MBARARA, May 10, 2024 – Cooperators, and cooperatives in Uganda have been told to be ready to raise Shs 300 billion to capitalise the new proposed National Cooperative Bank.
According to the State Minister of Cooperatives Frederick Ngobi Gume, nationwide consultative meetings are underway to revitalise the bank which was closed in 1999 under unclear circumstances by the Bank of Uganda [BoU].
According to the BoU, Shs 150 billion is required as paid-up capital by June 2024 for any bank to do business in Uganda
Minister Gume was speaking during a two-day consultative meeting orgainised recently on the establishment of the National Cooperative Bank at Pelikan Hotel in Mbarara City.
He told the cooperators that he has been assigned by cabinet to get resolutions from the cooperators from around the country about reviving the Cooperative Bank.
Gume said different stakeholders in the country are now being consulted, thus appealing to cooperators in Ankole and Kigezi Sub-regions, among others, to walk the talk by contributing Shs 300bln to capitalise their bank.
“We had a cooperative bank that later collapsed but there were many forces that led to its collapse but that is the past. We now want to begin afresh and be functional,” he said.
He said the resolutions from the cooperators regarding the opening of the bank will be presented to cabinet for further action.
“I have been ordered by cabinet for a specific period of time to get regional resolutions of cooperators about forming a Cooperative Bank. After, I will take the resolutions to cabinet then we will start on the actual foundations of laying the Cooperative Bank,” he said.
Gume added that, “I am impressed that out of the meetings that we have had, out of a total of 14 million cooperators in this country, 10mln consent to the revival of the Cooperative Bank.
Despite the traditional cooperatives, unions, Gume said that Emyooga SACCOs and Parish Development Model SACCOs will also be considered to increase the number of cooperators subscribing to the Cooperative Bank.
“We now have 14mln cooperators including those in Emyooga and PDM meaning that all these will be captured and will be customers for the Cooperative Bank and I have a feeling that a bank with 14mln people as its customers will not be shaken by anybody instead it will attractive other people to join,” he said.
Gume added that the new Cooperative Bank to be established is not only going to benefit cooperators but will have to compete with traditional commercial banks in terms of services, including offering loans at competitive interest rates.
“That is how it can attract more people to join them and out-compete other banks. For instance, the Co-operative Bank of Kenya is doing wonders which we can also copy,” the minister said.
The minister said that they are worried of middlemen who do not want farmers to unite, thus appealing to cooperators to remain focused on forming their own bank.
“Our enemy as cooperators is the middleman, so we want to aggregate and market collectively. I know it is a hurdle. We have people who will challenge it but we will go ahead and implement,” Gume said.
“Above all parliament has also signified the work plan and has also instituted that there must be a national cooperative bank in the amended act of the cooperative,” he added.
Gume said by buying shares in the planned bank, the cooperators will have boost its initial capitalisation.
“We have traditional cooperatives; we have SACCOs which are rich as some commercial banks in the country, so when all these people put their resources together, they will be able to access cheap credit through the Cooperative Bank,” he said.
“We shall not have the repatriation, the money that they will manufacture; the money that they will get as a result of profits will be reinvested to capitalise the bank,” he added.
The minister assured the cooperators that the business of the Cooperative Bank will be handled by the cooperators themselves.
According to Ivan Asiimwe, General Secretary Uganda Cooperative Alliance [UCA], the Cooperative Bank can only be vibrant if the government can increase training centres for cooperatives, especially to enhance education among cooperators.
He said that the cooperatives are still suffering from lack of cooperative education compared to other cooperatives in the neighbouring countries, thus challenging the government to intensify cooperative education in Uganda.
He said cooperative colleges in Uganda are still offering certificates and diplomas while in Kenya and Tanzania, cooperative education goes up to PhD level. Therefore, I want to call upon the government that let us invest a lot in cooperative education,” Asiimwe said.
Asiimwe added that commercial banks in the country are profit-oriented and not focusing on addressing the needs of the smallholder farmers.
He said that the National Cooperative Bank, when established, will work through the cooperative structures. “For instance, the Bank the will give the money to the union and the union will in turn give the money to the primary society while members will pick the money from their primary societies,” he said.
He added that most foreign countries have managed to develop because of empowering their cooperatives thus appealing cooperators to form the National Cooperative Bank.
“If we are to fight poverty, we must embrace cooperatives. I urge Ugandans to revive our Cooperative Bank,” he said, adding that countries like United States of America and those in Europe work under cooperatives.
On his part, Johnas Tweyambe, Chairperson UCA said the Cooperative Bank was established in 1964 but later collapsed due to various reasons, including corruption and political instabilities in the country.
“When the cooperative societies and unions collapsed due to several reasons including civil wars and economic restructuring plus the legal and regulatory framework, automatically the Cooperative Bank was closed by the Central Bank on May 19, 1999, but as cooperators, we don’t give up. Eventually, we have come together to start a new bank,” Tweyambe said.
He said that the essence of the Cooperative Bank to be set up is to give smallholder farmers loans at very low interest rates, between 6 and 7 percent, which is about 2-3 times lower than what commercial banks offer
On his part, Robert Kanusu, the Mbarara Resident City Commissioner, lauded the cooperators from Ankole and Kigezi sub-regions for supporting the revival of the Cooperative Bank.
“Denmark is a role model of farmers’ cooperative in the whole world and it is a country which has no minerals but they discovered their strength by uniting farmers in their cooperatives, where most people now go for benchmarking to push for production and value addition,” Kanusu said.
He added that countries like India, Turkey, and California have grown because of the cooperatives, thus assuring total support from government to the cooperators in their endeavours to revive the Cooperative Bank.
“I want to assure you that the country is very prepared to have the cooperative movement growing. And government respects people who work together. Therefore, I promise you that the government of Uganda will never say no to the noble resolutions that you make to revive the bank [Cooperative Bank],” Kanusu said.
Meanwhile, Rita Bwahika, Woman Member of Parliament Mbarara City challenged cooperative leaders to be transparent if they are to gain people’s trust.
She added that the focus for the Cooperative Bank, when established, should be to benefit the members but not an institution itself.
“You should not run the institution to grow and leave the members behind. Bring women and youth groups on board. For instance, you are rebirthing the bank but if primary societies and unions don’t grow, then the bank will be irrelevant,” the MP said.
https://thecooperator.news/live-bank-of-uganda-probed-over-closure-of-cooperative-bank/
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