This system allows stakeholders real-time access to critical information, enabling them to make informed decisions about transactions and creditworthiness
Kampala, Uganda | JULIUS BUSINGE | Uganda’s Savings and Credit Cooperative Societies (SACCOs) are grappling with a rising default rate, currently at 10%, which surpasses the industry cap of 5%. However, this trend could soon end following the launch of two innovations: the ‘SACCO Dashboard’ and ‘Credit Score’.
Developed by Future Link Technologies (FLT), a licensed national payment system operator by the Bank of Uganda, the SACCO Dashboard and Credit Score system is a comprehensive, computer-aided platform that aggregates data from participating SACCOs.
This system allows stakeholders real-time access to critical information, enabling them to make informed decisions about transactions and creditworthiness.
Launching the innovations in Kampala on May 24, FLT CEO Vincent Tumwijukye said, “The SACCO Dashboard allows institutions to benchmark themselves against the top 3% within the FLT ecosystem, which includes over 170 institutions and a branch network of 320. This comparative insight is vital for driving performance improvements.”
He emphasized that the Credit Score component of the system is particularly impactful, as it assesses the borrowing and repayment capabilities of SACCO members. This scoring mechanism extends to customers served by Microfinance Institutions (MFIs), thus broadening its scope and utility.
Tumwijukye noted that this system will help SACCOs mitigate operational risks and attract investments, while also reducing operational costs and fostering financial inclusion.
Richard Byarugaba, Executive Director for Finance at the Bank of Uganda, underscored the importance of these innovations for reducing lending costs and promoting financial inclusion. “They ensure that SACCOs operate efficiently and meet the needs of their members,” he said.
This development comes as the latest Finscope survey indicates that SACCOs are pivotal in driving financial inclusion in Uganda, with their utilization increasing from 5% in 2018 to 14% in 2023.
Byarugaba emphasized that the BoU and its partners are committed to enhancing financial inclusion through the promotion of electronic transactions, which mitigate the risks associated with cash dealings.
In addition to improving operational efficiency, the innovations facilitate safe online cash transfers between SACCOs and their members. Byarugaba highlighted the security benefits, stating, “These innovations are reducing the reliance on cash, which enhances safety and reduces the risk of theft. While online fraud is a concern, robust firewalls are in place to track and prevent such activities.”
Both Byarugaba and Edith Tusubira, the Executive Director of the Uganda Microfinance Regulatory Authority (UMRA), who co-regulate SACCOs and MFIs in Uganda, assured stakeholders that the BoU and UMRA are fully prepared to monitor and regulate these digital innovations to ensure their success and sustainability.
