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EBO SACCO in final touches to transform into MDI

To operate in Uganda, MDIs are required to have a minimum paid-up capital of Shs 5 billion.

 MBARARA, June 19, 2024 – EBO SACCO located in Bwizibwera-Rutooma town council in Mbarara district, is in its final stages of transiting into a Microfinance deposit-taking institution [MDI] this year, having issued a public notice about the same on May 28, 2024.

To operate in Uganda, MDIs are required to have a minimum paid-up capital of Shs 5 billion. According to Chief Executive Officer Joseph Mugume, EBO SACCO has a paid-up capital of Shs 5.9 billion, which qualifies it to become an MDI and be regulated by the Bank of Uganda.

Rosette Kashaija Kazibwe, Chairperson EBO SACCO says a transition to an MDI was one of the resolutions passed by the SACCO members at the 20th annual general meeting [AGM] held on March 20, 2024.

“We shall apply for a licence from the central bank since the process of transformation into an MDI is nearly complete and yet it is now a requirement to be regulated. Therefore, we are requesting for the general assembly’s mandate to effect this requirement by law,” Kazibwe said during the AGM.

Kazibwe said that all the processes for EBO SACCO to transform into an MDI are progressing well, with the Bank of Uganda staff routinely paying courtesy visits to ensure that the SACCO provides all the financial requirements before it becomes an MDI.

“On a daily basis, we receive more than two groups of supervisors and spot checks from the Bank of Uganda to ensure that everything is in order for us to achieve this milestone. So our offices are busy but that has not stopped us from serving our members very well,” she noted.

Kazibwe appealed to the SACCO stakeholders to support the SACCO in becoming an MDI.

“Persons that have reasonable objections against the application of EBO SACCO to transition to an MDI were required to submit their objections in writing to the Bank of Uganda within 14 after the public announcement,” she said, calling upon others to support the process.

As of March, 2024, EBO SACCO boasted of 84,689 members, with total assets amounting to Shs 64.2 billion, savings totaling Shs 28.6bln, and a loan portfolio standing at Shs 52.7bln.

Currently, the SACCO has 15 branches and outreaches in Mbarara, Ibanda, Kiruhura, Rwampara, Kyegegwa, Sembabule among others.

Emmanuel Mucunguzi Beyanga, one of the delegates at the the recent AGM appreciated EBO SACCO for transforming into an MDI to provide financial services to members in accordance with Section 7 [1a] of the Microfinance Deposit-Taking Institutions Act, 2003.

“Being an MDI doesn’t mean that EBO SACCO will become a commercial bank. It will still serve its members with no strings attached. That is why it made it opens for every member to buy a share as part of the requirement to become an MDI and remain serving the interests of its members,” Mucunguzi said.

He said that this is the right time for EBO SACCO to become an MDI to boost financial services for its members.

“There are some other SACCOs that started with us but have not yet realised the liquidity that we have. Actually, EBO SACCO is the second biggest SACCO after Wazalendo SACCO in Uganda,” Mucunguzi noted.

For good governance, Mucunguzi challenged EBO SACCO to continue exhibiting cooperative principles and values to serve the interests of the members.

“I am sure EBO SACCO will remain a member owned, member controlled financial institution even if it becomes an MDI. Even this year members were given dividends during the AGM. There is even an open resolution that the board is elected by the members not appointed by the CEO,” he said.

Among the plans of becoming a microfinance deposit institution, EBO SACCO has also launched a quiz dubbed “Vulumula savings” to inspire members to buy shares in a bid to increase the liquidity.

“It is a requirement by the Bank of Uganda to have more funds and that’s why we have encouraged every member to have a share. I want to tell you that currently everything that we are doing is a requirement by Bank of Uganda to prepare EBO SACCO to become an MDI,” Mucunguzi said.

On his part, Emmy Kateera Turyabagyenyi, Resident District Commissioner [RDC] Mbarara advised EBO SACCO to maintain low interest rates for its members even if it becomes an MDI.

“There has been a concern about the high interest rate charged by commercial banks. This has been echoed by even the Head of State [President Museveni]. I also appeal to EBO SACCO to keep giving quality services at a low interest rate in the interest of the Wanainchi and Bank of Uganda should come up with a workable formula of reducing commercial interest rate because we cannot allow banks to milk the Wanainchi [Ugandans],” Turyabagyenyi noted.

He said that the growth, developments and competition of SACCOs in Uganda is happening because of the restoration of the NRM peace and security in the country since 1986.

Turyabagyenyi added that the government’s empowerment of communities with economic initiatives like Emyooga, the Parish Development Model [PDM], Operation Wealth Creation [OWC], among others have enabled people to work hard and save through SACCOs.

“People have been empowered with an economic base to the extent that they can now save their money with banks and SACCOs. And that’s why SACCOs like EBO SACCO among others are existing and performing well,” said Turyabagyenyi.

Turyabagyenyi pledged the government’s total support to transform EBO SACCO into an MDI. “I want to thank the management of EBO SACCO and we are looking forward to protect its interests and support it for being an example of socio-economic transformation,” he said.

Meanwhile, Benson Nduhura, Chairman Besania SACCO in Mbarara City has advised thriving SACCOs in western Uganda to transform into multipurpose cooperatives to boost members’ savings instead of hurrying to become MDIs.

Nduhura expressed fear that a number of SACCOs in the area are in the process of transiting to MDIs, thus putting members’ savings at risk as well as moving away from their missions and visions.

“Becoming an MDI is cost-challenging. Members who were used to the SACCO operations and receive all their savings will see their monies being deducted because of different operational costs that come with an MDI,” he said.

Some of the SACCOs in western Uganda that are being monitored by Bank of Uganda as they undergo the process to transit into MDI include; EBO SACCO, Butuuro SACCO, Kyamuhunga People’s SACCO, and Mushanga SACCO among others.

Some of the MDIs in the country that EBO SACCO want to join include FINCA Uganda, Pride Microfinance Limited, UGAFODE Microfinance Limited, EFC Uganda Limited having had its licence revoked by BoU in January 2024 due to undercapitalisation and poor corporate governance.

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