Cooperatives & Communities

North Bukedi Cooperative Union choking on Debt, appeals to President Museveni for rescue

The loan,initially of 500 million, has now accumulated to 3 billion

KIBUKU, UGANDA: The leadership of North Bukedi Cooperative Union (NBCU) has appealed to President Museveni to prevail upon Housing Finance bank, regarding a bank loan amounting to Shs.3billion which the Union as failed to pay.

The Cooperator has learnt that in 2003, NBCU secured a shs 500 million loan from Housing Finance bank to construct the Union’s headquarters in Mbale and utilize the remainder as working capital, with a promise to pay back in 3 years.

However, 16 years down the road, the Union has not only been unable to repay the loan, the loan has accumulated to now Shs.3billion.

The NBCU Chairperson, Mr. Gundi Faruk blames their situation on bad agricultural seasons. “The slump in the cotton prices, coupled with bad weather just made the issue of repayment complex,” he said.

In the recent past, cotton production has been in decline across the country. According to data from the Cotton Development Organization, Uganda’s lint production has declined to about 250,000 bales annually- occasionally dropping to 100,000 bales, from about 450,000 bales in the 1970s. A bale is 185 kilograms. In April Last year, the Economic Policy Research Centre (EPRC) found that Uganda’s ginneries are operating at merely 10 percent of their optimal capacity.

Bukedi sub-region and NBCU have borne a significant brunt of this decline. NBCU was set up in 1958 to focus on the growing, ginning and marketing of cotton in the districts of Budaka, Palliisa, Kibuku and Mbale. Now, according to Mr. Gundi, over 85% of its over 40,000 membership has abandoned production of the crop, thanks to bad weather and low prices. In turn, this has hurt the business of the cooperative, making it difficult to service its loan.

To salvage the situation, the Union has now petitioned the President to prevail over Housing Finance Bank to “cool” down on the loan demand.

A close source at State House intimated to theCooperator that the petition was forwarded to President Museveni early this year: “Yes it’s true, State House received the petition for assistance from North Bukedi, but the President is yet to respond,” the source said, on condition of anonymity.

Gundi says they (NBCU) petitioned the president to help them contain the “massive pressure” from Housing Finance Bank. He insists that part of the Union’s troubles have their roots in government’s failure to pay its historical debts to the cooperative.

Just like other Cooperative Unions, North Bukedi was not spared of the vandalism, looting and general damage of cooperatives’ assets during the NRA war. Known ginneries like Kibuku, Kakoro, Bulangira all lie in ruins today due to the war.

TheCooperator has learnt that the Union has compensation claims to the tune of shs11 billion, which was duly approved by the Ministry of Trade, Industry and Cooperatives, and forwarded to the Finance Ministry for payment. However, just like in many others, payment has yet to be effected.

Mr. James Okoboi, NBCU Secretary General says the loan has not only demoralized the farmers, but also made running of the union activities hard.

“We appeal to the President to help usby using his authority to bail us out from collapsing over accumulated debts and help us recover what we lost during the war,” said Okoboi.



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