An institution that offers saving through investing: Phuthalichaba Savings & Credit Cooperative Society

Savings and Credit Cooperative Organizations (SACCOs) exist to help people save money and access financial services such as loans. This is the traditional purpose of SACCOs. Now, I want you to consider an unconventional SACCO institution that helps you save through investing. This institution is Phuthalichaba Savings & Credit Cooperative Society, which provides SACCO financial products in a more advantageous way, saving money through investment.

I am a member of two SACCOs: PSCCS and Boliba Savings and Credit. I joined both for different reasons. So, while I may be discussing an unconventional SACCO, keep in mind that traditional SACCOs are still beneficial in their own way.

In 2021, I received a text from one of my acquaintances asking if I had ever heard of PSCCS, where I could save money through debit orders. Since I had no clue about it, I told him, and he gave me the contact details of Ntate Tjapela, the founder of the institution.

I then hopped on a call with Ntate Tjapela and found the concept really interesting. I asked about the process, but honestly, I didn’t think I was in a position to visit the PSCCS branch, obtain proof of residence, and get my residential chief to sign it. The thought of all this overwhelmed me, but I needed to be sure. Since I was genuinely sold on the idea, I asked him about the process, and he assured me that everything could be done online. In fact, they never assist clients in person, everything is handled virtually.

I completed all the necessary steps to register. While I may not remember the entire process, I was able to do everything smoothly, and that was what mattered.

I then became a member, and it is fascinating to realize that I joined only a year after its founding. This means I am slightly more privileged than most people who joined in the subsequent years.

Since becoming a member, I have never missed a payment. As I mentioned, I don’t even have to visit their branch to make deposits, everything happens remotely through stop orders. This is a feature you won’t find in any other SACCOs in Lesotho. For example, as a member of Boliba, I can only access their services by visiting their branch, including withdrawing my own money, as they have no alternative withdrawal methods besides tellers.

Anyway, let’s delve into what you should know about PSCCS.

It encourages Basotho to save a minimum of M50 per month, which happens through a debit order that can be processed at the beginning, middle, or end of the month. Whatever amount you choose to save won’t be just a regular savings account as we typically know it, it’s more like an investment because it is long-term.

Most local banks offer a small percentage of interest on their clients’ savings, but PSCCS was founded specifically to invest people’s savings. This means they offer a much better deal when it comes to interest. I’m not sure about the exact percentage, but I know that most local banks and SACCOs offer around 5% or less per annum. I am certain that PSCCS offers more than that because they don’t just provide interest, they also distribute dividends.

Yes, dividends! As you might have guessed, being a member means owning a share. This share is directly connected to PSCCS, but there are also other shares you are indirectly connected to. For example, when PSCCS invests money into other businesses, it ensures adequate profits to distribute both dividends and interest to all members.

Registration requires a payment of M150, which is broken down into a M50 registration fee and M100 to purchase a share in the institution. This process is conducted entirely online through their website, so you can visit it if you are interested.

PSCCS has several aims, with the main one being to promote a saving culture among Basotho. Another key objective is to help businesses gain access to funding. This operates similarly to how stock markets work, and interestingly, PSCCS aspires to establish a subsidiary that will function as its own stock exchange.

This means small businesses could potentially access funding through PSCCS, something that rarely happens in our country, as banks are more likely to grant loans to large businesses.

Loans are also offered to members, with each member having access to an amount that is three times their current savings. This means that if you have M3,000 in savings, you could access a loan of M9,000, which could be a great opportunity for graduates.

Imagine a student who joins this institution during their freshman year and saves M100 per month throughout a four-year program. This would mean sacrificing about 10% of their monthly stipend, as NMDS usually provides around M1,300.

The book The Richest Man in Babylon illustrates how Arkad (The richest man of his time) became wealthy by consistently saving 10% of his income. For anyone earning an income and looking to build wealth, this is just the starting point. By the end of their program, that student would have M4,800 in savings, plus interest and dividends. Additionally, they would have access to a loan of M14,400, which could provide them with the opportunity to start their own business amid high unemployment.

Well, I think this covers the gist of it. For more information, you can visit their website. Personally, I have been saving since 2021, when I was a freshman, and everything has gone well throughout my entire program. Now, in my final year, I have the opportunity to start a business and seek funding from the same institution. I can do this either by selling stocks to them, since members with businesses are allowed to pitch for funding, or by taking out a loan as an alternative.