Gov't announces sh105b for rural financial services

By Vision Reporter

Prime Minister Amama Mbabazi has disclosed that the government has designed a new rural financial services programme, the Project for Financial Inclusion in Rural Areas (PROFIRA) under which village savings and loan associations will be supported.

Mbabazi said the seven-year sh105b project would be funded by the Rome-based United Nations agency, International Fund for Agricultural Development (IFAD) which has already committed US$30m (close to UShs 74bn) on concessional terms.  

He was presiding over the 6th Annual General Meeting of Butuuro People’s Savings and Credit Cooperative Society in Bushenyi-Ishaka Municipality. He planted a tree at the society’s office in Nyakabirizi, before buying 200 shares.

Buturo, which is the third largest cooperative society in Ankole region, started six years ago with one million shillings and 46 members. It now has 2,041 members with over sh330m deposits.  Last year the society made a net profit of over sh100m.

Both the LC 5 Vice Chairman, Mathias Mbyebembire and the Municipality Mayor, Jackson Kamugasha complained of high costs on loans arising from interest rates imposed by the Microfinance Support Centre and the cooperative societies.

“You have already heard from the President that we are abolishing NAADS,” Mbabazi affirmed. He said the money saved would become government counterpart funding for the new project aimed at providing better rural financial services.

The government has been implementing the rural finance programme through the Microfinance Support Centre. Mbabazi reaffirmed government commitment to fighting household poverty.

He said the government was reviewing financial laws to protect people’s savings in banks, microfinance institutions, and village savings and credit cooperative organisations (SACCOs).

“Saving is a source of wealth but Ugandans have the worst saving culture in the world with less than one percent,” Mbabazi noted. He advised them to emulate the Japanese, whose economy is the third richest and save 60 percent of their income for investment.

“We are determined as a government to raise the standards of our people by empowering them to fight household poverty, using the money that has been going to NAADS,” he said.

There are 2,030 SACCOs in the country, 735 of which have been getting government support through provision of technical advice, office furniture, safes and computers, among others. Under the new project, more support will go to struggling SACCOs.