The Uganda Credit Union Experience

Where do I start?? There is so much information on the history of the credit union system in Uganda, I find it difficult to digest, compress and relay it in a meaningful manner. So there it is, my testament that writing a blog is a little challenging. I want the information to be interesting and captivating while providing my insight on this wonderful experience, so here goes!



First Meeting the Uganda Co-operative Association

We are not good stewards for our own community development.

The rationale behind this bold statement is from a meeting that I attended this morning with the Uganda Co-operative Association (UCA). I received a great presentation from Leonard Msemakweli, on the history of the co-operative movement in Uganda. He described the robust co-op sector which was formed in 1913 and how it had to overcome numerous obstacles in the following 90 years. The largest obstacle was the change in Government in the 1990's which dismantled the previous governments great relationship with co-operatives. The new government simply wanted to remove anything that the previous government liked and in doing so, stopped supporting co-operatives. In return, many of the co-operatives began to suffer and fail and the Government did not realize the impact of their decisions. On top of the Governments poor attitude, the Uganda currency "Shilling", lost significant value on the world markets. Uganda is a large exporter of agricultural goods, and as a result, the production of goods became unprofitable. With the growth in population - 32 million in a 240 square kilometer area - they are also struggling with land availability.

The environment for the rural citizens became very difficult with access to jobs, credit, and opportunities drying up. In a bold move by the UCA, they sought out to convince the new government that the co-operative model was what the people needed. They developed a new co-operative model and implemented the model in 10 organizations. The model had several critical success points:

1. Staff were trained using a strong management and co-operative knowledge training program.
2. Policies and procedures were implemented with stringent requirements.
3. The co-operative principles were enforced

The model became so successful that the government reversed its decision and made bold statements such as "all financing should be done through a co-operative". Citizens now had access to co-ops where they could jointly come together and negotiate prices for their products and sell to suppliers at a more profitable price, sometimes three times higher then negotiating on their own. The local credit union would lend to the co-ops thus providing the financial injection required to stimulate growth in their economy. Rural citizens began to
borrow and save and as a result mass social improvements came to fruition. Employment increased, incomes increased, children became educated, and production of agriculture increased. The stigma that government had attached to co-ops had fallen and support soon followed. The government created a department and assigned a Minister of Co-operatives. Leonard credits the Canadian Co-operative Association for assisting with the new model development and implementation. He also credits CCA for assisting UCA to lobby the  Uganda government  for support.

All of this change happened in the last 10 years, and had resounding impacts on this region. Interesting enough, the commercial banks have arrived in Uganda, 12 in total. They had tried to now penetrate the rural areas as 80% of the population resides in rural areas. The citizens have responded with a strong commitment to their co-op's. I asked Leonard why is that the citizens have opted to continue to bank with the co-operatives and shun the banks with only 10% of the population supporting banks. He advised that they have not forgotten what the local co-ops have done for them. They appreciate that they elect local representatives and they speak and manage the way their local co-ops operate. They determine how to distribute funds and do not appreciate that their savings would be removed from their community and invested in other countries when the need is on their doorstep. They also have recognized that during tough times, their co-operatives would work with them, invest in them and not leave them as the banks have done before. WOW!
I look at our own credit union where three out of the six branches are operating where the bank has pulled out. Four of the six branches operate as the single financial institution in town. We are operating on the same principles of the Uganda model however there is a stronger loyalty, and commitment to the community in Uganda. It seems that price in many instances is the underpinning decision maker for most people, leaving me to question so much. What value today do people place on their community?  I have described how a co-operative model in Uganda basically is the foundation of rebuilding that country. I am very pleased to have such a small piece of that development. The coaching program has been running for numerous years and assisting the co-ops in numerous areas. The partnerships between the establishment of co-operatives and credit unions is admirable.

So when i think of some of the areas in which we operate and consider some of the needs out there, my head spins with opportunities. Opportunities that are left vacant because having one entrepreneur invest is out of reach. Imagine many like-minded and needing people investing in something however, and now you have a working model. I think of a certified daycare in Port aux Basques that is much needed however can never seem to take off. Farming in the rich soils of the Codroy Valley that requires trained farmers, equipment, markets, financing, land, and professional services. Housing in many other communities are a definite need and yet lacking investments. Maybe we need to take a lesson from the people of Uganda and put the riches aside and focus back on our communities. Maybe Leading Edge Credit Union needs to take a leadership role and work with the Newfoundland and Labrador Federation of Co-ops and start to develop some of these community services. After all.... the United Nations declared this year the "International Year of the Co-operatives"!!