Village savings groups to register, file reports with govt

Sep 30, 2022

Minister Kasolo said the groups will also be mandated to disclose their respective membership and size, governance and management. 

Minister Kasolo said the guidelines are meant to not only protect savings groups but also guarantee Ugandans who save in the groups of the government’s duty safety of their money.

Denis Nsubuga
Journalist @New Vision

VILLAGE | SAVINGS | GROUPS

KAMPALA - Village savings groups in the country should register and file periodic reports for the government’s review. 

This is contained in the new operational guidelines issued by the Ministry of Finance and Economic Development, through the Uganda Microfinance Regulatory Authority (UMRA).

In the new guidelines, Village Savings and Loans Associations (VSLAs), also referred to as Self Help Groups (SHGs), will apply for registration with the government twelve months after the date of commencement of its operations.

The groups will also be mandated to disclose their respective membership and size, governance and management. 

SHGs will show mechanisms for both financial stabilization and sharing out of funds among members. 

The operation guidelines are scheduled to commence on January 1, 2023.

They were launched by the state minister in charge of microfinance, Haruna Kasolo Kyeyune at the media center on Tuesday.

He said the move is in accordance with Tier 4 Microfinance Institutions and Money Lenders Act, 2016, and it is aimed at increasing transparency in order to inform and empower members of the SHGs and to foster public confidence in the groups.

He said the guidelines are meant to not only protect savings groups but also guarantee Ugandans who save in the groups of the government’s duty safety of their money.

With the rollout of the Parish Development Model (PDM), Kasolo said it is important that government puts effort into ensuring and comforting people who keep their money in the groups.

“We want to support village banks, and allay fears of those that keep their money with the VSLAs. Once the guidelines are issued, it, therefore, becomes an offence if they are not followed. Therefore, the saver’s money will be safe,” Kasolo said.

Avenue for capital

The guidelines will also show how VSLA can be transformed into a Savings and Credit Cooperative Organization after a period of operation. Once the group has developed a commercial muscle, Kasolo said, the group members will ask the commercial officer at the District Local Government officer to elevate it into a SACCO.

The minister noted that only 19% of Ugandans have accounts with formal banking institutions, therefore the majority of Ugandans can barely access capital to engage in economic activities that will improve their livelihoods.

“The VLSAs create an avenue for the people to operate accounts with institutions. There are two major sources of capital, namely; savings and credit. Many cannot get credit from financial institutions because we don’t have collateral such as land. We want to see all Ugandans operating accounts so that the revolving funds can help them do business,” he said.

The guidelines were issued with support from Care International Uganda, following a two-year landscaping study in 76 districts across the country aimed at understanding the configuration and operations of the savings groups.

Michael Opiyo, the program director at Care International Uganda, noted that there are more women in the leadership of the groups. 

He said their findings show that besides lending among their members, the group come with additional services such as health services and civic education.

Edith Namugga, the executive director of UMRA, quoted studies indicating that women’s participation in savings groups leads to increased savings, access to credit, business investments, and in combination with other interventions, reduced incidence of gender-based violence and child marriage.

Comments

No Comment


(adsbygoogle = window.adsbygoogle || []).push({});