Negotiating the Sacco Challenges in Ethiopia – The Tederash Sacco Success Story
The business mission of SACCOs is to provide financial service to members and become viable community based financial institutions by providing value-added services such as education, training and financial services on a sustainable basis. People look upon these institutions as means for obtaining loans from the government and / NGOs. Likewise, the SACCO unions established are based on the weak primary SACCOs that were established mainly to access loan fund from rural financial intermediation program (RUFIP). So long as people expect to get something from the government, they see to it that societies somehow continue to function. Weak governance Management committee members have no knowledge about financial management. In most cases SACCOs are unable to employ high caliber management staff and the burden of due diligence is left to members who may have limited education on management
Key Challenges Lack of awareness
Members are not well informed about the basic cooperative principles and values and create the inspiration among members to rally around their grass root financial service institutions. Regrettably, no special efforts have been made in this direction.
Weak governance
Management committee members have no knowledge about financial management. In most cases SACCOs are unable to employ high caliber management staff and the burden of due diligence is left to members who may have limited education on management.
Weak financial management system
The financial system in place including accounting and audit works are very weak. Most of the primary SACCOs are not maintain proper financial records and produce reports timely. Similarly, the accounts of the societies are not timely audited with three to four years lag in the case of certain primary societies.
Lack of differentiated products
Apart from the above stated problems, cooperatives have not yet provided demand driven products that could address the needs of their members in spite of their older age and better outreach to the grass roots level and unbanked community.
Policy and regulatory environment
Apart from the above stated problems, cooperatives have not yet provided demand driven products that could address the needs of their members in spite of their older age and better outreach to the grass roots level and unbanked community
Stand Out Story of Tederash Saccos, Addis Ababa, Ethiopia
Under the strong guidance and direction of Cooperative Bank of Oromia , Tederash Saccos Adopted the Techverve Digital Core Banking solution in early 2022 for Modernizing its core . This was the first step in the right direction to overcome all the structural challenges stated above which was besieging the sector . Strong leadership propelled vision helped in this journey . Was Established In 2015 with just 24 members to provide basic financial services to the community with a limited capital of 24000 ETB. It slowly steadily wound its way to create 1600 members in a 8 year trajectory till Techverve stepped in to digitalize the core operations . The Sacco went Live with SaccoVerve in February 2022 and since then the growth due to enhanced Operational efficiency has been exponential . The Membership jumped 450 % to about 6000 Members and to 140 Million ETB all part of an active , vibrant Savings and Borrowing community being services through its 9 branches in the country. Mr xxxx, CEO of Tederash Saccos said “ We have just begun . The true scalability will be achieved once we launch the Mobile Banking app and make it accessible to the rural folks. Saving their time in doing basic Transactions is the sustainable benefit we would like members to enjoy “.
The Road Ahead
Tederash Sacco aspires to quantum multiply its membership and develop its loan portfolio both horizontally and vertically . The Progression path it sees for itself as the current year Target