Makerere University Business School (MUBS) Principal Prof. Waswa Balunywa has argued that Uganda is losing an opportunity to mobilise capital for investment through Savings and Credit Cooperative Organizations (SACCOs).
Though Balunywa said SACCOs are for the poor people, he noted it is through these savings organisations at the village level that capital for funding huge businesses, development programmes and stock exchanges cane be mobilised.
According to the Ministry of Trade, as of January 2017, there were 8,285 registered SACCOs in Uganda.
For instance, Balunywa mentioned MUBS staff SACCO which has over 100 million Shillings idle on account. He said the growth of Africa will not come without parastatals and the people to fund these parastatals are in SACCOS.
Balunywa who was giving a keynote address at MUBS Economic Forum at the main campus in Nakawa on Thursday, said government should not intervene in the management of SACCOs such as appointing their officials like it did with cooperatives. He warned that government intervention will lead to their downfall.
Responding to Balunywa’s remarks, Colin Agabalinda, manager for SACCOs in the Ministry of Finance noted that government is no longer a direct participant in SACCOs financing and management.
“Initially, government had what you would call direct intervention. You remember the ‘Entandikwa‘ scheme where the government was the direct lender. After realising it wasn’t working, the government shifted to a strictly private sector-led intervention when it put money in micro-finance institutions like FINCA and Pride Micro Finance among others,” he said.
Agabalinda said government is only bringing the public and private together by supporting SACCOs or Community Savings and Credit Institutions to be able to mobilise their own savings so they can access them as loans.
He said government is also providing capacity development to SACCOs across the country.
Agabalinda said technocrats don’t support political donations but argued it’s difficult to persuade politicians from making donations to SACCOs because of political capital.
“If the president came and found you coming up with your SACCO and made a pledge of 100 million Shillings, for us in the technical side we discourage that but you should recognise it as a donation and you should not let it disrupt your business,” he said.
He also noted that government has had a long history supporting financial inclusion in areas where commercial banks do not reach.
Currently, the Ministry of Finance is running a 30 -million-dollar loan project from the International Fund for Agricultural Development (IFAD) which supports SACCOs in rural areas.