Empowering SACCOs Members To Safeguard Their Institutions

Empowering SACCOs Members To Safeguard Their Institutions

Introduction

Savings and Credit Cooperative Societies (SACCOs) have become an essential pillar of financial inclusion in Eswatini. They provide affordable savings and credit facilities to thousands of members, helping families achieve their financial goals, grow businesses, finance education etc. Unlike most financial institution, SACCOs are owned by their members, meaning that every member has rights and responsibilities in ensuring the SACCO remains financially sound and sustainable.

The Financial Services Regulatory Authority (FSRA) encourages all SACCO members to actively participate in the governance of their SACCOs because a strong and sustainable SACCO is not only the responsibility of the Board of Directors or senior management, but is a shared responsibility of every SACCO member.

Members are owners not just customers

Every member of a SACCO is a shareholder and owner. This ownership gives members the right to participate in important decisions affecting the cooperative while also requiring them to act in its best interests.

Members contribute to the long-term success of their SACCO by:

  • Regularly saving and honouring loan repayment obligations.
  • Attending Annual General Meetings (AGMs) and Special General Meetings.
  • Voting responsibly on key resolutions.
  • Electing qualified, competent, ethical and board members.
  • Holding the Board and management accountable for their decisions.
  • Reporting suspected fraud, abuse or conflicts of interest.

When members become passive, weak governance can develop unnoticed, increasing the risk of financial losses and poor decision-making.

The Importance of Annual General Meetings

The Annual General Meeting is the highest decision-making body of a SACCO. It is where members exercise their ownership rights and determine the future direction of the cooperative.

Members should use the AGM to:

  • Review the audited financial statements.
  • Understand how their savings are being protected and where they are invested.
  • Ask questions about the SACCO's financial performance.
  • Review reports from the Board, supervisory committees and external auditors.
  • Approve major policies and strategic decisions where required.
  • Elect leaders based on integrity, competence and commitment rather than personal relationships or popularity.

Members should prepare for AGMs by reading meeting documents beforehand and actively participating in discussions. Simply attending without engaging limits the effectiveness of member oversight.

Safeguarding Members' Savings Through Good Risk Management

Every SACCO faces risks that must be properly managed. These include:

  • Credit risk arising from members failing to repay loans.
  • Fraud and theft.
  • Weak governance and conflicts of interest.
  • Poor investment decisions.
  • Cybersecurity and information technology risks.
  • Liquidity risk where the SACCO may struggle to meet member withdrawals.
  • Operational risks resulting from weak internal controls.

Members should expect their Board and management to have appropriate systems to identify, assess, monitor and manage these risks.

Members should not hesitate to ask questions such as:

  • How are delinquent loans being managed?
  • What controls exist to prevent fraud?
  • Has the SACCO been audited?
  • Are risks regularly reported to the Board?
  • Is management complying with FSRA regulatory requirements?
  • How many board committees/ sub-committee meeting were held? Are they not excessive resulting high fees being paid for each of the sittings?

An informed membership is one of the strongest safeguards against financial loss.

Honoraria Should Be Fair and Responsible

Board members dedicate time and effort to overseeing the affairs of a SACCO. It is therefore reasonable that they may receive honoraria approved in accordance with the SACCO's governing documents and applicable legal and regulatory requirements.

However, honoraria should always reflect the financial capacity of the SACCO and should never place unnecessary strain on members' savings.

Members should ensure that:

  • Honoraria are transparently disclosed.
  • Payments are properly approved through appropriate governance processes.
  • Compensation remains reasonable and proportionate.
  • Decisions are free from conflicts of interest.
  • Resources are prioritised towards strengthening the financial position of the SACCO and delivering value to members.

Excessive remuneration can weaken member confidence and reduce funds available to support the cooperative's core objectives.

Accountability of the Board and Senior Management

The Board of Directors provides strategic direction and oversight, while senior management is responsible for the day-to-day operations of the SACCO.

Both are accountable to the members.

The Board and Senior Management should ensure:

  • Sound corporate governance.
  • Effective oversight.
  • Compliance with applicable laws and FSRA requirements.
  • Proper risk management.
  • Protection of members' assets.
  • Timely and accurate financial reporting.

Members should expect honesty, transparency, professionalism and ethical conduct from everyone entrusted with managing the SACCO.

A Collective Responsibility

The sustainability of a SACCO depends on responsible leadership, sound financial management and active member participation.

When members attend meetings, ask informed questions, elect capable leaders, insist on transparency and fulfil their own financial obligations, they help build resilient institutions that can continue serving future generations.

The FSRA remains committed to promoting safe, sound and well-governed SACCOs that protect members' savings and contribute to the stability of Eswatini's financial sector.