MBARARA CITY, January 13, 2026 – The Attorney General [AG], Kiryowa Kiwanuka, has advised the Bank of Uganda [BoU], the Ministry of Trade, Industry and Cooperatives [MTIC], and the Ministry of Finance to halt the operations of large SACCOs that have failed to comply with the law requiring them to obtain a licence from the central bank.
Section 6[2] of the Microfinance Deposit-Taking Institutions [MDI] Act, Cap 58, together with Regulations 2 and 4 of the Microfinance Deposit-Taking Institutions [Registered Societies] Regulations, 2023, require all registered societies or SACCOs with voluntary savings exceeding Shs 1.5 billion and institutional capital above Shs 500 million to seek a licence from the BoU.
According to the BoU, 99 SACCOs met this threshold as of June 2023 and are therefore operating as unregulated financial institutions. However, only three SACCOs have so far applied to be regulated by the central bank.
The AG’s advice, contained in a letter dated January 9, 2026, and addressed to the Finance Minister, effectively overrules an earlier attempt by MTIC to shield the large SACCOs from BoU regulation. MTIC had cited several factors, including regulatory overlap, the SACCO business model, and an existing court case lodged by the Uganda Cooperative Savings and Credit Union [UCSCU], the apex body of SACCOs in the country.
The dispute between the institutions escalated following a December 19, 2025 letter from David L. Kalyango, BoU’s Executive Director for Supervision and Regulation, in which he stated that non-compliant SACCOs should be de-registered by the Registrar of Cooperatives at MTIC.
“SACCOs are categorised as financial institutions. As such, the continued operation of large SACCOs in contravention of the MDI Act is likely to adversely affect the assessment of Uganda’s level of effectiveness for compliance with AML [Anti-Money Laundering] obligations regarding regulation of market entry,” Kalyango wrote, as he listed 99 SACCOs that fall under BoU regulation as of June 30, 2023.
However, MTIC Permanent Secretary Lynette B. Bagonza initially rejected the central bank’s request to de-register the defiant SACCOs, describing the sector as “nascent, highly complex, and deeply rooted in the socio-economic fabric of our communities”.
“While the Bank of Uganda’s position on enforcement of the law is legally sound, MTIC is of the considered view that the sector needs to be approached and managed with a nuanced appreciation of its unique character,” Bagonza stated in her December 30 response.
She further warned that “forceful enforcement actions or the mass de-registration of large SACCOs could destabilise the sector and have adverse socio-economic consequences”, noting that an ongoing court case filed by UCSCU had left the regulatory environment in “legal ambiguity”.
The Attorney General, however, dismissed MTIC’s position on refusing to grant BoU’s request to de-register non-compliant SACCOs.
“My advice is that the Bank of Uganda, the Ministry of Trade, Industry and Cooperatives and the Ministry of Finance, Planning and Economic Development should enforce the law by halting the operations of all the large SACCOs [registered societies] that are operating without a licence issued by the Bank of Uganda,” the AG stated.
According to Kiwanuka, the Minister for Finance, Planning and Economic Development made the Micro Finance Deposit-Taking Institutions [Registered Societies] Regulations, 2023 S.I No. 54 of 2023 to provide procedures for registered societies to apply to the BoU for a licence to offer financial services in accordance with sections 3 and 6 of the MDI Act, Cap.58.
“My understanding is that the large SACCOs the Minister referred to in his letter are the registered societies which are required to obtain a licence under section [2] of Cap.58. If my understanding is correct, it is my opinion that large SACCOs [registered societies] operating without a licence issued by the Bank of Uganda are acting contrary to sections 3 and 6[2] of Cap.58 and S.I No. 54 of 2023,” Kiwanuka stated.
Responding to MTIC’s concerns about overlapping laws, the Attorney General maintained that the current regulatory framework was deliberately designed by Parliament.
“Regarding the alleged regulatory overlaps in the Tier 4 Microfinance Institutions and Money Lenders Act, Cap.61, the Cooperative Societies Act, Cap.107 and the Microfinance Deposit Taking Institutions Act, Cap.58, my opinion is that there is no such overlap. The Tier 4 Microfinance Institutions and Money Lenders Act, Cap.61 and the Cooperative Societies [Amendment] Act, 2022, which introduced legal regulatory reforms for large SACCOs, resulted from Government Bills that were considered and approved by Cabinet before being enacted by Parliament. Cabinet intended that large SACCOs should be regulated under separate laws, with clearly defined roles for each regulatory body, including the Registrar of Societies [read Cooperatives] and the Bank of Uganda,” he explained.
The Government Legal Advisor added that if the Ministry of Finance and MTIC believe large SACCOs are over-regulated, the matter should be treated as a policy issue and referred to Cabinet for guidance.
“If the Ministry of Finance, Planning and Economic Development and the Ministry of Trade, Industry and Cooperatives are of the view that large SACCOs are over-regulated because they must comply with multiple laws, that is a policy matter which should be referred to Cabinet for guidance on an alternative regulatory regime,” he said.
Until then, the AG advised that the existing laws be fully enforced.
“The purpose of this letter, therefore, is to advise that the Tier 4 Microfinance Institutions and Money Lenders Act, Cap.61, the Cooperative Societies Act, Cap.107, the Microfinance Deposit Taking Institutions Act, Cap.58 and the Micro Finance Deposit-Taking Institutions [Registered Societies] Regulations, 2023 S.I No. 54 of 2023 be implemented as they are until Cabinet approves a new policy to guide the regulation of large SACCOs and the laws are amended accordingly.”
Currently, only three SACCOs nationwide have successfully acquired a BoU licence. These are EBO SACCO in Bwizibwera Town Board in Mbarara District, Kyazanga-Kwegata Microfinance Cooperative in Lwengo District, and Masindi District Farmers Association Savings and Credit Cooperative [MADFA Cooperative], the first three institutions licensed under the new MDI regulations for large SACCOs.
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