Journey to revive Cooperative Bank begins as gov’t inaugurates steering committee
KAMPALA– Cooperators in Uganda could soon have access to cheap and appropriate financing after the government on Tuesday inaugurated a steering committee to revive the defunct Cooperative Bank whose assets were taken over by the Bank of Uganda [BoU] in May 1999.
This follows a recent Cabinet meeting where the cooperative sector lender’s revival was given a green light.
The 14-member committee was launched in Kampala by the Minister of Trade Industry and Cooperatives, Francis Mwebesa who said the government was determined to have the bank back.
The committee is made up of representatives from seven institutions such as Walimu Cooperative Union and Wazalendo SACCO.
Other members of the committee were picked from the Parliamentary SACCO, Uganda Central Cooperative Savings and Credit Union Limited.
According to the State Minister for Cooperatives, Frederick Gume Ngobi said the committee would be operational until the farmers’ bank is operationalised.
“We have about three months to study what led to the bank’s downfall and how we can circumvent it,” he said urging the committee to fast-track the development of a roadmap for consultations and to submit regular reports to stakeholders.
Minister Mwebesa said the revival of once farmers’ bank will ease access to affordable and appropriate credit for cooperatives in all sectors of the economy.
Officials who attended the launch of the committee to revive the bank noted that over 47,000 cooperatives with 15 million members have the power to revive the bank, which was first established in 1964 under the Cooperative Societies Act of 1963.
Once the steering committee has finished the task of streamlining the bank’s establishment, the responsibility of managing it will be transferred to a team under the National Cooperative Bank, said Austin Nyakuboho, the lobby and advocacy expert at Uganda Cooperative Alliance [UCA].
The Cooperative Bank was closed on 19 May 1999, by the late Charles Kikonyogo, the governor of the Bank of Uganda at that time. The reasons given for its closure were “inadequate capitalization” and “insolvency to the tune Shs 4.8 billion, as of December 31, 1998.
However, the 1990s saw a major economic policy shift to privatisation in Uganda as part of the implementation of the Structural Adjustment Programs [SAPs], largely driven by the International Monetary Fund [IMF] and the World Bank. Among many other changes that happened because of SAPs was divestiture of the Cooperative Bank and the liberalisation of the cash crop market.
The divestiture of the Cooperative Bank led to the collapse of many cooperatives since they did not have access to credit from a bank that had been tailor-made to suit their needs.
According to a study conducted in 2013 by the Uhuru Institute for Social Development [TUI], Centre for Basic Research and Action Aid, cooperatives had been a vital sector on which the state heavily depended for its foreign exchange and taxation needs by the end of the 1960s. By 1970, the cooperative movement had become the largest employer in Uganda.
Developed countries such as China have established different banks to suit the need of different sectors of the economy. For example, they have an Agricultural Bank, Export and Import Bank, and a Construction Bank, and many others. In East Africa, the Cooperative Bank of Kenya serves cooperatives and their members. Tanzania and Rwanda also have work going to establish a bank for cooperatives.
Uganda’s third National Development Plan whose goal is to increase average household incomes and improve the quality of life of the citizens of Uganda recognises cooperatives as central in mobilising and organising farm-level production, value addition, marketing, savings, and financial intermediation at the local level. These can be achieved best when the National Cooperative Bank is established.
Cooperators across Uganda in a Parliamentary Brief on the Cooperative Sector in Uganda [April 2022] asked the 10th Parliament to cause BoU to present to the floor of Parliament the liquidation report of the defunct Cooperative Bank to help cooperatives ascertain the current financial position of the debtors, shareholders, and any other stakeholders today, but this has never happened.
https://thecooperator.news/govt-will-revive-cooperative-bank-says-minister-bahati/
Buy your copy of thecooperator magazine from one of our country-wide vending points or an e-copy on emag.thecooperator.news
Views: 2
