The Uganda Cooperative Alliance has announced plans for a new co-operative bank to give agricultural co-ops access to loans, in a plan backed by the government.
An earlier co-operative bank, set up in 1964, was seized by the Central Bank of Uganda in 1999, which cited inadequate capitalisation and insolvency as the reasons for closing the bank.
The Alliance, which brings together over 1,400 co-operative unions, held its 54th annual general meeting in October. Members attending the meeting voted in favour of setting up their own bank to cope with the high cost of borrowing.
In an interview for the national broadcaster UBC Television Uganda, Geraldine Ssali, permanent secretary at the Ministry of Trade, Industry and Cooperatives, said the initiative could help co-ops improve productivity by borrowing at a better lower cost. Co-ops looking to secure loans from commercial banks are faced with double-digit rates over 20%.
The government set a community infrastructure programme in 2016 through which 270 agro processing facilities were created across the country to boost sector profits.
Ivan Asiimwe, general secretary of Uganda Cooperative Alliance, told UBC that these facilities operate at a 40% capacity and below due to the high cost of doing business. Members of UCA agreed to contribute Shs 5m each towards the bank.
The minister for co-operatives, Frederick Gume Ngobi, also pledged support for the project arguing that co-ops can develop more if they manage their own finances.
Meanwhile, the AGM also decided to summon a group of former UCA leaders, accusing them of selling its properties without members’ knowledge.
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