President Museveni has said government, through the Central Bank, will start to directly give low interest finances to credible micro-credit Savings and Credit Cooperative Organizations (SACCOs) in the country that have been using loans from commercial banks.
He said the move would enable SACCOs to access low interest rate loans to their members, especially the rural poor, who are fighting to overcome poverty.
The President made the revelation at a public rally held yesterday at Kaswa Primary School grounds in Kinoni Town Council, Bukoto South Constituency in Lwengo District in Greater Masaka area after opening a women’s bank known as Rural Women Micro-Finance Ltd.
Mr. Museveni said although most micro-credit associations and SACCOs boasts a large membership, have accumulated a lot of share capital and enjoy sufficient capacity to run themselves, they are at the same time constrained by lack of sufficient resources to lend to their members which makes to rely on loans from commercial banks that levy high interest rates that cannot help the poor in the poverty eradication drive.
According to the World Bank, Ugandans’ access to financial services has improved dramatically in recent years.
More than half of Uganda’s adult population now has access to an account at a formal financial institution
Museveni said government “fully appreciates the importance of accessing cheap sources of working capital by the population in the struggle against poverty.”
Therefore, he said, as such funds are available to government, they should be “directly extended to credible micro-credit institutions that are devoted to fighting poverty among the population.”
Only 16% of the adult population keep their savings at formal deposit taking institutions, including banks, micro finance institutions and savings and credit institutions.
Up to 60% of adult Ugandans still keep their savings at home and in the form of assets such as animals.
Moreover, a much larger share of the population, reaching more than 65%, are unable to access formal financial institutions for credit.
This proportion of the population relies on informal sources of finance or their own, their families’, or their friends’.
As a result, a significant proportion of the population is unable to increase productivity through investments in better equipment, and too many Ugandans continue to rely on subsistence activities, particularly in the agricultural sector.
At a time when the country is aspiring to achieve middle-income status, this is not good news.
The President had earlier commissioned a water project that will supply piped water to a number of areas in Bukoto Constituency, such as Kaswa and Senge.
He said much as government is on track in spearheading development in the country through the development of the necessary infrastructure, the population must play their part to eliminate household poverty to allow the country attain her much desired prosperity.
Mr Museveni sounded a strong warning to head teachers who continue levying fees in Universal Primary and Secondary Education schools saying stressing severe reprimand awaits those involved.
He, therefore, urged Movement leaders and the newly elected Local Councils to use their proximity to the population to stamp out the vice from schools.
The President expressed happiness to note that crime had gone down in Greater Masaka area following the intensification of operations by the security agencies in various places of Greater Masaka.
He attributed the wave of crime in the past few months to the infiltration of the Police by criminals. He, however, assured of security in the country because the Government has taken many interventions to ensure sanity.
Bukoto South MP, Hajji Muyanja Mbabali, said the newly commissioned Rural Women Micro-Finance platform does not take collateral security while giving loans to members because their SACCOs are their guarantors.
He revealed that the bank membership is drawn from ordinary traders, farmers, artisans and boda-boda cyclists who are mostly low-income earners.