midnorthpsdc.org

DATA SERVICE CENTRE PROGRAMME SUMMARY

Northern Uganda is still recovering from the effects of over two decades of insurgency that left the population poorer and less commercialized compared to other parts of the country. As a result, the farmers in this region mainly fall into the less sophisticated category that are not yet ready for financial services offered by commercial banks or higher tier financial institutions. For the population in this region to participate and make a contribution to the economy, there must be access to holistic financial services which enhance their productivity and income generation for sustainable development. As a coping mechanism, the active rural poor have mobilized themselves and established their Savings and Credit Co-operative Organizations (SACCOs) constituting the rural financial systems in the region. However, most SACCOs in the region suffer from the lack of accurate, computerized data and management reports derived from this data which are essential for the proper management of the SACCOS.

MNPSDC would therefore like to partner with USAID LEAD in a bid to significantly contribute to the strengthening of a large number of SACCOs in a sustainable manner.  It is envisioned that at the end of the first year pilot phase, which this grant will partially fund, six SACCOs will have their financial data computerized and Mid-North will provide them with the management reports necessary to manage the SACCOs effectively, and will also provide training to these SACCOs in the use of these reports.

Purpose and Overall Approach

The overall purpose of this partnership is to ease financial service constraints for farmers and agriculture related SMEs in Northern Uganda. MNPSDC’s proposal calls for the establishment of a DSC in Lira to provide services related to the computerization of SACCOs transactional data and to produce computerized customer savings and loan account statements and management data information reports for SACCOs located in Lira, Otuke, Dokolo, Amolatar, Apac, Oyam, Masindi, Buliisa, and Nakasongola districts.

Specific Project activities

In this collaboration between USAID LEAD and Mid-North Private Sector Development Company Ltd (MNPSDC), the activities below are to be funded by USAID LEAD.

• USAID LEAD will fund the computer hardware and software costs in order to establish a Data Service Centre. This Data Service Centre (DSC) will facilitate SACCOs in the region to supply accurate and timely information for risk management and compliance to both Management and Board; and provide consolidated information that can be used to assess the performance of the SACCOs and the microfinance sector in the region and benchmark it to national standards.
• USAID LEAD will fund the training of District Based Consultants (DBCs) and purchase of basic furniture for six district offices for the DBCs. This training will build a pool of local district based consultants (DBCs) in the region who can provide timely onsite technical backstopping and mentoring of the SACCOs, based on the reports generated by the DSC, and training programmes specifically targeted to meet needs indicated by analysis of operational data and mentoring visits.
• There is also need to build the capacity of Boards and managements to interpret and use the information generated for monitoring the performance of their SACCOs, and improve their decision making processes. To this effect, USAID LEAD will fund the technical assistance and training costs with contributions from Mid-North.
• USAID LEAD will fund some logistical support costs to support the marketing of DSC’s services and the purchase of limited office equipment.  This will strengthen the capacity of Mid-North Private Sector Development Company to serve as an information hub for the microfinance initiatives.
• As part of its contribution, Mid-North Private Sector Development Company Ltd will be responsible for all operational costs including external technical support costs. Mid-North Private Sector Development Company Ltd will also pay the salaries of its staff.

This envisaged outreach support will contribute to the achievement of a number of USAID LEAD Project’s mandated objectives including increasing financial opportunities for small farmers and agriculture related SMES in the under banked areas of northern Uganda; strengthening SACCOs, and strengthening  Business Development Service (BDS) providers.

Specifically:-

• By the end of the first year pilot phase, the DSC will have computerized the data entry process for six SACCOs and will generate management reports for these SACCOs.
• The DSC will provide training to these SACCOs on the utilization of these reports in the day-to-day management of each SACCO.
• The DSC will also generate computerized reports on profitability, asset and liability management, loan portfolio performance, and so forth which will be used to prepare a review of the past year’s performance and the SACCO’s business plan for use at the annual general meeting of shareholders.
• Accurate, computerized statements on individual customer savings and loan accounts will be prepared and given to the SACCO’s customers who will both enhance the customers’ confidence in the SACCO and also enable the customers to better understand and manage their own accounts.
• The greater transparency of the SACCOs’ accounts will make it easier to attract new member shareholders, and, ultimately, to attract outside organizations to lend funds to the SACCOs for their continuing development and growth.
• Over 6,000 farmers (at least 1,000 per SACCOs) shall benefit from improved saving and credits services that will be offered by SACCOs served by the DSC.

SUSTAINABILITY AND EXIT STRATEGY

The DSC will be fully sustainable by June 2013 operating on revenue generated from the services it provides to the SACCOs subscribing to the DSC’s services. The pool of local district based consultants (DBCs) in the region who can provide timely onsite technical backstopping and mentoring of the SACCOs will continue after USAID LEAD has pulled out. USAID LEAD’s exit strategy needs to be looked at in two phases. The first phase is the first year pilot phase, for which the grant support from USAID, as requested here, is crucial. Without it, the MNPSDC would have to shut down the DSC project, which is already off to a positive start while operating on a shoestring budget. USAID LEAD’s grant support will ensure the successful operation of the DSC during the first year pilot phase. The second phase is the full implementation period which will run from November 2010 until June 2013, by which time the DSC will be fully self-sustainable.

Furthermore, once the Mid-North DSC has fully established itself as an available BDS provider for financial data management in the region, this model will be replicable in numerous other regions in Uganda, with the potential to provide essential computerized management information services to over 200 SACCOs throughout Uganda.