The Deputy Speaker, Jacob Oulanyah has advised government that unless Saccos shift from simply extending credit and savings to financing production, realizations of the desired wealth creation among rural and poor communities will be miraculous.
Oulanyah said that Saccos have not been keen on assessing the potential of creditors to transform loans into income, thus resulting into numerous cases of defaulting and misuse of loans.
“The concept of Saccos is to an extent misleading; you don’t have to give money to whoever wants it. if you do that, people will take money, marry the second wife and you start chasing them as if they are criminals,” said Oulanyah.
He called on the Microfinance Support Centre to guide Saccos to lend to people who are visibly engaged in enterprises, saying that, “without production in the concept of Saccos, the available funds will go for consumption”.
He urged government to look into the then ‘Crop Finance’ which extended loans to farmers to assist them purchase farm inputs and carryout farming.
Legislators were concerned that despite the creation of the Micro Finance Support Centre, money lenders and Saccos are still fleecing poor people and mistreating defaulters..
Johnson Muyanja Mbabali (MP Mukono South) told Parliament of a Sacco called Mutual Trust operating in his constituency, that makes its members pay almost 10 times in case of loan repayment.
“They are arresting women; if you repay a loan and remain with a balance of shs30,000, the Sacco fines you shs400,000; I wonder who registered such microfinance, ” said Muyanja.
Nyabushozi County MP, Fred Mwesigye was concerned that government has not considered mentorship and monitoring of Sacco operations, saying that many creditors are illiterate and lack the skills to sustain loans.
The State Minister for Micro-Finance, Haruna Kasolo Kyeyune said that the Micro Finance Centre has since January this year implemented the presidential initiative on wealth creation known as ‘emyooga’ which see Saccos extend loans to groups already engaged in enterprise.
“In the new arrangement, we are targeting groups in specialized enterprises such as saloons and carpentry. We are extending credit to people who are already doing something,” he said.
Kasolo revealed that under the emyooga concept, government will give shs30 million as seed capital to each of the Myooga saving groups and Saccos and that sensitization for members is underway countrywide.
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