The Government of Uganda is to set up a body to license and regulate the work of the Savings and Credit Co-operative Organizations (SACCOs) of Uganda, according to a press release on the Ugandan newspaper Monitor. The announcement was made by Ms.Ruth Nankabirwa, the state minister for Micro Finance, at a rural financial service sensitization program in the Kiboga District of Uganda. Ms. Nankabirwa stated that the new regulatory body was a move to protect the Ugandan public from conmen and also to stop embezzlement of savers’ money collected by SACCOs.

Elaborating on the need for the new monitoring body, Ms. Nankabirwa brought to focus the fact that several Ugandan MFIs tend to operate for a few months in a particular region and then relocate to another region thereby causing many Ugandans to lose money. She mentioned that the new board would identify and follow-up on all MFIs involved in such questionable activities and ‘bring to book all unscrupulous financial managers’. This announcement on the establishment of the new body follows an initial announcement back in July 2008 by Mr.Henry Mbaguta, the assistant commissioner in-charge of microfinance in the Ministry of Finance, Planning and Economic Development.

In this regard, the former Vice President of Uganda Ms. Specioza Wandira Kazibwe, called upon the Parliament to set laws that would better regulate the operation of the SACCOs. Ms. Kazibwe also noted that in order to ensure setting up a unifying law, the government needed to carry out sensitization exercises around the country to identify and understand the views of those wishing to benefit from the SACCOs. Furthermore, Ms. Kazibwe called upon Members of the Parliament to ensure that people in the rural areas of Uganda are able to access money. Almost 38 percent of Ugandans live below the national poverty line. In rural areas, 64 percent live on less than USD 1 a day.

SACCOs comprises of organizations that accept deposits and give loans to individuals and small businesses and is an integral part of the Ugandan government’s economic development project entitled ‘prosperity for all’ launched in 2007. The government channels money through SACCOs in order to reach poor individuals and as of 2008 planned to have over 1,000 SACCOs operating in the country.

Although the government initially used the SACCOs to reach out to the poor without exercising strict controls, several instances of fraud in the recent past have forced the government to exercise stricter controls. These controls were enforced following government investigations of many SACCO executives which prompted many organizations including The World Council of Credit Unions (WOCCU), a trade association representing 72 countries across the globe, to call for increased regulation. To learn more about the controversy surrounding SACCOs and the recent increase in regulatory authority, please refer to this MicroCapital story.

SACCOs are controlled by The Uganda Cooperative Savings and Credit Cooperative Union (UCSCU), a government regulatory agency. The UCSCU is registered under the Uganda Cooperative Societies Statute of 1991 and its mission is to offer demand-driven quality service to SACCOs for their growth and profitability, in addition to improving their internal operations.