'Co-operative bank will ease financing challenges'

Trade industry and co-operatives state minister Frederick Ngobi Gume has told co-operative unions that the Government is ready to re-establish the Co-operative bank if they get organised.

With over 50,000 registered co-operatives and over 14 million members, Gume said co-operatives can come together and join resources to reestablish a bank to tackle the challenges of financing for SACCOs.

“If we have a co-operative bank, we can reach all of Uganda since co-operatives have assets all over the country that can be offered to host the bank’s structures,” Gume said.

According to Gume, the co-operative bank is a game changer and a great tool as far as availing financial access to members is concerned.

He was speaking during a two-day national consultative meeting organised by the Uganda Co-operative Alliance in partnership with Agriterra to engage sector players on issues affecting them.

Gume said the consultative meeting should come up with a position paper that is more accountable, well informed and with relevant ideas to policymakers to be presented to Cabinet and, thereafter, to Parliament for decision-making.

According to Gume, he's unhappy that Parish Development Model programme funds are being facilitated by commercial banks.

High cost of financing

UCA general secretary Ivan Asiimwe said banks are charging high-interest rates between 18 to 25 percent.

“These facilities are not affordable. Banks require that you start paying interest before you even start earning from the project. You have borrowed to plant coffee, which takes three years to mature, but you start paying interest the next months after receiving the loan. This is inappropriate,” he said.

Asiimwe said the bank will help to curb this challenge by boosting access to affordable and appropriate financing for members of co-operatives.

Multiple regulation

During the meeting, stakeholders raised concerns over multiple regulations, which they said is crippling their growth.

 Asiimwe added that multiple regulations is costing SACCOs heavily through the multiple fees they pay to different regulatory bodies.

He said some SACCOs are regulated by the Bank of Uganda, others the Uganda Microfinance Regulatory Authority and others the trade ministry under cooperatives.

“We are in a legal dilemma as this kind of multiple regulation has heavy cost implications on us. We demand that there be a single regulatory authority that can regulate the sector,” Asiimwe added.

The bureaucracy that comes with multiple regulation, Asiimwe said, is strangling SACCOs some of which are dying out at very early stages. 

"We need one regulator who understands the challenges of SACCOs and who knows how they work,” he said.

“In Kenya, only one body regulates SACCO societies and this can also be done in Uganda to properly organise the sector,” Asiimwe added.

According to Gume, the sector is not uniformly organised and, therefore, needs a singular regulator.

He said the Attorney General and Parliament are positive about handling this issue. 

“We are going to table this issue before Cabinet and we are hopeful that something positive will come out,” he added.