Bank of Uganda has started the implementation of regulation of substantially well capitalised Savings and Credit Cooperative Societies (Saccos).
The move, which starts with the issuance of an MDI licence to Ebo Sacco, targets saving societies with savings of above or UGX 1.5 billion provided under the Microfinance Deposit-Taking Institutions Act, 2022 and guided by the Microfinance Deposit-taking Institutions (Registered Societies) Regulations, 2022.
Last week, Bank of Uganda issued Ebo Sacco with an MDI license in a shift that takes regulation of big Saccos away from Uganda Microfinance Regulatory Authority to the Central Bank.
In 2022, Finance Minister Matia Kasaija presented to Parliament the amended Microfinance Deposit-Taking Institutions (Amendment) Bill, 2022, which proposed, among others to permit Micro Deposit-taking Institutions to expand into agent banking, provide insurance services and products through Bancassurance, offer Islamic finance (Islamic microfinance) and give Bank of Uganda supervisory oversight over registered societies with voluntary savings in excess of Shs1.5b and institutional capital of above Shs500m.
The Bill was later enacted, after which Bank of Uganda, together with Ministry Finance and First Parliamentary Counsel in the same year drafted the Microfinance Deposit-taking Institutions (Registered Societies) Regulations, which were approved and gazetted to operationalise the proposals.
However, the implementation had been delayed by a case in which the Uganda Cooperative Savings and Credit Union challenged the shift, reasoning that Parliament had rejected the provisions in the Microfinance Deposit-Taking Institutions [Amendment] Bill, 2022 which sought to bring registered societies under the supervision and regulation of Bank of Uganda.
dfcu Bank Partners with Jubilee Health to Launch BlueCare Health Insurance SolutionEbo, which has its headquarters in Bwizibwera Town, about 25 kilometers from Mbarara Town, becomes the first Sacco to be regulated by Bank of Uganda.
It was founded in 1995 as a rotating savings and credit association and in 2002 it was registered and started formal operations as a Savings and Credit Cooperative with membership initially from Rwanyamahembe Sub County but later expanded into Kashari County, Mbarara Municipality and neighbouring districts of Sheema, Ibanda, Kiruhura, Kamwenge and Buhweju.
The Sacco has since grown to more than 92,840 individual members, 4,000 farmer groups and currently operates 13 branches in western Uganda.
Other Saccos with large savings include Wazalendo, Parliamentary Sacco, Mushanga Sacco, Muhame Sacco, Ankole Farmers’ Sacco, among others.
In 2023, Ebo registered a profit after tax position of UGX 2.4 billion, which was an increase from UGX 446 million, while the outstanding loan portfolio rose to UGX 52.7 billion in 2023 from 40 billion in 2022.
