Once hailed as one of the country's premier SACCOs and a benchmark for many clubs and SACCOs, 2023 marks another year where the once-celebrated Y-Save SACCO has declared and paid zero dividends to its members. Are the challenges facing this formerly esteemed SACCO being overlooked? We delve into the financial statements of the SACCO for a closer examination.
Staff and Board Members.
Y-Save has a total of 12 full-time Staff.
The personnel costs stand at a staggering UGX 960 million for a 12-member workforce. This translates to an average annual salary of UGX 80 million per employee, which seems quite high for a SACCO of this size or UGX 6.6 Million per month per Staff only for members to get a No Dividend this year.
For a SACCO that has struggled to pay Dividends, why would you contribute an extra 5% over and above the 10% statutory requirement as contribution? What value is this that the members are heavily paying for to the 12 permanent staff? That extra 5% is costing the SACCO an annual UGX 35 Million.
As if that’s not enough, the SACCO incurred a total of close to 200 Million in Committe expenses, Monthly meeting and planning expenses. That’s like 16 Million per month for people to seat and plan for a SACCO that hasn’t paid a dividend.
Then, you have loan to the Staff and Board Members of the SACCO to the tune of UGX 860 Million almost 6% of the total loan portfolio among this elite club.
Investments and Return on Investment.
The SACCO's return on its UGX 21 billion investment is a mere 11.9%. Given the inflationary economy, this return is dismal and raises questions about the effectiveness of the SACCO's investment strategy. The SACCO has heavily invested in land, but the yield is disappointingly low. A simple at their land portfolio shows the land is in areas where return on such an asset is barely 6% in the last 5 years.
The SACCO states it made a total of 380 Million in sale of land yet Land value reduced by only UGX 355 Million, and cashflows show the SACCO received only 355 Million from land, so what income is the UGX 380 Million? How much was the land sold in 2023 sold for? A Proper reconciliation of the Cashflows from Land sale vs the Land value remaining, or was the land sold in 2023 sold at credit (cash plus credit) and this might explain why Account receivable of the SACCO almost doubled from UGX 245 Million in 2022 to over UGX 489 Million by end of 2023 and if this might be the case, then who did they sell the land to at credit? Was it to a related party that ended up enjoying the credit influence and benefits?
The SACCO carries all their Investment properties at Cost, which would mean the sold land cost 355 Million (reduction in IP above). Then how much was the land sold for? how much cash did the SACCO? Was part of the deal a credit sale and if so by how much?
Return on Member’s savings.
The return on members' savings is also significantly low compared to the industry and the class of assets. A return of UGX 1.3 billion against savings of UGX 16 billion is not competitive. That’s like 8% return way below the Money Market averages of 11%.
Income vs Expenses.
The financial statements show that the loan interest income for Y-Save increased from UGX 2,454,996,230 in 2022 to UGX 2,485,397,672 in 2023, representing a growth of approximately 1.24%. On the other hand, personnel expenses rose from UGX 878,224,804 in 2022 to UGX 960,630,816 in 2023, indicating a growth of about 9.38%.
In terms of other operating expenses, the total increased from UGX 1,525,024,656 in 2022 to UGX 1,724,359,571 in 2023, a growth of approximately 13.07%. This is significantly higher than the growth in loan interest income.
This suggests that the growth in expenses is outpacing the growth in loan interest income. Members should question why costs are rising faster than income, and whether this is sustainable in the long term.
There needs to be a deliberate effort to reduce on the luxurious wasteful expenditure. The contributors surely must expect a dividend.
That is a billion in investments.
Maybe the should restructure their leadership, reduce emoluments and allowance packages.
In the long run , they should have actualised lest a step towards being a microfinance.
What is the cash out policy. I would withdrawal my savings if I was a member