Walimu Cooperative Union Faces Shs11 Billion Bad Debt Crisis

Walimu Cooperative Union, a secondary cooperative with 275 member primary cooperatives, is facing a severe financial hurdle as it grapples with Shs11 billion in unrecovered debts. This money represents a portion of a Shs25 billion grant initially pledged by President Yoweri Museveni in 2011 to support government teachers.

Finance and Administration Manager Robert Omongin Odeke revealed that the outstanding debts are held by the primary teacher cooperatives. Efforts to recover the funds have been ongoing, with the Registrar of Cooperative Societies tasking the new board with this recovery mission. Omongin clarified that the defaults are primarily due to issues with individual member repayments rather than corruption or poor accountability.

Recovery attempts have seen limited success. While Shs2 billion has been recovered through legal channels, previous mediation and arbitration efforts, even with the involvement of trade union leadership, yielded minimal results. Omongin emphasized that cooperative conflicts are typically civil matters, not criminal, as the funds are advanced to members based on their relationship with the union.

The accumulation of debt is partly attributed to some SACCOs issuing post-dated checks that bounced, often after teachers secured multiple loans from other financial institutions. When attempting to recover funds through salary deductions, the union found that the capped deduction amounts made it a lengthy process for heavily indebted teachers to repay substantial sums.

In response to these challenges, the Union’s new board chairperson, Stephen Olinga, highlighted the implementation of digital systems to enhance transparency and streamline loan access. Innovations include digital recovery processes and enabling teachers to access funds directly at their schools, aiming to improve efficiency and ease the repayment burden.

The Union typically lends to primary teacher SACCOs at an 8% annual interest rate, while direct loans to individual teachers incur a 15% annual interest rate on a reducing balance.

Source: Daily Monitor (Uganda)