Sh10b for five zones PFA

Oct 07, 2007

THE Government has been implementing the Rural Financial Services Strategy (RFS) as part of its overall strategy of Prosperity for All (PFA) programme. The Rural Financial Strategy is aimed at creating a financial infrastructure for all Ugandans where they can save and access credit in order to enha

THE Government has been implementing the Rural Financial Services Strategy (RFS) as part of its overall strategy of Prosperity for All (PFA) programme. The Rural Financial Strategy is aimed at creating a financial infrastructure for all Ugandans where they can save and access credit in order to enhance their economic activities.

RFS will support the households engaged in productive enterprises through provision of inputs, appropriate infrastructure, markets and post-harvest handling facilities.

To tap these savings and encourage the households to save, the Government, under the RFS, therefore, mobilised resources that will support communities to put up a financial infrastructure that is owned, operated, managed and used by them. Specifically, this support is to be packaged under the following components:
  • Supporting those communities that are currently not accessing financial services.
    Given the importance of financial services to the production cycle, easy access to these services is seen to be a critical element.

  • Supporting those communities that have managed, through their own initiatives, to start their own locally based institutions.
    Here, the objective of the Government is to strengthen these institutions and transform them into institutions for prosperity.

  • Providing wholesale funds to these institutions at affordable rates to enable them widen their lending scope and products to their members

  • Providing a regulatory and supervisory framework that will provide confidence among members of these households to entrust their money (deposits) with these institutions.


  • In order for us to implement this strategy, a multi-pronged approach is to be adopted by the Government to deliver financial services to the households. The country has been mapped into 15 financial zones that will be served by one locally based/regionally owned institution.

    In some cases, these institutions already exist such as the Bunyoro/Toro Company (BUTO) in the Bunyoro-Toro region, Teso Rural Development Trust (TERUDET) in Teso Region, or they have been identified by the community such as the Agaro SACCO in the northern region, and Victoria Micro Finance SACCO in the Victoria basin area (Kalangala, Masaka, Sembabule, Rakai, Lyantonde) or, they will be developed as the case will be in other regions.

    The basic principle under the creation of financial centres/zones will be not to substitute them for the area-based or formed SACCOs/SIDAs, but rather to have a regionally based institution that can avail funds to the individual SACCOs/SIDAs on wholesale. The regional institution will be supported to establish its presence in the entire catchment districts and will be provided with a start-up wholesale fund of sh2b.

    It is expected that identified or created regional institutions will be expected to serve all the community-based institutions in its region as long as they meet the basic requirements to access wholesale funds. It is also proposed that for easy ownership of the regional institution, its share holding structure will be reviewed with the objective of opening it for the community-based institutions to purchase shares.

    Below is a summary of the financial zones that have been identified under the RFS.

    The advantages of using the above approach to implement the RFS include:
  • Building on existing institutions and groupings

  • It will provide oversight of the financial intermediaries at the grassroots level (e.g. SACCOs, groups etc) until effective supervision arrangements are established and operationalised.

  • It will bring a competitive spirit within the region, with a focus on more intense mobilisation by political and other leaders as well as taking services to lower levels e.g. parish level and use of local languages and local mobilization methods;

  • It will provide an opportunity for the SACCOs to own the regional institution.

  • To start the operationalisation of this methodology, I am announcing the availability of sh2b for each of the five zones that have already identified the lead institutions to manage their wholesale funds

    In the meantime, the Government will continue to support those communities that have no SACCOs to start one and strengthen the capacity of an existing one, and provide an enabling legislation for the safety of people’s deposits. This action will reach a 10 million Ugandans (about 36% of the population).

    For God and my Country

    Rtd Gen. Caleb Akandwanaho
    Minister of State for Finance and Economic Development (micro-finance)

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