MICROCAPITAL STORY: Lira Women Savings and Credit Co-operative Organization (SACCO) of Uganda Faces Audit Over Impropriety

Following complaints of financial mismanagement by the Lira Women Savings and Credit Cooperation Society (SACCO), the Ugandan State Minister for Finance in charge of Microfinance, Ms. Ruth Nankabirwa has stated that a special team of auditors will be sent to examine accounts of the Lira SACCO. According to a press release on Monitor Online, Ms. Nankabirwa, while speaking to members of the SACCO at their Lira office, assured them that the problem would be solved [1]. In this regard, Ms. Nankabirwa was also quoted as saying that the ‘government would give the organization more money’. (Monitor Online is the online edition of the Ugandan newspaper, Daily Monitor [2]. Established in 1992 it is jointly owned by the Nation Media Group [3] and five other undisclosed individual shareholders).

The audit is the result of recent accusations against Ms. Dolly Omolo Okullo, the head of SACCO. Ms. Okullo has reportedly been accused of misappropriating over SHS 40 million (approximately USD 520 k) collected from about 2,500 members [1]. Per information available, the Secretary General of SACCO, Ms. Mary Alany had sent a letter to the Minister for Microfinance in February this year accusing Ms. Okullo of mismanagement in addition to nepotism and using her home as office. According to a related April 2009 release on Lango Web, the Northern Uganda and United Kingdom based independent website, Ms. Alany called for ‘urgent intervention’ to rescue the institution before it ‘collapsed’. Stating that the chairperson had ‘personalized it [the SACCO]’, Ms. Alany also reported that Ms. Okullo had enrolled only her children and close relatives to work in the SACCO offices and ‘withdrew money without the board approval’ [8]. Lango Web also reveals that the above mentioned amount was found missing from the SACCO account in Crane Bank. Ms. Okullo also reportedly changed the SACCO bank account from Post Bank to Crane Bank without board approval [8].

The press release quotes Ms. Okullo as denying any wrongdoing [1]. Ms. Okullo has also stated the same in a related June 2009 publication by the Institute of War and Peace Reporting [5] where she acknowledged that money had gone missing, but denied that she was at fault and defended her organization’s record [5].

This audit is the latest in an on-going battle of the Ugandan government against corrupt microfinance organizations in the country. So far a number of SACCOs have been investigated by the Ugandan police and shut down [4]. Microcapital has extensively covered several such cases in Uganda; for more information on these cases, please click here. Although the Ugandan government initially used the SACCOs to reach out to the poor without exercising strict controls, increased instances of fraud in the recent past has forced the government to exercise stricter controls. These controls were enforced following government investigations [7] of many SACCO executives which prompted many organizations including The World Council of Credit Unions (WOCCU), a worldwide trade association supporting credit unions and representing 72 countries across the globe, to call for increased regulation [6]. The WOCCU declares the lack of a legal framework and supervisory system as one of the biggest challenges facing Ugandan SACCOs. To stop the embezzlement of savers’ money collected by SACCOs and to protect the Ugandan public, the Ugandan Government announced in April 2009 a regulatory body to license and to monitor the work of SACCOs [6].

SACCOs comprises of organizations that accept deposits and give loans to individuals and small businesses and is an integral part of the Ugandan government’s economic development project entitled ‘prosperity for all’ launched in 2007. The government channels money through SACCOs in order to reach poor individuals. SACCOs are controlled by The Uganda Cooperative Savings and Credit Cooperative Union (UCSCU), a government regulatory agency. The UCSCU is registered under the Uganda Cooperative Societies Statute of 1991 and its mission is to offer demand-driven quality service to SACCOs for their growth and profitability, in addition to improving their internal operations.

By Bharathi Ram, Research Assistant

Additional Resources:

Bibliography:

[1] Monitor Online: “Lira Sacco faces audit over impropriety” by Hudson Apunyo, July 20 2009, http://www.monitor.co.ug/artman/publish/regional-special/Lira_Sacco_faces_audit_over_impropriety_88347.shtml

[2] Daily Monitor: http://www.monitor.co.ug/artman/publish/about_us/index.shtml

[3] Nation Media Group: http://www.nationmedia.com/

[4] Microcapital Story, Jan 9, 2008: Another Microfinance Institution (MFI) Closes in Uganda as Chaos Continues in the Sector https://www.microcapital.org/microcapital-story-another-microfinance-institution-mfi-closes-in-uganda-as-chaos-continues-in-the-sector/

[5] Institute for War and Peace Reporting, Corruption Exacerbates Food Crisis, 23 June 2009, AR No. 219, available at: http://www.unhcr.org/refworld/docid/4a4491e3c.html

[accessed 21 July 2009]

[6] Microcapital Story, April 7, 2009: Uganda Government to Set Up Regulatory Body to Monitor Work of Savings and Credit Co-operatives https://www.microcapital.org/microcapital-story-uganda-government-to-set-up-regulatory-body-to-monitor-work-of-savings-and-credit-co-operative-organizations-saccos/

[7] MicroCapital Story, September 21, 2007: Police in Uganda Investigate Front Page Micro Finance and Three Other Microfinance Firms https://www.microcapital.org/microcapital-story-police-in-uganda-investigate-front-page-micro-finance-and-three-other-microfinance-firms/

[8] Lango Web: “Lira Women SACCO Bosses in Troubles Over 40m Shillings” by Ronald Odongo, April 14, 2009, http://www.langoweb.net/apps/blog/show/824593-lira-women-sacco-bosses-in-troubles-over-40m-shillings-

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