Co-operators launch process to revive defunct Cooperative Bank

KAMPALA - Uganda’s co-operative movement has officially initiated efforts to revive the defunct Co-operative Bank, more than two decades after it was shut down due to insolvency.

The decision was made on Monday, June 16, 2025,  during an extraordinary meeting of co-operative leaders at the Uganda Co-operative Alliance (UCA) headquarters in Nkrumah, Kampala city. 

The meeting presided over by co-operatives state minister Frederick Ngobi Gume, brought together stakeholders from the country’s 50,000 co-operatives, which collectively serve over 18 million Ugandans.

“Today is a historic for the co-operative movement in Uganda,” UCA general secretary Ivan Asimwe said. “For over a decade, we’ve discussed this, and now the co-operators from all regions have unanimously resolved to start a cooperative bank.”

Gradual rollout

The planned revival will not be immediate, however. According to Asimwe, the bank will initially operate as a Tier 4 microfinance institution and gradually grow into a fully-fledged commercial bank.

“To start a commercial bank in Uganda, the Bank of Uganda (BOU) requires a minimum paid-up capital of shillings 150 billion,” he said.

“That is a tall order, so we are beginning small, building gradually and developing the necessary skills, structures, and financial base.”

Asimwe noted that the new institution will begin as the National Financial Co-operative Society Ltd, with plans to transition into a Micro Deposit-Taking Institution (MDI), before finally achieving Tier 1 commercial bank status.

“We have agreed on the share value, minimum savings, and capitalization structure. The cooperatives are committed, and we are hopeful to raise billions in the first year,” he added.

Lessons from the region

Asimwe pointed to global examples to underscore the potential of co-operative banks.

He cited Rabobank of the Netherlands, which has a net worth of over euros 630 billion, and Kenya’s Co-operative Bank, founded in 1966, with assets exceeding $2.6 billion.

“South Africa has two co-operative banks. Ethiopia and Tanzania have theirs too. Tanzania just launched its National Co-operative Bank in April 2025,” he said. “It’s high time Uganda reaped the benefits of cooperatives, especially in financing smallholder farmers and SMEs.”

Legal hurdles

Wamakuyu Mudimi, MP for Elgon County in Bulambuli, welcomed the initiative but noted the legal framework will need to be harmonised.

“According to current laws, financial institutions are regulated by the BoU, while cooperatives fall under the Ministry of Trade. So we need to streamline the laws to allow a cooperative institution to evolve into a commercial bank,” he explained.

Mudimi said starting as a Tier 4 institution allows the movement to operate under current cooperative laws while laying the groundwork to meet BOU requirements in the future.
Minister Gume praised the co-operators for their resolve and said he had reviewed the resolutions presented.

“The steering committee includes strong SACCOs from across the country who have committed to buying shares in the bank,” he said. “Institutions like Wazalendo and Exodus SACCOs, affiliated with the army and Police, respectively, have also pledged support.”

He said the Uganda Co-operative Alliance had committed to providing office space for the bank and urged co-operators to embrace innovation and efficiency.

“We live in a liberalised economy. The only way to compete is to be cost-effective, act with speed, and provide better services than traditional banks,” he added. “Today we celebrate the beginning of this journey—and every step counts.”

The original Uganda Co-operative Bank was founded in 1964 but was closed by the Bank of Uganda in 1999 due to insolvency, with a reported deficit of shillings 4.8 billion at the time.

The current revival effort is being viewed as a potential turning point for Uganda’s cooperative movement and financial inclusion for the country’s underserved rural population.