09ud-5486 - Demystifying Financial Management for Cooperatives in Uganda
With the increased volume of financial transactions in the cooperative organisations, and the need for accountability and reliability by the members, it is important to improve on the financial management skills of both the board and staff of UCA and its members. UCA is an Umbrella body of Cooperatives in Uganda. It was registered in 1961 under the Cooperative Ordinance 1946 as amended. Its membership includes cooperatives from sectors such as production, marketing, financial services, transport, etc. UCA has three main mandates: - To carry out advocacy and representation of the Ugandan cooperatives - To provide education and training and - To mobilize resources for the development of the cooperative movement. UCA has implemented many projects mainly in the area of forming/ strengthening co-operative organisations, promotion of rural finance and agricultural development. It has been in these areas because of the fact that the membership of co-operatives and hence UCA, are mainly involved in agriculture which happens to be the dominant sector in Uganda (currently employing about 85% of the country’s population). UCA plays the role of a catalyst for change and tries to build the necessary capacities so that the co-operatives can continue to provide services to members on their own. The first generation of projects concentrated on financial services because in the effort to start afresh, it was searching for interventions that would give solution to the main problem of the traditional co-operatives which was the lack of internally generated capital from the system itself. In order to build a strong base for the new co-operative movement, ways had to be found of providing financial resources on a sustainable basis. At that point UCA started to promote what was then called “village banks” but were in effect SACCOs (Savings and Credit Co-operatives) since the communities then frowned at co-operatives. However as UCA’s pilot SACCOs (re-branded Village Banks) operated and became successful, co-operatives started gaining acceptability and as of now SACCOs is a buzz word; not only popular with the rural communities but with all sectors of the Ugandan? as well as the Government itself. For the first ten years UCA had to lay this foundation concentrating only on the formation/ strengthening of SACCOs precisely because it knew that one of the causes of the crisis in the co-operative movement had been a financial crisis which became clear when government subsidies and funding were withdrawn. It would have made no sense starting again without addressing this problem. UCA started with a pilot of 8 SACCOs in 1997/98 but due to its success, the approach has since been rolled out many times to the extent that there are now more than 2,500 SACCOs across the country embracing UCA ‘s methodology. Even government has now adopted UCA’s model as a way of making financial services accessible to the rural areas (in particular) and all other needful citizens in general. In another effort about 8 years ago, UCA started to intervene in the agricultural sector which has a lot of problems ranging from low productivity to poor marketing and the absence of value addition. As a consequence of this, farmers in Uganda continue to live in a poverty trap. UCA's intervention has been based on an Integrated Approach where the producers have access to organised production services as well as organised marketing services. The farmers have access to financial services (from their SACCOs) which enable them to procure production support services and inputs. They also access production advisory services/extension from their production co-operatives. They also access organised value addition and marketing services through their marketing and value addition co-operatives (also popularly known as area co-operatives enterprises). This approach ensures sustainable empowerment of farmers. Despite all efforts, lack of awareness of the importance of financial management policies and procedures is a big problem, which becomes clear from the number of issues raised in the auditors management letters. The underlying causes are a limited adherence to policies and procedures, and lack of basic financial management knowledge and skills. For those reasons, it is necessary to review the operational policies and procedures and to create awareness about proper financial management in senior staff meetings. By the end of this project; 1. There will be increased adherence to the financial policies and procedures by the beneficiary organisations 2. The board and staff of UCA,Unions, ACEs, SACCOs and other partner organisations will have improved on their knowledge of financial management 3. Audit reports will be un-qualified