New UCSCU Chair to Lobby for Harmonisation of SACCO Regulations

By Nancy Akullo

Newly elected Board Chairperson of the Uganda Cooperative Savings and Credit Union (UCSCU), Hon. Bintu Jalia Lukumu has pledged to continue lobbying for favourable policies and regulations for Savings and Credit Cooperatives (SACCOs).

Elections for new Board members were held during the Annual General Meeting (AGM) in September 2018. Hon. Bintu, who is also the Chairperson of the Parliamentarians SACCO is the District Woman Member of Parliament (MP) for Masindi.

Mr. Sylivester Ndiroramukama, the CEO of UCSCU said, “Hon. Bintu has been very influential in lobbying for SACCO policies. She was supportive of the 10-year Income Tax exemption.”

Among the regulatory issues of contention for SACCOs, Hon. Bintu cites the dual regulation by the Tier 4 Microfinance Institutions and Money Lenders Act (2016) as well as the Cooperative Societies Act Cap. 112.

“You cannot ask me to operate under 2 environments. If I abrogate this one, then the other one will strike me,” she said.

She cited a clause which mandates SACCOs with voluntary savings in excess of 1.5 billion shillings and institutional capital above 500 million shillings to apply to for a license from the Central Bank. Bank of Uganda (BoU) has since developed regulations for these SACCOs.

“The principles of SACCOs are different from where they are taking us. BoU has been regulating banks. Now they are taking SACCOs (which are member owned and operating under the Cooperative Act), and placing them under Bank of Uganda Act and other regulations. We need to harmonise this,” Hon. Bintu said.

In 1999, BoU adopted a tiered approach to the regulation and supervision of financial service providers.

4 Tiers emerged and SACCOs were placed under Tier 4 (Microfinance institutions not supervised by BoU).

In July 2017, the Tier 4 Microfinance Institutions and Money Lenders Act (2016) was enacted, to regulate SACCOs and other Tier 4 institutions.

However, SACCO members have expressed concern over the Act. During a consultative dialogue organized by Uganda Cooperative Alliance (UCA) in May 2018, they said the Tier 4 Act makes SACCOs lose their identity as cooperatives and mainly focuses on licensing rather than operations.

Hon. Bintu gave re-assurance that the inconsistencies will be harmonised.

The MP was also instrumental in lobbying for the introduction and preservation of the 10-year Income Tax waiver for SACCOs, in 2017 and 2018, respectively.

She said the tax waiver will enable SACCOs to stabilise and build their internal capacity.

“When you tax SACCOs, you are likely to kill the morale and urge people have developed in saving, and yet here we are saying let’s promote a savings culture,” Hon. Bintu said. “After 10 years, we shall say now we are ready to pay taxes,” she added.

END.

The full list of newly elected UCSCU Board and Supervisory Committee (SUPCO) Members 2018/2019

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