The State Minister for Cooperatives, Fredrick Gumme Ngoobi, has cautioned leaders of different Saving Cooperatives and Credit Organizations (SACCOs) to refrain from presenting audit reports to their members inappropriately.
Gumme issued this warning during the 5th East African Cooperative Societies’ Forum in Kampala, which brought together members, leaders, and regulators in the SACCO industry.
Gumme stated that many SACCO leaders intentionally present unclear audit reports to obstruct their members from comprehending the details within these reports, which provides a loophole for cheating and misappropriation of funds within the organizations.
He added that such behavior weakens the SACCO movement and erodes the trust that Ugandans have in it. “The SACCO movement would be very powerful, but because of such mannerisms, people are slowly losing trust in the whole arrangement, and we are all losers in the end,” he said.
However, the microfinance and SACCO sector in Uganda is still facing several challenges that are hindering its progress, including the inconsistent regulatory framework and the lack of a proper national plan to nurture the industry.
Gumme cited the fear of the Central Bank being one of the SACCO regulators as one of the issues that are holding back the sector, owing to its rough history with the closure of the Cooperative Bank in the 1990s.
Under regulations, we still have a lot to talk about, because when cooperators hear about the Bank of Uganda among their regulators, yet it is the one that closed the Cooperative Bank, it brings questions.” He said.
Edith Namugga, the CEO of the Uganda Microfinance Regulatory Authority (UMRA), blames the SACCOs’ problems on their deliberate avoidance of regulation by exploiting loopholes in the current regulatory framework.
“Many of these problems would be avoided, if the SACCOs were allowed to be regulated irrespective of the legal issues, and this would have solved many of their internal problems and the sector obtains more trust among Ugandans,” she said.
Namugga notes that the sector is also challenged by the lack of a borrowers’ database that can help to detect defaulters, which could potentially impact the entire economy.
The database will also aid in detecting any money laundering tendencies within the sector and ensure that Uganda doesn’t appear on the grey list due to issues in the SACCO industry.
“It is possible that there could be money laundering going on in the sector, so we want to comb that out so that the money we have in tier four is the money that we are supposed to have there. We must make sure that Uganda doesn’t appear on the grey list because of issues in the sector, but we also want to comb out many other issues using this list,” Namugga explained.
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