Financial Literacy and the Profitability of SACCOs in Kampala, Uganda: A Conceptual Framework and Research Agenda

Savings and credit cooperative organizations (SACCOs) lend members' own savings back to members, so their survival depends on whether members and managers understand money well enough to save, borrow, repay and make informed decisions. This article examines how financial literacy might shape the profitability of SACCOs in Kampala, Uganda. It draws on published descriptions of the SACCO sector and its regulation, alongside Ugandan studies of financial literacy, governance and SACCO performance, including a study of staff SACCOs in Kampala. The review finds that existing evidence is limited, mostly unpublished and perception-based. Studies generally measure loan performance or perceived organizational performance rather than profitability and seldom distinguish members' financial literacy from that of boards and managers. The article proposes a framework in which members' financial literacy and the financial literacy of boards and management influence SACCO profitability through loan repayment, savings mobilization and management decisions, with governance quality as a moderating factor. It presents four propositions and outlines a quantitative research design for future empirical investigation. Its contribution is a clearer conceptual and methodological approach to examining the relationship rather than an empirical test. No new data were collected.