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news | July 12, 2009 | Uganda |

Creating a Savings Culture to Improve Livelihoods

A better access to financial services could improve populations’ livelihoods.

ACTED is supporting the expansion of Savings and Credit Cooperatives (SACCOs) as part of its 12-month project entitled “Livelihood and Economic Recovery for Northern Uganda” (LEARN Uganda), funded by the Norwegian Embassy. The project seeks to strengthen the livelihoods of 41,830 IDPs returning to their places of origin following the cessation of hostilities between the government of Uganda and the Lord’s Resistance Army (LRA).

An innovative approach: relying on Savings and Credit Cooperatives (SACCOs)

ACTED has chosen to take an innovative approach by using SACCOs to transfer Cash For Work (CFW) on infrastructure rehabilitation and construction projects and cash grants for Income Generating Activities (IGA) across eight sub-counties in the three war- and poverty-stricken districts of Oyam, Gulu and Amuru in Northern Uganda. ACTED aims at helping the communities to reconstruct their livelihoods and improve their living conditions after decades of insecurity and suffering.
Savings and Credit Cooperatives are democratic and self-help structures, often present in Uganda’s rural areas. They are owned, governed and managed by their members who agree to save their money together and to make loans to each other at reasonable interest rates. There is no payment to or profit by any outside interest.

Improving beneficiaries’ access to the local financial system

SACCOs provide 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 project develops a savings culture which in turn could improve cash management as well as savings knowledge and behaviour in Northern Uganda. The presence of cooperatives improves the availability of credit and savings facilities, reinforcing populations’ access to the local financial system. Beneficiaries would then have more opportunities to access credits after the end of the project.

Empowering Savings and Credit Cooperatives to create a savings culture

ACTED is also providing capacity building to SACCO staff to increase the cooperatives’ transparency, efficiency and coverage as well as ensuring that key assets (e.g. safes) are set up to guarantee the successful management and disbursement of program funds. Capacity building includes formal training sessions covering topics such as “Cash Handling Systems” or “Customer Care” and ongoing monitoring and support to staff members. These training sessions aim at improving SACCOs’ ability to deliver efficient and reliable financial services to rural communities.

Despite these interventions, in a food insecure environment characterized by short-term thinking, there are still question marks as to how long and what it will really take to ensure that a true savings culture takes hold in Northern Uganda. Nonetheless, empowering SACCOs will develop inhabitants’ access to the local financial system, thus improving their livelihoods as well as the economic recovery in ACTED’s areas of interventions.