UCSCU let down as EBO SACCO opts for BoU regulation
Joseph Mugume, the Chief Executive Officer [CEO]of EBO SACCO, defended their decision to obtain an MDI licence, stating that they did so in accordance with the law
MBARARA, 3rd February 2025 – The Vice Chairman of the Uganda Cooperative Savings and Credit Union [ UCSCU ], Stephen Bongonzya, has expressed his disappointment regarding some of the larger Savings and Credit Cooperative Organisations [SACCOs] that are seeking to be supervised and regulated by the central bank, the Bank of Uganda [BoU].
Bongonzya’s concern follows BoU’s recent announcement that EBO SACCO, located in Buzibwera Rutooma Town Council, Mbarara District, is now under its supervision and regulation. This came after BoU granted the SACCO a licence to operate as a Micro Finance Deposit Taking Institution (MDI), after EBO SACCO applied for the licence in May 2024.
According to Bongonzya, EBO SACCO’s decision to acquire a licence from BoU is a betrayal to the cooperative sector. He cautioned large SACCOs to be mindful of the issue of multiple regulations, which, he claimed, have caused confusion within Uganda’s cooperative movement.
He also pointed out that UCSCU, as the apex body of SACCOs in the country, has taken legal action against the government over the issue of multiple regulations, stressing that SACCOs should be overseen by a single regulatory body.
Currently SACCOs are under the supervision and regulation of the Uganda Microfinance Regulatory Authority[whose functions have been transferred to Finance Ministry] , Ministry of Trade, Industry and Cooperatives [MTIC], and BoU.
Bongonzya questioned why EBO SACCO proceeded with its application for an MDI licence, despite the fact that a case regarding multiple regulation of SACCOs was still pending in court.
“They did not consult us; however, when we learned about the application, we voiced our concerns. The CEO, in particular, insisted that they needed to be strategic and secure the licence,” Bongonzya added.
Despite EBO SACCO’s successful licencing as an MDI, Bongonzya affirmed that UCSCU would continue to fight to maintain its membership and advocate for a single regulator for the sector.
“It is regrettable that EBO SACCO was granted a licence by BoU to operate as an MDI, but UCSCU is taking all necessary steps to have the regulation issues addressed by the relevant authorities,” he said.
On the other hand, Joseph Mugume, the Chief Executive Officer [CEO]of EBO SACCO, defended their decision to obtain an MDI licence, stating that they did so in accordance with the law, thus Regulation 8 of the Micro – Finance Deposit – Taking Institutions [Registered Societies] Regulations, 2023.
“There has been considerable disagreement regarding multiple regulations, but the law under which we applied and received the licence was gazetted, and for us, it was about ensuring compliance,” Mugume explained.
He added that applying for an MDI licence was a strategic decision made by the general assembly of EBO SACCO.
“While UCSCU is entitled to its views and opinions, at EBO SACCO, strategic decisions are made by the general assembly, which met and unanimously resolved that the management and board apply for the licence under the Micro – Finance Deposit – Taking Institutions [Registered Societies] Regulations 2023, as required for any SACCO wishing to be supervised and regulated by BoU. Therefore, our ultimate decision-makers are the annual general meeting of shareholders,” Mugume noted.
The CEO expressed excitement about EBO SACCO being the first large SACCO in Uganda to be regulated by the central bank, challenging other large SACCOs to follow suit.
“It has been our mission, and we are thrilled as management, staff, and the board. Our members now have more confidence and trust in the institution. In fact, we are seeing an increase in deposits, a growth in shareholder numbers, and a rise in the loan portfolio,” Mugume remarked.
He also mentioned that the licence, which cost Shs 500,000, would help EBO SACCO address some of the challenges facing the cooperative movement. With BoU’s supervision and regulation, Mugume noted that legal issues of the SACCO would be managed more effectively.
https://thecooperator.news/bank-of-uganda-issues-mdi-licence-to-ebo-sacco/
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