Kampala — THE Finance ministry has allocated sh22b to consolidate the nationwide network of rural Savings and Credit Cooperative Organisations (SACCOs in the 2008/09 budget. The money will be channelled through the Uganda Cooperative Societies and Credit Unions.
According to the National Budget Framework paper 2008/09, the funds will help establish 14 regional branches to deliver financial services to rural areas and formulate a law to govern SACCOs.
"These branches will subsequently be transformed into regional networks. In the same vein, the Microfinance Support Centres Ltd will be supported to strengthen its regional offices and to increase them from the current 12 to 15," the paper indicates.
The paper said each of these offices will be given a credit loan float of sh500m and will have the authority to approve and disburse loans of up to sh50m to a SACCO.
It added that the rural financial services programme will also focus on the operationalisation of the SACCO Specific Act 2008 and the SACCO Regulations 2008.
"The key area of attention will be the establishment and operationalisation of the SACCO Regulatory Agency," the paper disclosed.
According to the paper, a study will be carried out to determine the financial and human resource implications of the agency.
The said efforts will be on-going to ensure that SACCOs begin to comply with the new law once it takes effect.
The paper added that the rural financial services organisation will focus on the regulation of the remaining institutions under tier four, which include the non-deposit taking micro-financial institutions, the micro-finance NGOs and the privately-owned wholesale lending institutions.
"A framework will also be provided for the operations of the rotating village savings and credit associations and the village savings and loan associations."
"The rural financial services programme will develop the monitoring and evaluation system that will help in reporting the progress of the programme. A survey of all microfinance institutions will be carried out to determine its size and its impact on household income."
This programme is aimed at improving the accessibility of micro-finance through SACCOs at every sub-county and later at parish level.
In sub-counties where these institutions already exist, the Government will help them in training and will lend them money for onward lending to their members.
In sub-counties where such institutions do not exist, the Government will sensitise the people and help set them up.
The Government also intends to organise youth in various trades like boda- boda, wheelbarrow pushers, newspaper vendors and vendors in the market into savings and credit societies through which they will access micro-finance.
The objective is to encourage savings mobilisation and the safe use of these deposits to provide investment capital to rural enterprises in form of loans, the paper said.
This will be done through the formation of SACCOs in sub-counties where none exists, strengthening existing but weak SACCOs, supporting expansion of services by strong SACCOs, effective SACCO supervision and regulations and wholesale lending.
However, experts argue that while access to financial services was important, it cannot on its own ensure positive and sustainable improvement in the lives of the rural population.
They insist that it is important to provide skills for managing the enterprises, road network to facilitate marketing of produce, and information on markets, prices and opportunities.
Absence of this, they add, will suffocate the efforts by SACCOs in extending loan facilities because their members will continue to be affected by low farm gate prices, high post-harvest losses, lack of markets, which negatively impacts on the capacity of SACCO development and people's chances of improving their standards of living.