Sabiiti Herbert, MBA, BBA (MUK)

If you’ve been keen enough lately, you may have heard of and/or noticed the levitation of savings and investment clubs in Africa and Uganda in particular. The days when people would have purposeless social events without an attached developmental agenda are long gone. Some of the used-to-be plain social gatherings have since evolved into savings and investment clubs which at the end of the day still impact the social aspect of life among others.

Today, so many merits are associated with being a member of Investment club X or Y; From getting alternative and cheap sources of domestic funding for projects to dodging the high interest rate of commercial banks & the warmth of enjoying some proprietorship of sorts, yet still some of these clubs are faced with a host of challenges that if not dealt with unfortunately breed sluggishness that sucks life out of them and consequently forcing them into closure, others have either lost funds or friendship and sometimes both.

These challenges revolve around governance issues namely;
1. Fairness: Some club members may feel they do not receive equal consideration for whatever stake they have in the investment club. The fairer the club is to all stakeholders, the more likely it is for it to celebrate more birthdays.
2.Accountability: The management has an obligation and responsibility to give an explanation or reason for the club’s actions, inactions and conduct yet some executive committee members unfortunately don’t feel obliged to do so mainly because they are holding the office on voluntary basis. Where possible, it is advisable to appoint a paid up administrator to manage the club’s operations and they can occasionally report to executive committee in accordance with terms of reference.
3. Transparency: The club members should be in the know regarding the clubs mode operandi; talk of future plans, associated risks & envisioned investment strategies. If this does not happen, then welcome to the world of conspiracy theories and this is never good for the unity and development of any club.
4. Record keeping:
Most investment clubs do not keep good records of clubs transactions. Records must be comprehensive and complete, well-kept and accessible. Less of that, conflict shall always arise.
5. Separate Entity: Just like a company, an investment club ought to be treated as an artificial person that can be born, grow, get sick, produce and even die. Unfortunately because some clubs are birthed on the basis of a common origin like family, church, workmates, village mates they at times mix relationship with operations. For example a member who takes it “personal” when reminded/demanded to pay their obligation. This has killed many savings and investment clubs. If you are called upon to meet your due obligations, digest it maturely & stop what some call “putting in feelings”. Doing so, only renders you an enemy of development.
6.Saving Fatigue: Saving and investment clubs normally agree on the amount of funds to be remitted monthly, but some times Life just happens;

 What happens when a member loses a job? How about increased financial responsibilities related to say – starting a family.
 Some members subscribe to more than one club. This does not only create financial burden but also may paralyze a member’s muscle to honor their monthly obligations. Being in multiple clubs may also be cousin to the temptation of multiple borrowing with its negative effects. It is therefore advisable to be in few clubs that you can manage without much financial stress. Much as we encourage savings, saving for tomorrow should not be at the expense of failure to live today.

This would be a whole discussion for another day.
To avoid saving fatigue, I normally advise savings and investment clubs to set a target of capital contribution from members. E.g in case Club X targets to raise UGX 1 billion. Each member can be advised to contribute UGX 50m for a finite period X. This money can be contributed daily, monthly or at ago depending on the financial rains of members at that time. This reduces the burden of saving per month.

It is not written on stone as some members think that shares are only for saccos, you can decide to front share capital and encourage members to buy shares of what they can manage so long as an individual does not exceed 1/3 of total share capital.

You can as well decide to contribute for a particular project. For example if there is land to purchase worth UGX100m. Club members can only contribute for that particular purpose. The club can also decide to engage in different ventures and give an opportunity to members to invest where they feel comfortable.

If you’re blessed to belong to an investment club, it’s your at most responsibility to jealously protect its integrity and growth, thanks to the unlimited advantages these clubs posses. If you and your other friend(s) have been thinking of starting one, kick that peddle and ride on, see you at the top.

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