmers
Squander accumulated savings (Fofana 2014)
40
APPENDENCIES
APPENDIX 1: QUESTIONAIRE
Dear respondent
I Cherop Silas investigating the contribution of SACCOs in household poverty
alleviation in Moyok sub county in Kween district. Therefore, I wish to request you
kindly to spare some time and answer the questions below as honestly as possible
by tickling or filling in the spaces provided. The information given will be purely for
academic purposes and will be treated confidentially. Thank you for your
cooperation
Tick or write answers in full where applicable
SECTION A: Background information
1. Gender of the respondents
Male D Female D
2. Marital status
Single I I Married I I Widower I I Divorced I I
41
3. Age bracket
11-20 years D 21-30 years D 31-40 D
41 and above D 4. Highest level of education attained of the respondents
UCE
UACE
Tertiary
University
D D D D
42
5. When did you join the SACCO?
a) One year back D b) Two years back D c) Above 3yrs back D
IS there any change since you join the SACCO?
Yes
NO
D D
If yes, how has it change your family?
Positive D Negative D No change D 8 what is the state of those who are not in the SACCO?
Poor D Very poor D Better off D
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APPENDIX 2: INTERVIEW GUIDE FOR THE SUB COUNTY SACCO MANAGER
Hello Sir, I am Cherop Silas, a third year Bachelor of Business Administration student
of Kampala International University. This questionnaire is designed to establish the
contribution of SACCOs in household poverty alleviation in Moyok Sub-county,
Kween district. The information that you will give will be used for academic purpose
only. I therefore kindly request you to give your honest opinion.
SECTION B: THE CONTRIBUTION OF SACCOs
1. What is your name?
2. What is your title in the SACCO?
3. For how long have been serving in the SACCO?
4. What is your view about the SACCO?
5. What are the contributions of SACCOs in Moyok?
Has this SACCO yield results in alleviating household poverty?
6. What are the responses of the members towards the SACCO?
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SECTION C: FACTORS INFLUENCING THE FORMATION OF SACCO IN
MOYOK.
On the scale of 1-5, tick in the appropriate box on how you strongly agree or
disagree with the statement
Scale 1 2 3 4 5
Strongly Agree Not sure disagree Strongly
agree disagree
Statement 1 2 3 4 5
the government
Relatives or friends influenced you to join
the SACCO
Is it family background which the influenced
the formation of Moyok SACCO
Did you decide by yourself to join the
SACCO
The church influence
Is the laws of the government
Thank you so much for your time God bless you
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