Community Banking, the Ugandan Way: Inside Savings Clubs
Have You Heard of Savings Clubs in Uganda? Here’s What They Are:
Across Uganda, community-led savings clubs are transforming lives by promoting financial discipline, building resilience, and creating a safety net for local families. These groups—often formed by neighbors, friends, or co-workers—play a vital role in strengthening financial independence and social connection, especially in rural areas where access to traditional banking is limited.
The Purpose of Savings Clubs
Savings clubs are founded on principles of trust, cooperation, and shared responsibility. Their goals include:
Encouraging consistent saving habits
Providing local financial support to prevent cash shortages
Offering quick assistance during emergencies
Promoting long-term financial stability and sustainability
Strengthening social ties within communities
Informal Savings Clubs
Informal savings clubs are the most common type, often organized and led by women. Once a group forms, members agree on a contribution amount, meeting schedule (weekly or monthly), and a payout rotation system. The total savings collected at each meeting is then given—without interest—to one member, following the agreed rotation until all members have received their share.
In other cases, groups choose to accumulate their funds and offer low-interest loans to members. These loans are backed by guarantors, ensuring that the group can recover funds if repayment issues arise. This method not only builds accountability but also gives members access to affordable credit when they need it most.
Formal Savings Clubs
Formal savings clubs, also known as Savings and Credit Cooperative Organizations (SACCOs), are registered under the Ministry of Trade, Industry, and Cooperatives. Members of a SACCO pay a small membership fee and purchase shares, becoming both owners and decision-makers in the organization.
Each member has equal voting rights, and operations are managed by an elected Board. Savings are pooled to provide low-interest loans to members, while profits are distributed as annual dividends. Compared to commercial banks, SACCOs offer far more affordable loan rates, enabling members to invest in education, small businesses, or home improvements.
Building a Culture of Savings
Savings clubs—both informal and formal—demonstrate the power of collective effort. They empower individuals to plan for the future, respond to challenges, and achieve financial stability through community cooperation.
At ACT Uganda, we celebrate and support initiatives like these that strengthen families, encourage self-reliance, and foster sustainable development from the ground up.
