Africa-Press – Uganda. The parish SACCOS is comprised of 6 to 7 groups with an average of 15 members in each group. These groups are formed depending on the enterprises the constituent members are interested in implementing. However, after the disbursement of funds, the members each use their Shs 1,000,000= to implement the projects individually. This defeats the purpose of transforming these subsistence farmers into commercial farmers and integrating them into the money economy using Shs 1,000,000= provided for each member as loan capital to be repaid into a revolving fund after 2 years.
The practice has many counterproductive consequences as demonstrated in the examples and narratives here below:
– Synergies are missed out. In a dairy enterprise, Shs 1,000,000= can only purchase a cross-breed calf. This means that the beneficiary will have to bear the cost of feeding and treatment for more than a year before it matures, is served, and calves. Meanwhile, if the 15 members pooled their Shs 1,000,000= each, they would have Shs 15,000,000= to plan for. They would be able to buy 5 in-calf heifers at Shs 2,500,000= each, totaling SHs 12,500,000= leaving a balance of Shs 2,500,000= This could be used for renting 2.5 acres of land at Shs 500,000=, Shs 500,000= for plowing and planting materials, Shs 750,000= for shed construction and Shs 750,000= reserved for treatment.
The heifers would calve within 1 – 2 months and the members would, besides having 5 calves, enter the money economy by selling milk. In the next year, the heifers will be calving again, raising the number to 15. After the second year, the first calves will also calve raising the total number to 20 with 10 of them lactating and providing milk for sale.
In a poultry layers project, you need a shed with adequate ventilation and brooding materials. There is also a minimum break-even quantity or number of chicks, below which it will not be economically viable to implement. Besides this, there is feeding and treatment of the chicks for at least 6 months before they start laying. This cannot be implemented using the individual Shs 1,000,000=. This enterprise also requires pooling of the individual Shs 1,000,000= by the group to afford these activities.
These two examples demonstrate the “synergies of pooling resources”, or the “power of numbers” or 1 + 1 > 2 whereas in the individual project is 1 + 1 = 2.
– Another consequence of individual household project implementation will be greater susceptibility to misappropriation than the group enterprise. The group has a governance structure and any changes during implementation of the agreed business plan will be subject to group policy and not individual will.
– Another reason is greater susceptibility to default than the group enterprise due to the length of the project gestation period. Whereas the group dairy project in the example above can start making small monthly repayments starting in the third month, the individual household project will start generating income after more than a year and therefore its repayment period is very short given the fact that repayment of the loan is after 2 years. Besides, the group has a governance structure that is easier to follow up for repayment than the individuals.
– The individual household project will be more susceptible to the effects of climate change since the co-funding for irrigation equipment which is available at the districts for sale is high but in a group, the members can split it among themselves and contribute affordable amounts.
– Most of the individual land holdings are small and have no access to water for production, yet the farmers may not have funding to plant in time to catch up with the seasonal rainwater. Under the group enterprise, the substantial “pooled” amount can justify the leasing of land in other districts.
– Another major setback to commercialization is that the individual household project may not be eligible for other sources of financing, otherwise available to group enterprises from financial institutions like Microfinance Support Centre, Post Bank, Housing Finance Bank, etc, and Development partners.
The PDM funding is disbursed in financial quarters which may not be in tandem with the onset of rains that largely determine the farming seasons. The funding may come late, for example in May which is the peak of the first season when crops should be flowering. This means the plowing should have been done in January and February so that planting is in March when the rains start. It is therefore important to take note of the following:
– There are land owners with developed land with channels distributing water for production which is available for leasing at around Shs 250,000= per acre.
– There are service providers that have farm equipment for ploughing, harrowing, planting, spraying, harvesting, and transportation available for hire.
– Some have agro inputs including certified seed, fertilizers, herbicides and pesticides for sale and storage facilities for rent.
The farm equipment and agro-inputs are available at prevailing market prices.
– There are financial institutions that can provide short-term loans secured against acknowledgment receipts for the stored farm produce.
All these services can be provided on credit after signing a memorandum of understanding between the service providers and the PDM beneficiaries in the enterprise group.
This arrangement will ensure that the timing of the release of funds by the Government does not affect the performance of the crops.
RECOMMENDATIONS
The local government political and technical leadership should sensitize the PDM beneficiaries on the benefits of “pooling” of resources, economies of scale, and synergies so that they voluntarily implement group enterprises after receiving their individual Shs 1,000,000 household entitlement.
The local government’s political and technical leadership have misinterpreted the president’s directive of Shs 1,000,000= per household to mean that the investment must be individual to the extent that it has become counterproductive for some enterprises and will make recovery difficult after 2 years without the beneficiaries selling off the biological assets acquired. The PDM Secretariat should therefore issue a circular urgently clarifying this issue to save this important fund from extinction.
The local government political and technical leadership should engage the land, equipment, and agro-input service providers and introduce them to the SACCOS leadership and enterprise group members for purposes of signing memoranda of understanding to implement the arrangements aforementioned.
The Ministry of Public Service in conjunction with the Ministry of Local Government should urgently reinstate the position of Assistant Cooperative Officer, trained at Uganda Cooperative College, Kigumba at the sub-county level if we appreciate the value of and are serious about reviving the primary producer and marketing cooperatives in Uganda.
CPA Khaukha Stephen
07769603885/0702960385
[email protected]
Khaukha is a retired civil servant with a range of experience in the private sector, microfinance, cooperatives, and local government. He last served as Chief Finance Officer for Bududa district, before retiring in November 2024
Source: Nilepost News
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