SACCOs seek speedy regulation

By Edward Kayiwa

Savings and Credit Co-operatives (SACCOs) leaders have asked government to fast track regulation for microfinance institutions in the country in order to attract more people to use their services and protect clients.

This comes at a time when SACCOs are increasingly facing fraud related challenges, forcing their leaders to call for a speedy process to enact the law.

“There is a lot of fraud happening in SACCOs and we need a law to maintain their integrity and soundness in the country,” said Bashir Mutebi, the Masaka elder’s Sacco manager.

He said regulation will increase the public’s confidence in the quality of Tier IV financial institution’s services, especially in rural areas where fraud cases have been perpetrated

He also said the absence of the law has created leeway for both clients and SACCOs to be exploited and urged the state minister for microfinance, Caroline Amali, to ensure that a law is passed.

“Currently we are operating under the Uganda Cooperative Societies Statute 1991 and the Uganda Cooperative Regulations 1992, which do not give the guidance we need,” he said.

Amali said government is already looking into the law that will regulate financial operations, lending norms, capital adequacy and liquidity levels of all tier four institutions.

“A lot of preparations have been made in terms of documentation, although a few hiccups still exist between the line ministries responsible for policy oversight over SACCOs and that of other financial institutions. However we believe that soon we shall have the law in place,” she said.

She further explained that under the project for financial inclusion in rural areas (PROFIRA), government intends to establish a Financial Regulatory Authority which will regulate all Saccos in the country.

“Savings and credit organisations will be regulated through the Financial Regulatory Authority, under the Micro Deposit Taking Institutions (MDI) Act, 2003, once Cabinet approves and Parliament endorses amendments to the law,” she said.

About 65% of the rural population is believed to have no access to credit facilities, according to information from the Bank of Uganda.

The bank also estimates that 35% of the rural population access financial services informally while 32% access through non-bank formal institutions such as SACCOs.

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