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Kampala, Uganda | THE INDEPENDENT | SACCO savers are set to get relief from the rampant losses due to group dissolution or liquidation as well as closures for any reason, as the government is set to implement a fund to secure their savings with different SACCOs in the country.
The SACCO Savings Protection Fund is aimed at mainly compensating the savers once a SACCO goes bankrupt or fails to pay its members at liquidation or closure of any nature.
Edith Namugga Tusuubira, the executive director of the Uganda Microfinance Regulatory Authority- UMRA, says that the fund is only remaining with a few regulatory framework issues to govern it, but the rest is set and ready to be rolled out.
“We have laid down all the necessary structures to protect the saver’s money, but the government has to first give us the guidelines to follow,” Tusuubira said.
The Tier 4 Microfinance and Money Lenders Regulations 2020 part 10, provides for the creation of this fund by the authority and a SACCO is compelled to pay an annual premium of 0.05% of its average annual savings. This is supposed to ensure the sustainability of the fund.
Tibbs Orikiriza, the SACCOs manager at UMRA, says at the moment, the authority has so far licensed only 67 SACCOs all over the country, yet there are thousands of them in operation, adding that the fund is to benefit only members of those that are licensed.
According to Orikiriza, the number of licensed SACCOs is still low because of the multiple licensing powers which the law places amongst three agencies, and this has confused them, hence ending up operating illegally.
By law, SACCOs with more than 1.5 billion shillings in deposits, are to be licensed by the Bank of Uganda whereas those below, fall under UMRA. But BOU is yet to start licensing.
Sylivester Ndiroramukama, the CEO of Uganda Cooperative Savings and Credit Union-UCSCU, the apex body of SACCOs, says the move to implement the fund will help people build confidence in SACCOs which has been depreciating every passing day because of both genuine and false liquidations.
Ndiroramukama, adds that this will help the sector to move in a positive direction, but the message needs to be harmonized and involve SACCOs as well as closing the regulatory gaps. He says that most SACCOs problems started when the government withdrew its support but the fund is bringing it back in a different way.
According to Ndiroramukama, SACCOs are highly disturbed by the multiple regulations, and this doesn’t help the sector to develop, which is what they as a union are focusing on for the good of everyone.
“Our thinking is that as a sector, we needed to be regulated under one roof, and we don’t care which agency is mandated to do it, and we have already petitioned parliament to this effect, and will help smaller SACCOs to benefit from backward linkages as well as other benefits to all the 1,368 UCSCU members.”
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