Government sets up fund to protect SACCO members’ savings

Government has established a contingency plan for members that may lose their monies in Savings and Credit Cooperative Organizations (SACCOs).

The latest safeguard has been established in form of a special Savings Protection Fund for SACCOs, with the aim of shielding members from unforeseen losses that usually arise out of management deficiencies or embezzlement tendencies in associations.

Established under the recently gazetted Tier 4 Microfinance Institutions and Money Lenders (SACCO) regulations 2020, the fund provides for compensation of members of savings and credit organizations for loss of their savings.

The regulations that were signed by the Minister of Finance, Planning and Economic Development, Matia Kasaija, were finally gazetted on July 7, to fully operationalise the Tier 4 Microfinance Institutions and Money Lenders Act, 2016, which established the Uganda Microfinance Regulatory Authority (UMRA) as a licensing and supervisory agency for SACCOs.

According to the regulations, SACCOs are now required to contribute an annual premium of 0.5 percent of their annual savings to the Protection Fund, which will directly be managed by UMRA.

The regulations put in place penalties for SACCOs that fail to comply with the requirements. Under its mandate, the regulatory authority has can suspend licenses of any microfinance institution over noncompliance with the regulations.

The State Minister in Charge of Microfinance, Kyeyune Haruna Kasolo, explains that the fund is somewhat similar to the Deposits Protection Fund that protects deposits by a certain percentage of the monies they hold in the event a commercial bank becomes insolvent.

He says the contingency fund is part of a well thought-out approach to strengthen the microfinance sector in the country and build public trust in SACCOs which have proven their capacity to improve the livelihoods of local populations by offering them affordable credit.

In the recent past, thousands of depositors affiliating to the various SACCOs have suffered losses as result of dishonest managers disappearing with the institutions’ finances.

The minister indicates that the new law mandates the authority to directly supervise the institutions at any time, as a way of preventing such eventualities

The gazetting of the regulations according to UMRA has also outlawed the operations of any SACCOs, Money lenders and other non-deposit taking microfinance institutions without valid operations licenses renewable on an annual basis.

Among other salient aspects, the regulations also demand that SACCOs submit to the authority their monthly returns on capital adequacy and liquidity statements.

UMRA was established by an Act of Parliament in 2016 with the aim of promoting a sound and sustainable non-banking financial institution’s sector, to enhance financial inclusion, financial stability, and financial consumer protection among the lower income population of the country.

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UPDATE: Masindi RDC gives Kinyara, out growers’ association ultimatum to agree on new sugar price

Masindi Resident District Commissioner (RDC), Martin Mugabi, has given Masindi Sugarcane Growers Association Limited (MASGAL) and Kinyara Sugar management one week to sort out their grievances over the sugarcane price for this financial year.

This was during a mediation meeting between the two parties that the RDC called at his office on Tuesday this week to resolve the impasse between the parties.

The meeting came after MASGAL rejected the price of 91,586 shillings for a tonne of sugarcane that Kinyara Sugar announced for this financial year which MASGAL says was reached without consulting them.

On July 1, 2020, Kinyara Sugar Ltd issued a new cane price for the 2020/2021 financial year which would be Shs. 91,586 per ton of sugar cane sold by the out growers. This was a decline from the previous price of Shs 108,200 shillings per tonne in the last Financial Year.

Speaking to the cooperator news a after the closed meeting, RDC Mugabi revealed that during the meeting the parties agreed to continue dialoguing on the matter with the aim of arriving at a mutually agreeable price.

“Another meeting will be held next week during which the two parties are expected to reach a consensus. I however appeal for calm from the farmers as the parties dialogue to ensure peace and prosperity in the area”, said Mugabi.

The chairperson Masindi Sugar cane out Growers Association Limited (MASGAL), Cosmas Byaruhanga, said they are ready to dialogue with Kinyara over the matter.

“The farmers would not have protested the price that Kinyara announced without consulting them if it was on the higher side,” Byaruhanga said.

Here’s our original story on the ongoing feud between Kinyara Sugar Ltd and the Masindi Sugarcane Growers Association Limited (MASGAL) about the cane price.

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