SACCOs face all kinds of challenges, and loaning stands out as this is their main business. Unless we ask ourselves questions surrounding SACCO operations, we cannot fully capture what we can do to overcome these challenges.

1. Challenges Faced by SACCOs in
Issuing Loans to Members
Challenges Faced by SACCOs in
Issuing Loans to Members
Stephen Kiritu Mwangi
Co-operative Officer
Stephen Kiritu Mwangi
Co-operative Officer

2. Liquidity/Cash flow problems
What is the source of our funds? Is the money
enough? How is the money collected? How is the
collection experience? How much is collected?
When is the collection? Who is responsible for
the Collection? Why is it so? How do we punish
those who do not pay on/in time? Is there
backlog? How big is the backlog? Why do we
have a backlog? Do we know when more
members than usual apply for loans? How do we
get out of this situation or What do we do?
Thesizeofthebuffersandother
stabilizingstocks,relativetotheirflows

3. Loan Policy
Are loans granted to bona fide members only? Are loans
properly appraised and approved? Are loans properly
guaranteed and approved? Are loans disbursed and done as
per the approved terms and conditions? Are proper records of
loans maintained? Are there effective monitoring and control
mechanisms? Are delinquent loans detected for action? Is the
loan policy sufficient/effective/efficient enough that it covers
membership to issuance of loan forms to approval and
thereafter? How do you recover loans and interests?
Amendments, improvements...are they based on experience
with the current loan policy? Who appraises and who approves
loans? Is there Loan Application Form? Does it protect the
society, loanee and guarantors? Are they filled and filed
properly? How are lump sum contributions treated?
The length of delays, relative to the rate of system change

4. Organization-Procedural and
Structural Challenges-What are our responsibilities? How are we held
accountable? What procedures are followed when
granting loans? When and who issues loan forms? Who
is considered first when granting loans? How are people
recruited to become members? When are they given
their first loans and How much are they given? Are there
other policies that reinforce loaning in the society? How
effective and efficient is loan appraisal process? Are
loanees interviewed when more information is required?
How do you balance society’s interests and you own?
The strength of negative feedback loops, relative to the impacts
they are trying to correct against

5. Loan Recovery Challenges
How do we punish defaulters? How is
guarantor-ship recorded? How are they taken
accountable? Are there cells? How are cells
formed and encouraged? Are these cells
effective and efficient? What happens to
delinquent loans? Are these recorded? Are
follow-ups made? Who makes the follow-ups?
How do you treat loans that were not
guaranteed by guarantors if any? What was
security? Who verified the securities
authenticity?
The rules of the system such as incentives, punishments, constraints

6. Competition Challenges
Who are our competitors? How is the
competition hurting us? Why is s/he hurting
us? What are we doing to counter our
competition? What indicators show that we
are becoming better? Do we need to improve
our services? What is our product range?
How competitive are our products? How is
our marketing-how do people know we are
out here? What can we do to our members
so that they become loyal and patronize
society products? SWOT?
The power to add, change, evolve, or self-organize system structure

7. Communication Challenges
How do we communicate to our members when
their loan requests are rejected or reduced from
the original amount applied for or when they want
to be served? How do we handle dissatisfied
members? Are there procedures of handling
grievances? Do members attend society meetings?
Do they know why they must/should attend? When
was the last education held? Did it cover loaning?
Do members know procedures to follow when
applying for loans? Do they understand why it is
so? Has this been communicated to them? What
can we do to improve communication?
The structure of information flows (who does and does not have access to what
kinds of information?)

8. Loan Use Challenges
Do members utilize loans for the intended
purposes? What loans are favorite with
members? What percentage of the total
loan is it? Is it beneficial to members? How
many loans are members allowed at a go?
Are their ‘serial’ borrowers? Of the ‘serial’
borrowers, how are they when we compare
them to one loan at a time borrowers? Does
society do any survey to determine how
society’s products have helped its
membership?
The goals of the system

9. Loan Record Challenges
Are there records? Are they properly filled
and filed? Are they protected/safe? Where
are they kept? Are they easily accessed by
everybody? Who can access the records?
Who is accountable for them? Do credit
and other sub-committees keep records
e.g. minutes? Can we safely say we can
retrieve loan records that are five years
old?
The gain around driving positive feedback loops

10. OUR FATHER….
Considering: That service, democracy and brotherhood are the
fundamental principles in the co-operative movement; That our
objective is not only to serve the economic but also the social
and cultural development as well as the human advancement of the
members; and that in the co-operative system, the primary co-
operatives, the federations and unions, the power of ultimate decision
except those reserved by laws, resides in the membership.
Grant us your Grace, to make integrity and unselfishness the basic
standards of conduct; to guard against the use of our position in the
co-operative for personal advantage; to discharge our responsibilities
so as to promote and protect the best interest of the co-operative and
its members; to accept the obligations of attendance, learning and
participation relating to the position held; to give issues, objective
hearings, to vote according to conscience and to support majority
rulings; and to encourage open, democratic procedures in the election
of qualified candidates for volunteer service to fellowmen.
All these we ask of YOU.
Amen.
PRAYER

11. THANK
YOU
THANK
YOU