MSC to have reference SACCO in every district
HOIMA, October 16, 2023 – Emmanuel Aliba Kiiza, the chairperson for Microfinance Support Centre [ MSC ] has said the government agency will soon launch a reference SACCO in each district of Uganda.
According to him, reference SACCOs will act as banks for small SACCOs in the districts, adding that several districts in the country have no banks and accessing financial support is a big challenge.
Speaking to this reporter days ago during an interview, Kiiza said: “As MSC, we said, let us see how to end this problem and made a resolution that we should have a reference SACCO in each district to work as a bank. Like here in Bunyoro, we have Rido SACCO in Kakumiro district. So this is what we want to have in each district.”
Meanwhile, he said MSC is currently engaging the Ministry of Trade, Industry and Cooperatives [MTIC] and Microfinance Regulatory Authority [UMRA] to have strategies aimed at doing away with the high interest rates in the SACCO sector.
He was concerned that MSC offers financial support to SACCOs at 8 percent per annum but unfortunately some SACCOs lend to their members at a high rate of 20 percent and above, as if they are commercial banks.
He noted that high interest rates is a big problem in the SACCO sector because those taking loans may end up failing to pay back.
“We [MSC] give money to SACCOs at 8 percent annually but we have discovered that some SACCOs are giving out loans to individuals at a high interest rate of 20 percent and above. So we want to solve this problem. We want to come with a memorandum of understanding with the SACCOs to see that the local person is not cheated when getting loans from these SACCOs,” Kiiza said.
Kiiza said previously a lot of money was given out to individual businesses but nothing impactful was realised as poverty continued to bite the beneficiaries.
Now, he said, MSC will give funds to SACCOs according to their capacities, further mentioning that recently MSC supported Rido SACCO in Kakumiro district with Shs 40 million, even though the SACCO recently applied for Shs 800mln to lend to small SACCOs.
Patrick Kunihira, the chairman Hoima Referees SACCO said SACCO are facing the challenge of inadequate financing and as a result they have failed to support all members.
He supported the idea of MSC launching reference SACCOs: “If this plan is going to be implemented it will help many small SACCOs that are struggling.”
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