Govt grants six-month extension for large SACCO licensing

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The Bank of Uganda (BOU) has announced a deadline extension for large savings and credit co-operative societies (SACCOs) to comply with new licensing regulations.

The central bank has moved the cutoff date from March 31, 2026, to September 30, 2026, providing breathing room for the country’s largest co-operative lenders.

Under the Microfinance Deposit-Taking Institutions (Registered Societies) Regulations 2023, SACCOs that meet specific financial thresholds are required to transition to BOU regulation. 

The extension also applies to Regulated Financial Service Providers (RFSPs), including commercial banks, which had previously been instructed to transact only with licensed entities.

In a statement issued on Monday, February 23, the central bank said the decision was driven by the need for deeper stakeholder engagement.

“The Bank intends to use this period to enhance public awareness of its supervisory role, review regulatory approaches where necessary, and support SACCOs to meet licensing requirements,” the statement said.

Authorities emphasised that financial institutions should continue serving affected SACCOs throughout the grace period.

“The Bank of Uganda does not expect any RFSP to deny financial services to eligible SACCOs until the expiry of this period,” the statement added.

The additional six months will allow regulators to expand public sensitisation on oversight of large cooperatives, assess whether existing regulatory measures require adjustment, and give SACCOs more time to prepare the documentation required for licensing.

For decades, SACCOs in Uganda were primarily regulated by the Ministry of Trade, Industry and Cooperatives. However, as some co-operatives expanded into large financial institutions comparable to mid-sized banks, authorities identified a regulatory gap that posed risks to the wider financial system.

The new framework targets “Large SACCOs” that exceed two financial thresholds: voluntary savings above shillings 1.5 billion and institutional capital above shillings 500 million. 

Regulators say bringing these Tier 3 institutions under central bank supervision will professionalise the sector, strengthen protection for members’ deposits, and curb money-laundering risks.

Many SACCOs have struggled to meet strict reporting and capital adequacy requirements under the new regime, making the six-month extension a significant relief for large community-based lenders.

SACCOs are member-owned financial cooperatives in which savers are also the owners, unlike commercial banks that operate for profit. 

Members typically share a common bond — such as working for the same employer, belonging to the same community, or operating within the same profession — and pool savings through regular contributions or share purchases. 

These funds are then used to provide relatively low-interest loans for needs such as school fees, medical expenses, or small business investment, with any surplus returned to members as dividends.

Flexible borrowing terms and strong community ties make SACCOs a key source of accessible financial services for many Ugandans.

Registered SACCOs 

As of January 2026, official government figures showed that over 33,000 SACCOs are registered in Uganda.

This growth has been largely driven by government programmes such as the Parish Development Model (PDM) and Emyooga, which require citizens to form SACCOs to access development funds. 

Despite the large number of SACCOs, only a small, elite group qualifies as “large” and falls under the supervision of the Bank of Uganda.

According to the central bank, only 90 are identified as large SACCOs, with savings exceeding shilling 1.5 billion. 

The vast majority of SACCOs are considered “Tier 4” and remain smaller, community-based organisations regulated by the Uganda Microfinance Regulatory Authority. 

While tens of thousands of Tier 4 SACCOs are registered, UMRA typically licenses only a few thousand active ones each year as they meet operational and regulatory standards.