Cooperatives set to borrow at 8% interest

KAMPALA, UGANDA: Government is set to help Cooperatives and individuals grouped under Savings AND Credit Cooperative Societies (SACCOs) access credit at low interest rates, the Cooperator News can reveal.

Addressing the NRM’s parliamentary caucus retreat in Kyankwanzi last month, President Museveni argued that with the launch of Isimba Hydro Power station expected to lower the cost of electricity to about $5centsPKWhr, the next target for government would be lowering the cost of credit for industrialists.

In the recent past, Commercial Interest rates have stubbornly remained between 20% and 25% per annum, despite sustained reduction in the central bank rate that reached a record low of 9% mid last year.

Now, sources have told theCooperator that the President is determined to find a substantive solution to this problem. “We cannot allow Commercial Banks to continue inconveniencing our farmers and traders like this. We must sort the problem of high interest rates once and for all, a source quoted the President as saying.

He recently urged his ministers to ensure that all organized groups under SACCOs or cooperatives get access to low credit finance from Uganda Development Bank(UDB) and the Microfinance Support Centre, which will be capitalized with shs43b in the financial year 2019/20.

Speaking to theCooperator, Finance Minister Matia Kasaijja said that his ministry had budgeted Shs.103b towards the recapitalization of UDB in the financial year 2019/2020. This will be the fourth installment released to the bank, which in 2015 was promised a recapitalization package of Shs.500billion.

So far, Shs.150 billion has been released to the bank over the last three years, in installments of Shs.50billion every financial year.

Last week, while presiding over belated Women’s day celebrations for Kampala at Kololo Independence grounds, President Museveni advised Women to get organized in groups so as to access easy loans and credit from government.

Should the planned monies be released, all organized groups will, starting with the next financial year be in position to borrow at an initial interest of 8%, expected to progressively peak at 12% per annum.

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