Kampala, Uganda: Cooperatives and SACCO groups have been urged to establish mechanisms for achieving accountability in their organizations.
The call was made by Mr. Kabanda Wilson, a SACCO/Business Development Consultant during the Institute of Certified Public Accountants of Uganda (ICPAU) organized seminar for Cooperatives.
Kabanda was delivering a paper on Strategic Governance and Management of Cooperatives at Hotel Africana in Kampala on Friday.
Kabanda said the division of power, direct management of business and affairs of Cooperatives is key in ensuring the democratic principle of governance.
“There is a need for cooperatives to practice a strategic type of governance because it helps the leaders focus on the bigger picture of the organization that they are leading,” said Kabanda.
He noted that strategic governance is key because it leads to strategic leadership and direction, sets and approves structures and polices approves the budget and defines expectations. “It also enables verification of performance against performance measures,” he said.
He told the Cooperators drawn from across the country that governance of cooperatives is based on the aspect of grass roots democracy, where one member has one vote, and where there is volunteer board.
He warned the cooperators against having close relatives at top management positions.
“Refine your policies properly- refrain yourself from the recruitment processes to avoid conflict of interest. If your relative goes through and becomes a SACCO manager then the policy should guide if the chairman or treasure should step down. You can’t have relatives serving in top positions,” he said.
He advised the cooperators to always comply with sound and financial practices
Mr. Moses Mugisha, the Executive Director Pullida, who also doubles as a Cooperative lawyer gave the cooperators tips on the legal frame work guiding the Cooperatives.
He gave a paper titled: “Review of the legal and Regulatory Framework for Microfinance and Cooperatives”.
Mugisha warned the cooperators never to sign a document that they don’t understand because once signed, defending it may be cumbersome in courts of law.
“As a cooperative, you don’t have to wait until the year ends to have your legal books in order. As cooperatives always have a lawyer to monitor all the documents that you sign before you enter into any business transactions to avoid backfire,” he said.
He urged the cooperators to desist from inside lending, saying it’s against the law under the Finance Act.
He gave them an example of the Cooperative Bank that was closed due to inside lending.
“As you work with cooperatives especially as accountants know the boundaries of the law especially from the members,” he advised.
He said that as of now SACCOs are unregulated. “Uganda Microfinance Regulatory Authority (UMRA) and BOU cannot start licensing SACCOs without regulation: he said.
Mugisha noted that the law which was hurriedly made has serious operational and regulatory problems. “This may explain why some regulations have up-to-now failed to come out,” he said.
Speaking about Taxation of Cooperatives, Mr. Albert Beine, CEO and Founder Global Taxation Services Limited said Cooperatives are obliged to pay taxes just like any other firms.
He said that SACCOs are exempt from tax under section 21 (1) of the Income Tax Act, that provides that Income of a Savings and Credit Society is exempt from tax up to 30th June 2027 (10 years). This provision was put into effect from July 1st, 2017.
Beine implored cooperatives engaged in agro-processing and exportation of finished goods and new investments to benefit from the section 21 (1) y of the Income Tax Act that exempts taxation of income made from exportations of goods for 10 years.
He told the participants to also look at article 41 of the Cooperatives Societies Act that gives the Minister of Finance powers to exempt taxes imposed on cooperatives or waives them.