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

ii

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.

iii

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.

iv

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

v

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

vi

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

vii

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

viii

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

ix

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.

X

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.

1

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.

2

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

3

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

4

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

5

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.

6

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.

7

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)

8

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.

9

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

10

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.

11

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.

12

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,

13

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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