Ugandan members of financial co-ops can now access financial services digitally, with support from the Korean Federation of Community Credit Cooperatives (KFCC).
Launched on 4 August, the digital system enables members to make deposits, withdrawals and transfer funds to and from their credit union account using mobile money platforms.
KFCC, which works to promote credit unions at home and abroad, launched the project in Uganda in 2017 through a bilateral agreement between the South Korean and Ugandan governments, with the aim of providing affordable financial services to those living in remote areas, who are excluded from formal financial institutions.
Under the project, credit unions were rolled out in Mityana and Mpigi districts to provide financial services to the rural communities without access to financial services such as savings, loans, and micro insurance. Three years since its inception, the project has led to 15 credit unions being set up with over 8,600 members, Shs261million in share capital, Shs717.2million in savings and Shs832.3million in outstanding loans.
The digitisation of these credit unions will enable them to grow further and improve their transparency, accountability, and reporting, says KFCC. The digital system features management information systems that receive data, post, update, store, share, and process data into meaningful reports to enable analysis and effective decision-making.
Digital transaction records will allow the credit unions to create a credit history for their members, which, says KFCC, will enable easy access to credit to low-income earners.
Korean credit unions, which date back to 1963, are known as Saemaul Geumgo (MGs), which translates as community credit co-operative. In Uganda credit unions are owned, governed and managed by members who have the same common bond and are known as saving and credit co-operatives (SACCOs). According to the Association of Microfinance Institutions of Uganda’s 2019/2020 report, the country is home to 2,000 non-deposit taking microfinance institutions, SACCOs and self-help groups.
“Affordable and easy access to financial services is still a challenge in rural areas of Uganda,” said Andy Kim, director of KFCC’s International Cooperation Department. “But with the MGs’ user-friendly services subsidised by KFCC, the MG digitalisation with innovative digital solutions targeting rural farmers will enable the affordability and easy accessibility of financial services.
“The growth and sustainability of the MGs will enable the formation of the Uganda Federation of Community Credit Cooperatives (UFCC), which will further foster the development of the MG model in Uganda through advocacy, advisory, and training, as well as improving operational efficiency.”