South Korea boasts one of the most successful financial inclusion models for rural communities worldover.
Saemaul Geumgo which literally means “new village Bank” is a community-owned and community-managed self-help system where poor communities mobilise savings and access affordable loans for both production and consumption needs.
The community-based financial cooperative model started in 1963 as part of efforts to rebuild the nation in the aftermath of the Korean war.
It is based on the ancient practices of mutual help found in Korean villages.
The Korean Federation of Community Credit Cooperatives (KFCC) is the National apex organisation of the Saemaul Geumgos in Korea. Since 2017, KFCC has been extending support to the districts of Mpigi and Mityana through a bilateral agreement between the Governments of Uganda and South Korea.
The support has been extended in form of trainings, provision of a start-up kits and support for digital transformation.
The trainings are made locally, and internationally – through invitation to Korea – where Saemaul Geumgo leaders are given lessons on effective organisational principles and practices, financial literacy and digital finance.
In 2022, the third international invitational study program was held from November 27 to December 4. The training involved leaders and management of the newly established Uganda Federation of MG Community Credit Cooperatives (UFCC) as well as delegates from Mpigi local Government, Mityana Local Government and KOICA Uganda. MG stands for Maul Geumgo, Korean for village bank
The training was specifically organised to establish and strengthen policy for the growth and spread of Saemaul Geumgos and continuous improvement of financial inclusion in rural areas. Today, the model is based in two districts; Mpigi and Mityana through 18 Saemaul Geumgos which approximately serve 10,000 individual members.
Given its tested safety, soundness and potential for sustainability for over three years of implementation, the Saemaul Geumgo model has attracted an interest from neighbouring communities and leaders from other districts for extension of its modus operandi. This international study was therefore timely to prepare the UFCC leaders to strategically plan its outreach program.
During the study tour, the delegation met with the KFCC leadership and learnt from their history especially how the Saemaul Geumgo model was able to expand from one village to reach the entire country in Korea, the symbiotic relationship between KFCC and its member Saemaul Geumgos with KFCC as a banker, insurer and technical services provider to its member Saemaul Geumgos and the subsequent contributions of the Saemaul Geumgos to the KFCC to ensure it remains a growing and going concern.
Members were exposed to KFCC investments in infrastructure to provide and promote continuous education and training as a pinnacle for growth and sustainability of the movement.
An eventful study tour
One of the prominent places the study team visited was Jeju province. This is one of the furthest provinces from Korea’s capital Seoul. It is located on Jeju Island. Despite the difficulties in accessibility, Saemaul Geumgo is one of the most visible and prominent features on the Island; with a modern training facility and several Saemaul Geumgos. The success of this training center was evident at Seogwipo Saemaul Geumgo. Established in 1978, it has over KRW 300 Billion (Approximately UGX 878 billion) in assets .
Besides providing financial services, the Geumgo has also invested in a fuel station and golf club as social enterprises for community development. In addition, it provides scholarships to members children joining college as well the vulnerable children from neighbouring communities out of its surplus.
Another interesting feature was the connection between the Saemaul Geumgo and enterprise growth.
Specifically, Jeju province is known for Citrus growing and the Saemaul Geumgo movement is a key player in supporting and sustaining this enterprise. Another enterprise being supported by the Saemaul Geumgo movement is green tea business – a traditional cash crop in Jeju province.
One of the key lessons for the visiting Ugandan team was the synonymous relationship between financial services and entrepreneurship that was demonstrated as critical pillars for the sustainability of Geumgos as well as for economic transformation in rural communities.
In an effort to support this cause in Uganda, the visiting team was introduced to the Strengthening Capacity for Youth Agribusiness Development in Uganda (SCADU) project due for implementation through a partnership between KFCC, KOICA and the Ministry of Agriculture, Animal Industry and Fisheries. UFCC will be one of the players in the implementation of this project of five years-2023-2027.
The 2nd Annual leaders conference
Following the international study visit in Korea, the UFCC held its 2nd Annual leaders conference on December 14, 2022 at Kolping Hotel in Kampala, with support from KFCC under the theme: “Standardising for Safety, Soundness and Sustainability.”
This was the moment where lessons learnt from the study team were presented and discussed by the Saemaul Geumgo Movement in Uganda. The discussions highlighted among other things; developing a three-year strategic plan for the UFCC that is tailored to the lessons learnt and organising stakeholders’ meetings with both central and local government officials to share this strategic direction.
Stakeholder engagement will primarily aim at agreeing on strategic actions to extend the model to neighbouring communities within the districts of Mpigi and Mityana as well as expanding to other districts across the country.
The conference delegates also agreed on the need to strengthen and spur the symbiotic relationship between the UFCC and individual member Saemaul Geumgos as well as promote the traditional cash crops as a cornerstone for economic transformation in their respective communities.
The UFCC also recognised the best performing Saemaul Geumgos in Uganda during this Annual Conference. Bbongole Parish Saemaul Geumgo found in Buwama sub-county, Mpigi District was awarded as best Saemaul Geumgo in adaptation to Saemaul Geumgo operating standards.
Tiribogo Saemaul Geumgo found in Muduuma sub county was awarded for adaptation to digital transformation and Bukooba Saemaul Geumgo found in Ssekanyonyi Sub county, Mityana District was awarded for its Spirit of Patronage towards Saemaul Geumgo activities.
The Conference attracted several stakeholders including District and sub county Chairpersons from Mpigi and Mityana, Parish Development Committee Chairpersons and Local Government staff who appreciated the important role the Saemaul Geumgos are playing in enhancing access to affordable finance to their communities and pledged continuous support to further this financial inclusion campaign for rural communities.