KAMPALA – Uganda Cooperative Savings and Credit Union [UCSCU] has dragged Bank of Uganda [BoU] and the Attorney General to High Court in Kampala, saying the central bank does not have the mandate to control SACCOs in the country.
This follows a recent notice that BoU sent to UCSCU, saying it was ready to license, regulate and supervise large SACCOs upon getting a nod from the Ministry of Finance, Planning and Economic Development.
In a letter dated July 31, 2023, Ivan Amagaragariho, a director in BoU wrote to UCSCU CEO saying, “We received policy guidance from the Ministry of Finance, Planning, and Economic Development that cleared Bank of Uganda to proceed with the implementation of the large SACCO mandate in May 2023 and accordingly the Microfinance Deposit-Taking Institutions [Registered Societies] Regulations, 2023 were approved, signed off and published in the Uganda Gazette on June 2, 2023.”
Amagaragariho further said BoU already engaged consultancy services of the International Credit Union Regulator’s Network [ICURN] to develop a risk-based supervision framework tailored to the unique business model of SACCOs and that the Central Bank is now ready to control large SACCOs.
“We are therefore ready to commence the regulation and supervision of large SACCOs,” Amagaragariho said,” adding that BoU officials would conduct workshops in August 2023 for board members and senior management of large SACCOs to “sensitise them about the Regulations and provide guidance on the licensing procedures.”
BoU considers large SACCOs as those in the country that have voluntary savings in excess of Shs 1.5 billion and institutional capital of Shs 500 million, and these are about 40 in number, mainly found in central and western Uganda. Such SACCOs include Wazalendo SACCO, Parliamentary SACCO, Mushanga SACCO, Muhame SACCO, Ankole Farmers’ SACCO, and EBO SACCO among several others.
However, UCSCU through M/S Moriah Advocates on Tuesday lodged an application to court, asking it to stop BoU from going ahead with the process until it establishes whether the Microfinance Deposit-Taking Institutions [Registered Societies] Regulations, 2023 are applicable or valid when Parliament rejected the provisions in the Microfinance Deposit-Taking Institutions [Amendment] Bill, 2022 which sought to bring registered societies under the supervision and regulation of Bou. 2.
UCSCU also wants court to determine whether Section 110 of the Tier 4 Microfinance Institutions and Money Lenders Act, 2016 can be a basis for making the Microfinance Deposit-Taking Institutions (Registered Societies) Regulations, 2023. 3.
Further, UCSCU through its lawyers wants court to determine whether BoU can legally licence, regulate and supervise registered societies under or basing on the Microfinance Deposit-Taking Institutions (Amendment) Act, 2023.
UCSCU in the application still wants court to establish if there is no contradiction between the Tier 4 Microfinance Institutions and Money Lenders Act, 2016 and the Cooperative Societies [Amendment] Act, 2020, as regards licensing, regulating and supervising Registered Societies.
Upon the determination of the issues raised, UCSCU wants court to issue a permanent injunction restraining the central bank from licensing, regulating and supervising the subject registered societies until Parliament has cured the contradiction by way of an amendment.
Finally, UCSCU wants a consequential order issued suspending and/or nullifying the Microfinance Deposit-Taking Institutions [Registered Societies] Regulations SI No. 54 of 2023 and a declaration be made that all SACCOs should be under a single regulator.
UCSCU which is the national apex organisation for SACCOs in Uganda had previously pointed out the challenges created by multiple and contradicting regulations in its petition to the Speaker of Parliament.
https://thecooperator.news/bou-readying-to-regulate-big-saccos-pledges-to-work-with-ucscu/
Buy your copy of thecooperator magazine from one of our country-wide vending points or an e-copy on emag.thecooperator.news
Views: 31
