Banking is medium of trust and without trust the banking sector cannot survive.
The poor keep their money in the banks on saving account since they do not trust each other; they lack investment ideas/ventures and have no knowledge of business opportunities around them. They fear taking any risk. In other words they are risk averse and they do not know that ’The greatest Risk is Never to Risk’’. The rich keep their money on current account. The rich borrow the poor person’s money from banks at an average interest rate of 20% per annum and use this money to invest and earn more from risk taking hence making the rich richer and the poor poorer in the long run. Since banks are trusted by the poor and willing to take risks with other people’s money that are willing to save with them, the poor man is only paid an average interest of 2% per annum on savings in Uganda. The poor person lacks knowledge of treasury bills, fixed deposits, capital markets and any other financial information to use to multiply his/ her little resources.
At Eight Tech we resolved that we shall only borrow money when we want to invest in productive ventures and the best institution to borrow from is that one regulated by Central bank. Borrowing money from a finance institution comes as a last resort after failing to get interest free loans from colleagues, business partners, and relatives.
We encourage each member at Eight Tech family and any other institution to always develop trust and pay debts promptly or on time. Once friends, relatives or workmates know that you are a trusted person, they will always be willing to lend you interest free money and this increases disposable income.
Avoiding money lenders is very critical since they charge high interest rates and make people poorer.
Power of Numbers
Banks survive on power of numbers by having different individuals or institutions saving with them. We need to always encourage people to be united as leaders right from family unit; the more empowered people are the better for our country and society.
For Example: ‘’Alone I can say but together we can talk’’
‘’Alone I can enjoy but together we can celebrate’’
‘’ Alone I can smile but together we can laugh’’
Always ask yourself before joining any group.
What are the benefits of joining any group socially, financially, spiritually and In terms of networking? If you find no value, do not join since it even takes away the little resources that you have. Time is very critical and must be spent well in any group.
At Eight Technologies we are a family of twenty one people and we formed a savings society where nineteen (19) members, each one saves 200,000 monthly. We have an investment we need to undertake in 2020 after saving for five years and we do not need to use borrowed funds since we can leverage on the numbers. Below is an illustration of our projection based on the current numbers at Eight Tech Ltd:
This is what numbers can do, nineteen persons saving Uganda shilling two hundred twenty eighty million in five years. On average each will have saved 12,000,000 (twelve million Uganda shilling only). Currently we have entered our second year in savings and none has defaulted since we have all learnt the benefits of numbers and timely payment of bills or commitments. We are now planning to start investing in treasury bills, real estate or lending amongst ourselves at only 1.5% per month on declining basis. We also agreed that at the end of fifth year each member will bring capital from other sources to our society of Ugx 15,000,000 (Uganda shilling fifteen million only) and this will translate to additional capital of Ugx 285,000,000/=.
|Five Years Savings||Additional Capital from Members||Total|
We also assumed that the money saved monthly will be invested to cater for inflation and other costs.
At Eight Tech we hope and believe in power of numbers and with our Ugx 513,000,000 at the end of fifth year we shall be able do our business venture without paying any bank interest on loans. The time to come together is now or never and forms a saving group with common goal! As the saying goes’’ There is no better time to do something than right now since your future will always be filled with challenges’’. We believe that you can save whichever amount you have. People do not need to be friends to each other to do business but only need to agree and look at returns in form of dividends in the longrun. Integrity, honesty, trustworthy and commitment is the key for the power of numbers to work and we have learnt this very well at Eight Tech. People have a lot of money but due to lack of integrity and trust they would rather keep in banks or under their pillows. I believe you have had of stories where our brothers and sisters in Diaspora have sent money to relatives to build for them houses but only to come back and find nothing on ground. These relatives keep sending nice pictures of other people’s houses showing progress on construction in order to get more money and cheat. Where did trust and ethical conduct go in our modern society?
Fourteen months back, it was hard to start our savings society as people used to tell us you cannot .We can do all things once we have passion and zeal as the bible says “ I can do all things through Christ who strengthens me Phil 4:13’’
We have trained ourselves in the way we want to be in the next five (5) years and once we achieve our objective we shall only aim higher and expand our horizon or Portifolio.
Saving is a sacrifice not because you have a lot, if you can’t save 5,000/= while earning 100,000/= you may not save 50,000/= while earning 1,000,000/= because human needs keep on changing as our income levels increase.
We have learnt that those who tell you it can’t be done have always been around, but throughout history, progress has always come from those who said it could be done. Kahlil Gibran said ‘‘The significance of a man is not in what he attains but in what he longs to attain”. Start up something small in 2017; you never know it may be your turning point!
Authored by: Adolf T. Sabiiti
Finance Director at Eight Tech Consults