The effect of digitisation on the performance of SACCOs in Uganda

Abstract

This study examined the effects of digitization on Savings and Credit Cooperative Organizations (SACCOs) in Uganda, focusing on financial inclusion, operational efficiency, and the challenges faced during the adoption of digital technologies. Digitization has emerged as a critical force in the financial services industry, with SACCOs adopting mobile money platforms, digital lending systems, and automated record-keeping to expand their reach and improve service delivery. Using secondary data, this study analyzed the impact of digital innovations on SACCO performance, especially in rural regions. The study employed a descriptive approach, which is perfect for examining pre-existing data, to find patterns and connections in the provided data. Through the use of secondary sources, the study aims to gather and assess data from a number of studies, articles, and publications on SACCOs in Uganda. The study is aimed at understanding the effect of digitization on the performance of SACCOs in Uganda. The findings revealed that SACCOs leveraging mobile money and digital platforms have significantly improved financial inclusion, with a 25% increase in rural membership between 2016 and 2020. Additionally, digitization has enhanced operational efficiency, reducing loan processing times by up to 60% and cutting administrative costs by 30% due to automation. SACCOs that adopted digital record-keeping also reported an 18% increase in data accuracy and transparency. The study concludes with recommendations for SACCOs, policymakers, and stakeholders to address these challenges. These include increased investment in digital infrastructure, government support for rural connectivity, partnerships with Fintech companies to lower costs, and comprehensive digital literacy programs. By addressing these issues, SACCOs in Uganda can fully harness the potential of digitization, contributing to greater financial inclusion and economic development.