David Groves is a hero. I will probably never meet him, but if I do, I will shake his hand and thank him for boarding an airplane in Australia bound for Kampala, Uganda in 1991, armed with nothing more than the name of the author of an article published in the Baptist Union General Society Newsletter about the terrible plight of Ugandan war orphans following years of civil strife.
Mr. Groves ultimately located that author, Pastor John Ekudu, General Secretary of the Ugandan Baptist Union, and formed a Non-Governmental Organization (NGO) called Share an Opportunity, Uganda (SAO) dedicated to the support of parentless Ugandan children orphaned by the dual scourge of war and HIV/Aids.
In 1993 SAO hired its second staff member, a recent business school graduate and Kampala native named Samuel Mayanja Ssekajja; Sam for short. Fourteen years later, in 2007, Sam is the Manager of Share an Opportunity (SAO) Micro-Finance Ltd in Kampala, and my new boss as a Kiva Fellow.
What follows is the history of Sam’s evolution as a micro-finance banker, whose work has positively impacted the lives of tens of thousands of poor Ugandans, multiplying the altruism of David Groves many times over.
Sam has an unquenchable thirst for knowledge. After completing his undergraduate degree in Business Management, he went back to business school to earn a degree in Purchasing and Supplies Management. He returned a third time to undertake a degree in Accounting followed by a Post Graduate degree in Micro-finance and then an MBA specializing in Project Management. He did all this while raising a family of five children with his wife Juliet and working full time for Share an Opportunity Uganda, a not-for-profit social service organization.
Above all else, Sam is an entrepreneur. The first day we met, I peppered him with questions non-stop for four hours to piece together his story of perseverance and creativity in one of the most chaotic business environments I can imagine.
Sam’s first assignment in 1993 was to create a program for income generation at the 10 centers across Uganda where a total of 50 orphans were housed with families in villages served by a Baptist church. The problem was the number of centers, and the number of orphans in each center, was growing faster than the budget to support them. By 1998 there were 25 centers with 40 children per center, a fourteen fold increase in orphans in only five years.
Sam developed a program to increase farming productivity at the centers. Typically, villagers engaged in subsistence agriculture; raising chickens, pigs, and other animals as well as growing maize (corn), cabbage, passion fruit, egg plant, and bananas. Uganda is located on the equator which means farmers can plant and harvest two crops each year. Planting season is September and March, the two rainy months, and harvest is in late August /early September and February.
Sam purchased improved hybrid corn seed developed in Uganda at the National Research Organization (NARO). The 3 new hybrids, called Long 4, Long 5 and Long 6, greatly increased yields compared to open pollinated seed saved from the previous crop. Farmers were not required to pay for the seed until after harvest.
He obtained professionally grown cabbage seed, eliminating the possibility seed borne plant disease, thus increasing the odds of a successful crop.
Sam went to the Ugandan government to obtain a locally bred hybrid passion fruit that crossed a disease resistant, but bitter, yellow variety with a local purple passion fruit, a good tasting variety that was susceptible to disease. The new Purple Hybrid produced a healthy crop of big succulent fruit.
He advised villagers how to increase banana yield through improved cultural practices. In the climate of Uganda, a banana plant grows from seed to a full grown plant in 9 months. Three months later, the new plant produces its first bunch of bananas. Sam showed villagers how trimming the banana plant back to three suckers of different lengths encourages continuous banana production.
SAO Uganda also distributed essential farm implements to the villagers. In Uganda, the majority of farming is done by hand, using simple, but essential, tools.
Finally, he encouraged the members of the village committees to focus their efforts on the most profitable crops, what he calls an “enterprise” approach. Previously, each family made independent planting decisions and then consumed what they produced. Sam encouraged them to pool output to create a marketable crop to attract cash paying commodity buyers.
The income generation program yielded three results;
1. Agricultural output increased, generating income from surplus production, and sustaining the orphan program.
2. Other villagers, beyond the original families housing orphans, joined the local committees.
3. The idea of credit and paying for inputs after harvest was introduced.
By 1997, Sam broadened SAO programs to include value added services like bakery production and primary health care education to reduce disease. These programs were implemented by volunteers within the villages. The number of centers increased as word of SAO and Sam’s success spread.
Fundamentally, Share an Opportunity was a charitable social service organization, not a business. Sam began to see problems with that approach.
Some of the villagers, who volunteered with orphans or in the various social service programs, saw their crop inputs as payment for services rendered and not debts repayable after harvest.
Other local committees had problems with self dealing of committee members, resulting in bad debt collection problems.
The fundamental problem, as he saw it, was the lack of savings at the local level. Villagers saved very little, and relied on the charitable parent organization when problems arose. Equity was not growing in the centers.
Sam saw a demand for micro credit, especially crop loans, but for ethical reasons SAO’s partners at Baptist World Aid did not wish SAO to be a banker. Locally owned SACCO’s, or Savings Credit Cooperative Societies, were Sam’s compromise to satisfy both local credit needs and his partner’s principles of maintaining community relationships.
A SACCO is based on the principle of local ownership. Members purchase share capital and pay a membership fee. In a SACCO the borrowers are the owners. The original methodology was group loans where members guaranteed each other’s loans and each borrower contributed 20% of the loan amount in compulsory savings.
Village committees were aggregated to parishes (6 villages), sub-counties (6-7 parishes), and districts (5 sub-counties).
When Sam received permission from his board to form the first SACCO, he did what many entrepreneurs do; he went back to the customers who knew him, trusted him, and respected him.
His first SACCO was in Zirobwe, a rural sub-county in Luwero district, 45 miles outside the capital city of Kampala, which had been one of the original orphan centers.
Convincing villagers to invest their meager cash savings in a cooperative society was not an easy task. Uganda has a long and tarnished history of co-ops. For several decades, warring factions plundered agricultural co-ops, stealing their stocks of cocoa, coffee, and cotton, and selling them in neighboring countries to finance armies. Banks were robbed. No savings institution was spared. Savings societies lost everything.
In 2000 Sam fearlessly ventured into this difficult business environment, selling founder’s capital in SAO’s first SACCO, many times to villagers who stored cash in buried coffee cans. His first meetings were held under a tree. Sam and a college intern crisscrossed the Zirobwe district meeting with small groups of men and women.
This was a different approach than social services. Previously, many SAO programs centered on the distribution of free goods or free education, paid for by a distant funding source. With the SACCO, it was all business. The customers were the owners who were borrowing their own money.
Although Sam’s board authorized him to pursue the SACCO concept, it did not provide start-up capital. They allowed him to petition five centers in Central Uganda, where his Income Generation Programs had generated a diminishing pool of retained earnings. Sam asked the committees to give up control of those funds (about US $3,000) so they could be used as loan capital for the Zirobwe SACCO. It wasn’t much money, but it was significant because this was the first SAO Uganda program to be completely self funded.
By 2001 Sam had mobilized three SACCOs, Zirobwe and Ngogwe in rural settings and Wakisso, in an urban location. As usual, growth was faster than funding. Just when Sam needed more money, a large umbrella organization for co-operative societies in Uganda named Uganda Cooperative Alliance advertised for smaller organizations to join them. Interestingly, the large organization had attempted to establish a SACCO in Ngogwe and failed.
As an inducement to join, UCA offered a free start-up pack for SACCO’s:
1. Office rent
2. Salary for two staff
5. Stationery, including pass books
6. Supervisory audits
No start-up capital was offered, but since Sam was out of money, he enrolled the three operating SAO SACCO’s and used funds for the start-up packs to loan even more money through new SACCO’s.
Today, Share An Opportunity Micro Finance Ltd. supports and loans to 14 branded SACCO’s, serving more than 10,000 poor Ugandans.
As usual, Sam did not limit his services to funding loans. He recommends “enterprise solutions” wherever SAO lends money. In Zirobwe, he encouraged the cultivation of upland rice, which produces higher returns.
In Ngogwe, he help convert farmers to maize production. Previously, they supported themselves by growing coffee or fishing from canoes on nearby Lake Victoria. In 1997, wilt disease wiped out the coffee crop and the government granted fishing rights for export to modern fishing vessels, which greatly diminished the local catch.
Soon after Ngogwe farmers switched to vanilla production, that market crashed.
Sam encouraged them to focus on corn production. Due to their critical mass of production (100 sack of corn are needed to fill a lorry), and increasing demand from drought stricken Kenya and war ravaged Sudan (as well as ethanol production in the US), maize prices are strong and the Ngowe SACCO is prospering. Additionally, SAO loaned money for the purchase of a flour mill in Ngogwe, which allowed local farmers to add value to their crop, increasing sales revenue 200-300%.
Sam and his new Board, composed of professionals of diverse backgrounds and business skills, completed a strategic plan in 2007 which concluded that in order to be sustainable; SAO Micro-Finance Ltd had to operate as a stand-alone for-profit business.
The problem with loaning to SACCO’s is that it is a low margin business. SAO loans to the SACCO at a 1%/month interest rate and the SACCO loans to its members at a 3% per month rate, using the spread to cover operating costs. The loans are small, so Share an Opportunity was perennially short of funds with which to grow.
Sam and his Board saw an opportunity in making loans directly to individuals in and around Kampala at substantially higher interest rates. In addition, he wanted to grant loans referred and guaranteed by his SACCO customers that exceeded the SACCO’s maximum loan size.
Once again Sam had an idea for expansion and no way to fund it. His eyes sparkled as he related to me the serendipitous story of how the very same week in February 2007 when he launched the direct lending program (“I have to start”, he told himself), he received a letter from Kiva.org inviting him to apply for funding of direct loans to poor borrowers.
Since February 2007 Share an Opportunity Micro-Finance Ltd. has funded about 50 individual loans through Kiva, totaling approximately $US 50,000. I will be calling on those borrowers and posting journals on the Kiva website to chronicle the impact of micro-finance on their lives.
SAO Microfinance Ltd currently has 6 full time employees, including Sam.
When Sam talks about the business, he speaks in terms of products. He’s looking for unfilled customer requirements and a profitable way to provide them.
He spoke of “school/crop loans” for the SACCO’s. In Uganda school begins in February (1st term), May (2nd term) and September (3rd. term). It is not free. Farmers are often forced to sell their harvest right out of the field, at the lowest possible price, in order to pay tuition for their children. Sam sees an opportunity for short term school loans, repaid by storing the crop and selling it at a higher price later.
He wants to finance more equipment and storage facilities to add value to crops at the village level.
He has been approached by at least one local employer about offering “salary loans”, which are loans to employees guaranteed by the employer and repaid through payroll deduction.
He is very interested in “double bottom line” projects which are both profitable and environmentally friendly. He sees a need for increased agricultural productivity; getting more food from existing cultivated acres, so farmers will be less likely to convert virgin, environmentally sensitive, land into marginal farmland.
As you can imagine, Sam is a natural born salesman. Walking down the street beside him is like being with the mayor. He greets everyone with a smile and a comment, and he knows every name. In the rural community of Ngogwe he is affectionately known as “Uncle Sam”. He was so smooth in negotiating a 45% discount on my hotel rate; everyone was smiling when the deal was struck.
It is no surprise that Sam sees my arrival as an opportunity to create new “products” and attract new customers. We talked about creating a business skills training module for his customers, based partially on my experience in US small business.
He wants me to look at their website, which was created when SAO was still a social service agency, and suggest ways to make it more valuable and user friendly for SACCO’s and commercial borrowers.
There is a perpetual need for updated and revised business plans. Sam pointed out micro-finance is the fastest growing business segment in Africa and it changes monthly. Commercial banks are now involved and the competition is increasing. I will be working with him on SAO’s planning.
My first meeting with Sam obviously covered a lot of ground. He is an energetic individual, to say the least. The moment that most impressed me was when he handed me a deposit book from one of his SACCO’s.
It was a simple little affair, kind of a pocket-sized version of the “blue book” we all used for college exams. The blue cover was printed with logo of the SACCO and the address. Inside the front cover was a rectangular outlined area to glue a photo of the owner of the pass book. The white pages inside were printed with a simple spreadsheet to record deposits and withdrawals.
The whole thing reminded me of my first “bank book” in third grade back in the 1950’s. Mom gave each of us five cents a week to deposit. We would carefully place the nickel in the envelope containing our bank book and close it securely using a string that wrapped around two circular tabs. At school, the teacher would announce “bank day” and collect our envelopes. Later, when she returned the envelopes minus the coin, we would all check our bank book, and sure enough find a new entry showing the 5 cent deposit. That bank book was very important to me.
Sam described how SACCO members are proud of their pass books. For many, it is the first time in their life they ever had personal savings. For many it represents the first official transaction they ever completed. The picture on the pass book is sometimes the only one they ever owned.
Many members, especially women, refuse to take their passbook out of the SACCO office. They are so proud of it and so fearful of losing it (or letting their husband have access to it), they insist on keeping it in the office safe.
As Sam told me this story, I realized he is a business man with his own “double bottom line”. He is clearly driven to succeed, but he also has a soft side that recognizes the profound effect he is having on the lives of others.
This is a man I can work with.