Poverty alleviation: Buganda Kingdom urges govt to priotise cooperatives
Much as government asked people to form PDM SACCOs, there is no sustainability because the beneficiaries’ intention is only to receive the money.
MASAKA, July 22, 2024 – Buganda kingdom has advised government that ending poverty in communities will not be achieved if poverty alleviation programmes like Emyooga and the Parish Development Model [PDM] are not implemented through the long-established cooperatives.
During the official opening of the National Cooperative Symposium at Marpel Leaf Hotel in Masaka City under the theme: ”Cooperatives Build a Better Future for All”, Buganda Kingdom Prime Minister, Charles Peter Mayiga in a message read for him by Waggwa Nsibirwa the kingdom’s Minister for Finance and Economic Development, said central government has put in place many initiatives like Emyooga, PDM passing them through the established cooperatives.
”The poverty alleviation programmes are well thought out with good intentions but their execution sometimes fails because the designers of these programmes are not on ground to ensure the proper implementation of such programmes,” he said at the event which was part of the activities lined up in the country to mark the belated International Day of Cooperatives last Saturday in Bukomansimbi district.
He said much as government asked people to form PDM SACCOs, there is no sustainability because the beneficiaries’ intention is only to receive the money. ”I don’t believe that you can get people out of poverty by giving them money. It can never work and it has not worked,” he said.
“As Buganda Kingdom, we must continue telling government to work differently and our proposal is that let the Ministry of Trade, Industry and Cooperatives [MTIC] work together with the current well-established cooperatives and SACCOs that have been in service for more than five years with well demonstrated systems of managing funds. Why don’t government strengthen the well established cooperatives, give them money to widen and deepen the credit?” the kingdom official said.
On his part, Nsibirwa said Buganda Kingdom is well anchored to promoting cooperatives, adding that its officials are working hard to mobilise people to embrace saving and invest part of the money in sustainable development.
”We have started with homesteads and formed SACCOs where the portfolio is growing steadily and there is transformation in the villages,” he said, adding that this model is more effective in moving people out of poverty.
Meanwhile, speaking at the same symposium, the Chief Executive Officer of Wazalendo SACCO, Col. Joseph Freddy Onata, urged MTIC to streamline the cooperative legal framework, stressing that the current regulatory framework governing SACCOs imposes numerous regulators, making the process hectic and tedious for cooperatives.
Currently, SACCOs are regulated and supervised by Registrar of Cooperatives, Uganda Microfinance Regulatory Authority [UMRA], and Bank of Uganda [BoU].
Until 2016, SACCO’s were registered and regulated like other cooperatives under Cap. 112 of the Cooperative Societies Act, and restricted transactions with non-members. Cap. 112 restricted provision of loans to only members and required consent of Registrar in case of non-members. The Act allowed receiving of deposits and loans from persons who are non-members under the authority of the Registrar.
There was an upsurge of SACCOs in the country which accumulated a lot of money in terms of savings. At some point, the government did not know how many SACCOs were in the country.
In 2016, the government moved to regulate SACCOs depending on their size. Parliament enacted Tier 4 Microfinance and Money Lenders Act, 2016 which provided for the licensing of small SACCOs ; below Shs 1.5 billion in savings and Shs 500 million institutional capital. The Small SACCO’s were to be licensed by Uganda Micro Finance Regulatory Authority Large SACCO’s (Voluntary savings exceeding Shs .1.5 billion and institutional capital of Shs 500 million were to be licensed by the Central Bank.
Since 2016, SACCOs have been regulated under 3 laws as follows;
The Cooperative Societies Act Cap 112: Once registered, the society which intended to carry out financial services had to apply for a license to the Uganda Micro-Finance Regulatory Authority [UMRA] as stipulated under the Tier 4 Microfinance and Money Lenders Act, 2016.
However, if a SACCO’s voluntary savings were in excess of one billion five hundred million Ugandan shillings, or its institutional capital was above five hundred million shillings, such a SACCO is required to obtain a license from Bank of Uganda under the Micro Finance Deposit Taking Institutions of 2003.
Once a SACCO obtained a license, the Registrar no longer had powers over it and any exercise of such power was vested in UMRA.
Meanwhile, Onata urged cooperatives to focus on improving the livelihoods of their members. “Mismanagement and corruption have prevented cooperatives from progressing,” Onata said.
He emphasised the importance of equipping SACCO leadership and members with adequate knowledge about their cooperatives. Col. Onata also used the opportunity to pledge full support for small SACCOs, promising to offer mentorship and training.
Establishment of National Cooperative Bank
On his part, State Minister for Cooperatives, Fredrick Gume Ngobi highlighted that the bill to establish the National Cooperative Bank has already been passed by parliament. He rallied cooperators to organise themselves to ensure the bank’s formation.
The minister also urged SACCOs to avoid frustrating their members and to manage competition effectively within the sector. He emphasised the importance of adding value to produce to attract East African and broader African markets.
Additionally, he encouraged cooperatives to benchmark against one another to achieve progress. He noted that cooperatives should exploit opportunities provided by the Parish Development Model [PDM] and stressed the need for transparency to assist the government in its efforts.
Mobilising cooperatives
The General Secretary of the Uganda Cooperative Alliance [UCA], Ivan Asiimwe pledged to mobilise members to enhance agro-processing and value addition in order to secure better market opportunities. “Can you imagine we grow cotton but put on second-hand clothes?” he wondered, pledging to enhance cooperative education.
He urged cooperators to uphold cooperative education to prevent mission deviation and improve sector practices.
Cooperatives advised
On his part, the Minister of State for Trade, Industry, and Cooperatives, Wilson Mbasu Mbadi who was the chief guest at the symposium warned cooperatives against deviating from their core missions. “Since 1913, when cooperatives were introduced, the intention was to fight exploitation that was forced on them by middlemen; they wanted to do it by themselves in a unified manner with unified efforts to satisfy themselves,” said Mbadi.
He added that “somehow they deviated from the main objectives of the formulation of the cooperatives.” He urged management to refocus their efforts towards industrialization and create an environment that enables cooperatives to perform and improve the welfare of their members by developing and offering affordable financial services.
The Minister pledged that government efforts are in place to support the cooperative movement as the best way to enhance productivity and reminded everyone of the vital role of building a strong cooperative movement.
Central bank cited
Former Finance minister, Professor Ezra Suruma criticised the central bank for promoting unfair competition that threatens the survival of local banks, which allows international banks to dominate Uganda’s economy.
“The bar for starting a commercial bank has been pushed so high deliberately you can not go there [start a bank],” he said.
He encouraged cooperatives to establish their own financial institutions, advising them to avoid relying on a single bank that could be easily closed by the central bank.
He said out of 23 banks in the country, only three are local banks.
Role of cooperatives emphasised
Dr. Chiyoge Sifa, Regional Director of International Cooperatives Alliance Africa [ICA – Africa], emphasised the crucial role of cooperatives in sustainable development in achieving Uganda’s Vision 2040. “Cooperatives are the backbone of inclusive growth, aligning global goals with community needs,” she said.
Additional reporting by Chrispus Mubale Muke.
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