3.6 SASCCO's Value Chain Activities
3.6.1 Core Activities
The Cooperatives core activities include:
3.6.1.1 Representational Role
SASCCO is a mouth-piece for all member Savings and Credit Cooperative movements locally and internationally.
3.6.1.2 Risk Management Programme (RMP)
SASCCO facilitates a risk management programme for the Savings and Credit Cooperative Societies in Swaziland known as the SASCCO Risk Management Programme (RMP). The RMP needs to be expanded to include all Saccos and those that are not yet affiliated. With the liberalization of the Swaziland Royal Insurance Cooperative SASCCO stands to benefit if there will be expansion to other products within the same portfolio.
There are two products currently provided under this programme. These are:
• Loan Protection: Under this product upon a member's death or permanent disability the programme pays up the members loan balance outstanding. The current maximum loan coverage limit is El 50 000.00.
• Life Savings: Under this product upon a member's death the programme pays an amount equal to, or part of, the members saving, which, together with the member's savings is paid to his/her beneficiaries. The current maximum savings coverage is E10 000.00. Each Sacco contributes toward this scheme. These are monthly premiums which are based on its monthly savings and loan balances. The basic premium rate is El.50 per El 000.00 on outstanding balances at the close of each month.
3.6.1.3 The Central Finance Facility (CFF)
The CFF is an extension of the Cooperative principle of pooling funds for mutual help benefits.
Savings and Credit Cooperatives save their surplus funds with the association just as individual members do at the primary society level. The CFF programme could be expanded and operated efficiently to reap even greater results. The services of the investment manager will indeed come handy in this regard.
The purpose of the fund is to:
• Provide alleviation for short-term liquidity problems for societies to enable better investment opportunities for cooperative societies' funds through lump sum investments.
• To create a source of income for the associations focused on reducing the subscriptions or dues rate and eventually eliminating the payment of the same in the immediate and long- term future.
The CFF service ensures that societies have enough liquidity to offer business loans and enhance growth to the individual members' fund. SASCCO collects the surplus funds of member societies and invest them at better interest rates than society individual societies could achieve. The CCF advances these loans to the societies that meet the necessary criteria. Saccos are encouraged to deposit an amount equal to 3% of their shares and savings with the CFF in accordance with their last audited statements. This also includes statutory reserve funds.
3.6.1.4 Education and Training
Education and training is on activity provided by SASCCO and is used as a tool for capacity building for the Cooperative societies' human resources. Outreach by education and training through tailor-made programmes is targeted at staff members, elected officers and fund members.
Due to the progressively changing operating environment and growth of Cooperative societies, there is a compelling need for education and training.
3.6.1.5 Technical Assistance and Advisory Services Provision
The Computer division, for instance, is tasked to launch new services that are carried out for the benefit of the societies. This division also ensures use of the same software applications by societies.
3.6.1.5 Other Services offered by the Cooperative
• Pension scheme: SASSCO runs a pension scheme for the Sacco members.
• Long-term loans: Loans of a member's savings are available at low interest rates. Members are given payment terms of up to sixty months.
• Short-term loans: These are loans that are payable within a short space of time ranging from three to twelve months.
• School loans: School loans are offered to cater for school fees and are repayable in 12 months. Current amount borrowed is up to the maximum of E 5000. 00.
• Emergency loans: Emergency loans are issued to cater for unforeseen expenses, such as, death and imprisonment.
• Special Loans: Loans available at very high interest rates values for special projects and are payable up to a period of 15 years.
• Fixed Deposits.
• Holiday Savings.
SASCCO's Project Proposal
SASCCO has been experiencing internal financial problems and is reorganizing its internal activities for more opportunities that exist externally. SASCCO resolved to seek land with the aim of building offices for its operations. This resolution took place in the mid 1990's. According to SASCCO's minutes (October 10, 2001) the Cooperative had shown positive growth both in the quality of its products and membership, hence, the Cooperative embarked on a Cooperative Bank project. This growth trend is set to continue given the changing environment regarding cooperative awareness in the country. It was thus, imperative that this growth be sustained by setting up proper strategies that included long-term economic investments, significant enough to convince members and stakeholders that SASCCO's business was, indeed, a going concern.
As part of strategic plan SASCCO put in place an investment committee to examine modalities of possible sustainable investments. Unfortunately, the committee could not identify an investment niche that could be pursued without violating cooperatives basic principles (SASCCO minutes October 10, 2001). The expansion of the offices included possible investments aimed at increasing members' wealth. It was envisaged that other investment opportunities would arise as the project continued to improve the investment. SASCCO has been perceived to stand greater opportunities to advance it and take the rightful place in the cooperative and financial arena.
Budget
A change in strategy nearly always calls for budget reallocations. Reworking the budget to make it more strategy-supportive is a crucial part of the implementation process, since every organization unit needs to have the people, equipment, facilities, and other resources to carry out its part of the strategic plan (Internet, 8).
The construction programme of the SASCCO Centre building initially stood as follows:
• Contract Period =18 months
• Commencement = January 2002
• Completion = July 2003
The anticipated disbursements cash flow after 18 months was estimated to be E21, 704, 000.00, and the following costs were excluded:
• Land Acquisition
• Loose Furniture and Equipment
• Air Conditioning
• Cost Escalation beyond the dates indicated above.
The rate of return envisaged on the project was to be decided at the SASCCO AGM, since the project would be financed by its members and immediate repayment of the initial investment were not anticipated.
SASCCO's proposed financing options included mainly
• Full SASCCO participation where SASSCO reserves by the 18 Saccos would be used. It was expected that share participation would not be less than E600, 000 by each affiliate.
• Financing through a bank or money market. SASCCO would solicit a bank loan and also approach micro-financing if necessary.
These two options were, however, dropped by SASCCO's board and the following options were suggested:
• Option 1
Full members' participation assumed 15, 000 Sacco members. In this option each individual member of Sacco could invest a minimum of E2, 000 with a limit of E10, 000.
The investment amount would have been paid by December 3 1s, 2001 and would yield dividends after one (1) year of project completion. Approximate growth pay-out dividend rate was not clearly stated. This option would also allow SASCCO affiliates participation through CFF investments with total costs of E33, 300, 000.00. Extra funds could be used towards buying furniture and installing air conditioning which were not part of the total project cost.
• Option 2
In this option SASCCO would hold 70% of the total investment and a strategic partner identified as NAPPO would hold 30%, with total costs of E22, 000, 000.00. It was further proposed that for option 2 the participation of NAPPO should be reduced since it was envisaged that there could be possible dominance by this strategic partner.