Effectively Regulate SACCOs To Flash Out Thieves – Mbale Mayor

By: Javier Silas Omagor

Government of Uganda should ensure that there are enough functional parameters put in place to regulate and supervise the formation of savings and credit cooperative societies, popularly known as Saccos in communities.

Hajji ZandyaMutwalibMafabi, Mbale Municipality Mayor made this call while in an exclusive interview with our reporter in his Mbale office.

“Though these Saccos are of undisputed significance to our community members, we need to effectively monitor and regulate them from grass root level to avoid unsuspecting people from being taken advantage of by unscrupulous individuals.” Mayor Mutwalib said in an interview with Elgon Daily.

Mbale Mayor Zandya Mutwalib Mafabi, Photo Credit By Javier Silas Omagor

In efforts to build robust rural financial systems to enhance financial inclusion, government has continued to encourage the formation Saccos both in rural and semi urban areas.

In fact, during his recently concluded wealth creation country tour, President Yoweri Museveni, was encouraging the citizens to form Saccos which he promised to support through a special fund such as Boda –boda fund, Carpentry Fund, Saloon Fund and Media operators’ Fund among others.

According to Michael Werikhe the state minister for trade and industry, in the year 2009, the statistics indicated that there were over 3155 Saccos, stressing that the number has since more than tripled.

Saccos are member based organizations whose core business is to encourage thrift and easy access to credit to their registered members. Members pull resources together in form of savings, and use the mobilized savings to extend small credit facilities to members within the Saccos.

They are legal bodies registered under the Uganda Cooperative Statute of 1991 and Cooperative Societies Regulations of 1992.

The government is hoping to extend financial services to more Ugandans through its seven-year project for Financial Inclusion in Rural Areas.

FinScope survey 2018, indicates that 42% Ugandans today are significantly more likely to borrow money from their Saccos to cover unforeseen expenses or children’s education, justifying how vital this saving service is compared to other available financing options.

Urban areas have also embraced SACCOs to save and borrow in Uganda

Only 14 per cent of Ugandans are part of the formal banking sector, less than 10 million have bank accounts and 15 per cent of the country’s adult population is still financially excluded, the FinScope 2018 survey, shows.


While Saccos have continued to improve access to savings and small credit facilities to rural communities in the absence of commercial banks, dubious elements have used them to dupe people of their small savings.

“Most times, my office receives cases of mushrooming Saccos under the guise of providing the rural poor with the financial services and a sudden disappearance of these wrong elements with little savings mobilized from the poor, majority members.”Mutwalib, said.

According to Mbale Mayor, with the government’s push for the formation of more Saccos’, selfish people have used this window to convince unsuspecting members to establish saving groups under unclear procedures, mobilize savings and later take off.

Apparently, any member in the community can start a Sacco and go around mobilizing members to join him or her without necessarily seeking for any form of authorization.This is why Mbale Mayor is calling for immediate regulation intervention;

“There is need to introduce policies which compel anyone or group starting a Sacco to ensure that they are registered, members well profiled especially those holding key leadership positions, before they are allowed to operationalize their activities.” He said.

Mutwalib is also concerned with other Informal financial service providers –who are not regulated or supervised such as Village Savings and Loan Associations (VSLAs), rotating savings and credit associations (ROSCAs), community-based money lenders among other saving service providers.


Until 2017, the financial sector regulatory framework provided for tier one to tier three institutions leaving out Saccos which are vital in provision of financial services to low income people but whose activities, unless regulated, could also disrupt people’s economic lives.

Under this law, members’ savings are said to be safer since Sacco managers will be required to have security in the bank worth the money they are going to handle in the Sacco.

However, a section of Sacco players who spoke to our reporter claim that this clause is not practiced at all in their groups.

Miriam MajjaKuholaku, a Sacco player in Mbale municipality, is in support of Mutwalib’s call, advancing that though the new Sacco law which came into force On July 1 2017 is viable, absence of close regulation for Saccos has resulted into huge losses to the members.

“If implemented well as it mustbe, the new law will sort out the bad apples from the Saccos business. For example, having official premises and registered business name as well as other necessary requirements will help kick out the thieves,” Kuholaku, told our reporter.

Minister Werikhe however, seemed to differ from the idea of introducing tight regulations and supervisions to this sector.

“It’s government responsibility to instill the saving culture into our citizens and Saccos are so far doing the great job in this aspect, so if we rush to introduce rigid regulations and supervisions, it might discourage this very spirit we are desperate for among our people.” Minister Werikhe reasoned.

Hon. Silas Aogon, a member of parliament for Kumi Municipality argued that unlike banks which he says are only based in urban areas, Saccos are not discriminative in nature as they go on to serve everyone across the country.

“I agree that we need some good gatekeeping in this area. The people who are suffering most are the ones in the villages. but we also need to be careful while introducing things such as Saccos taxation and close regulation because it might end up limiting its growth. Said Aogon.

Henry Mbaguta, assistant commissioner in the Financial Services Department in the Ministry of Finance, Planning and Economic Development, shares the same sentiment with Mbale Mayor.

“Effective regulation and supervision will ensure adequate compliance to the law and provide an important tool for financial inclusion,” said Mbaguta.

Mbaguta adds that this also encourages continued use of these institutions through savings and access to credit facilities.



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