The rise and fall of Support Organisation for Micro-cent Development (SOMEDI) microfinance

My Dad’s best friend, Mr. Joseph Businge, used to own three shops and a restaurant in Masindi town. His wife, Beatrice, was an employee at Support Organisation for Micro-cent Development (SOMEDI) head offices in Masindi. They had five children in school who were very promising. Joseph was a successful man providing employment opportunities to other ten Ugandans working in his small businesses. He owed his success to SOMEDI Microfinance which gave him a small loan, through a group of five friends.

In 2008, SOMEDI Microfinance once one of the top Microfinance institutions in Uganda with operations in over eight districts, was no more. It suddenly collapsed.

Many people, including Joseph Businge, collapsed with it. You need to visit Masindi and see for yourself the impact SOMEDI Microfinance had on the people in that area and beyond.

In 2012, I visited Joseph. If you were with me in his small sitting room, you would have seen first-hand how desperate poverty can make a man. Two of his once brilliant children were at home besieged by jiggers. After senior six, they dropped out of school due to lack of money for further education.  Once a budding entrepreneur, Joseph and wife now do subsistence farming around their home and live in the worst of conditions.

SOMEDI was started around 1996 by a local entrepreneur. It expanded into a vibrant and model Microfinance attracting very good international partners who provided low cost funds for lending. It is unfortunate that SOMEDI collapsed with so much other people’s money while shattering the lives of those who depended on it.

One of the past senior staff of SOMEDI attribute its collapse to poor governance, high levels of fraud and the lack of clear shared strategic focus. It is reported that the entity lacked clear policies and procedures. And worst of all, poor record keeping practices. For any microfinance to succeed, it must have clear systems to record and account for members balances, loans dispersed, repayment dates. Unfortunately, former staff explained that SOMEDI did not seek the services of professionals specifically a qualified accountant, with evidence of registration with the Institute of Certified Public Accountants of Uganda. This deprived the microfinance of best practices in accounting and finance specifically formulation and implementation of adequate accounting and financial policies and procedures with emphasis on segregation of duties and record keeping, among others.

The board composition was also wanting, as it was composed of prominent persons who had limited exposure on corporate governance specifically technical issues like strategy, risk management, structure and systems.

Copyright Mustapha B Mugisa, 2019. All rights reserved

Share now

Mustapha Barnabas Mugisa is one of those rare people who provides business consulting and advisory to professionals and corporate entities who demand the very best. He is a prolific speaker and governance (strategy and risk) expert. His speaking involves making key notes at major conferences and business events on both technical subjects and leadership skills. A change agent and motivational speaker. Mustapha provides tools and proven methodologies to remarkable results through making people appreciate change. Visit Mustapha's LinkedIn profile to know more. Mustapha is the architect of #WinningMindset Leadership and #WinningTheGame strategy approach that combines Harvard Business strategy Playing To Win, with the Blue Ocean Strategy and Balanced Score Card to deliver a strategy that is easy to execute and monitor. Visit www.mustaphamugisa.com for special insights to improve your condition. Are you too good to be great?

Leave a Reply

Your email address will not be published. Required fields are marked *