SACCOS to get loans at 8% interest rate

SACCOS

KAMPALA - The Microfinance Support Centre is to get sh43b to lend to investment groups such as savings and credit cooperative societies (SACCOS) at an interest rate of 8%.

The money is part of the sh125b in the 2019/2020 financial year budgeted to provide low cost credit to Ugandans through the Uganda Development Bank (UDB) and the Microfinance Support Centre.

Since the Microfinance Support Centre was allocated sh4.2b in the current financial year, it means by allocating it sh43b in the next financial year, the Government is prioritising the centre as one of the interventions for the economic empowerment of Ugandans.

President Yoweri Museveni has repeatedly raised concern over the high interest rates charged on loans acquired from commercial banks and promised to avail low cost credit through the state financial institutions.

In the current financial year which ends in June, the Government allocated sh53b to UDB as part of phased efforts of capitalising the bank.

The finance ministry director for budget, Kenneth Mugambe, explained that sh103b will be allocated towards capitalisation of UDB in the 2019/2020 financial year.

Source of funding The extra allocation to UDB and the Microfinance Support Centre in excess of sh125b will be raised from reallocations within the various budget items Mugambe said long-term loans will be availed to Ugandans through UDB at a low interest rate of 12%.

The budget director further noted that the intention of government is to have UDB capitalised by sh500b.

"More funds will be allocated to UDB in the process of capitalising it. So far, the Government has capitalised UDB with over sh300b," Mugambe said. 

According to the budget ministerial statement for the finance ministry which has been presented to Parliament for scrutiny, the ministry's budget will increase from sh468.5b allocated in the ending financial year to sh593.4b in the 2019/2020 budget.

Meanwhile, the amount of money the ministry spends on debt repayment under treasury operations will increase from sh8.9 trillion allocated in the 2018/2019 to sh10.69 trillion in the 2019/2020 financial year.

Organised groups of Ugandans will have an opportunity to benefit from the low credit funds in UDB and Microfinance Support Centre.

The 2019/2020 national budget is very fundamental because it is a budget for the last year within which government's second National Development Plan (NDPII) of driving the country to the middle-income status has to be realised.