Recently, SACCO members from Rakai and Sembabule districts lost over sh2bn and shs800m respectively
State minister for micro-finance, Haruna Kyeyune has sent a stern warning to financial institutions that cheat clients.
Kyeyune said that those SACCOs cheating clients will be closed down.
Speaking to New Vision, Kyeyune re-affirmed his warning to members against swindling finances meant to spur rural development through extension of cheap loans.
His warning comes after he met different SACCO representatives at the headquarters of Association of Microfinance Institution of Uganda (AMFIU) to deliberate on issues affecting them.
Recently, SACCO members from Rakai and Sembabule districts lost over sh2bn and shs800m respectively. The members called for action against those who had misappropriated funds.
According to Kyeyune, all the implicated SACCO managers should be forced to return the finances or be arraigned in courts of law.
Figures available at micro-finance ministry indicate that about 68% of Ugandans cannot afford loans and only a paltry 32% can access loans from financial institutions. Kyeyune said under this term dubbed ‘Kisanja hakuna muchezo' institutions not complying with set regulations risk closure.
"We will not look on as our people are exploited by institutions that are supposed to bridge the gap of financial inclusion," said Kyeyune.
He encouraged the need for a savings culture to enable SACCOs have businesses through extending credit to the rural business community.
While reading the 2015/16 budget, finance minister Matia Kasaija announced plans to recapitalize Uganda Development Bank (UDB) to a tune of sh500b in the medium term with the aim of extending cheap loans to especially the rural business fraternity.
Kyeyune called on SACCOs and MDIs to take advantage of government's financial disbursement and borrow money from UDB immediately money is extended to UDB.
President Yoweri Museveni has already assented to the new Tier 4 regulations that seek to officially control the non-banking institutions and MDIs.
Kyeyune said there is need to sensitize people about the new Tier 4 regulation so that they properly appreciate its role.
According to AMFIU president Wilson Twamuhabwa, SACCOs and MDIs are playing a pivotal role in increasing financial inclusion.
Twamuhabwa called on Kyeyune to help expedite the process of bringing to reality the concept of agency banking. This is because he believes that agency banking will increase individual branches of different institutions which will also contribute to availability of more loans.
Henry Mbaguta, assistant commissioner, Financial Services Department at Ministry of Finance and Economic Planning encouraged all SACCOs to strengthen unity and reflect on ways of protecting their finances.
Mbaguta said that this term, the ministry will close any financial institution that does not comply with expected regulations.
He observed that the ministry had already finished formulating all necessary legal framework which will be benchmarked on to prosecute the institutions.