Why paying honoraria to SACCO directors matters

The governance and leadership of Savings and Credit Cooperative Organizations (SACCOs) play a crucial role in ensuring financial stability, growth, and sustainability. SACCO directors are responsible for strategic decision-making, policy formulation, and overall management oversight. To recognize their efforts and encourage effective leadership, many SACCOs provide honoraria to directors. This form of financial appreciation is important in motivating directors, maintaining professionalism, and strengthening SACCO governance. Hers is why paying honoraria to SACCO directors matters.

Recognizing Leadership and Service

SACCO directors dedicate their time and expertise to guiding the organization, often without receiving salaries. Paying honoraria serves as a token of appreciation for their commitment to advancing the SACCO’s mission. These directors make critical decisions affecting financial performance, risk management, and member services. Recognizing their efforts through honoraria helps maintain morale and encourages a continued focus on excellence in leadership.

Enhancing Accountability and Commitment

When SACCO directors receive honoraria, they are more likely to take their roles seriously and remain accountable to the members. A well-compensated board is more engaged in decision-making, regulatory compliance, and strategic planning. This accountability ensures that directors prioritize the SACCO’s interests, promote ethical leadership, and act in the best interests of members. Without financial recognition, there is a risk that directors may become disengaged or ineffective in their duties.

Encouraging Professionalism and Expertise

SACCOs require directors with strong financial, legal, and managerial expertise to navigate complex industry challenges. Paying honoraria attracts skilled professionals to serve in leadership roles, ensuring that the SACCO benefits from experienced decision-makers. It also encourages continuous learning and professional development among directors, as they are motivated to enhance their knowledge and skills to better serve the SACCO. Without honoraria, experienced professionals may be reluctant to take up directorship roles, potentially leaving leadership gaps.

Strengthening Corporate Governance

Good corporate governance is essential for SACCOs to build trust and confidence among members. Providing honoraria reinforces the importance of strong governance by motivating directors to uphold transparency, accountability, and ethical decision-making. When directors receive fair compensation, they are less susceptible to external influence or conflicts of interest, which helps maintain the SACCO’s integrity. Strong governance ultimately contributes to long-term sustainability and financial growth.

Minimizing Conflict of Interest and Corruption Risks

A well-structured honoraria policy can help reduce the likelihood of financial misconduct and conflicts of interest. When directors are compensated fairly, there is less temptation to engage in unethical practices such as embezzlement or favoritism in decision-making. Honoraria serve as an incentive for directors to uphold the SACCO’s policies, protect member funds, and make objective financial decisions. In contrast, the absence of honoraria could create financial strain on directors, increasing the risk of corruption.

Ensuring Stability in Leadership

SACCOs rely on stable leadership to navigate economic and regulatory challenges. When directors are compensated for their service, there is a lower turnover rate, as individuals are more likely to remain committed to their roles. Stability in leadership allows for continuity in strategic planning and implementation of long-term goals. SACCOs that experience frequent board member changes due to lack of motivation or financial appreciation may struggle with inconsistent policies and weak governance.

Attracting and Retaining Competent Directors

The competitive financial landscape requires SACCOs to attract competent directors with strong management skills. Providing honoraria makes SACCO directorship positions more attractive to qualified individuals who might otherwise prefer corporate leadership roles with financial incentives. Retaining skilled directors ensures that the SACCO benefits from experienced leadership, which is crucial for growth, innovation, and regulatory compliance.

Balancing Member Interests and Financial Responsibility

While paying honoraria is beneficial, SACCOs must strike a balance between compensating directors and maintaining financial sustainability. The honoraria should be structured in a way that does not burden the SACCO’s finances or compromise member interests. A well-managed honoraria system ensures that directors are rewarded for their efforts while ensuring that member funds are used responsibly. Transparent policies on honoraria payments help maintain trust between SACCO leadership and members.

Author: Andrew Walyaula

Andrew Walyaula is a seasoned multimedia journalist. waliaulaandrew0@gmail.com