Ugandan Police are investigating four savings and co-operative credit organisations (SACCOs) suspected of fraud. They are alleged to be cheating their clients and making withdrawal of deposit money very difficult. The organisations are Front Page Micro Finance, Faster Micro Finance, Savings and Credit Cooperative Society Support Uganda Finance Limited and Stade Rugando Finance, all based in Kampala. According to the police up to 50 people have made complaints against the firms, accusing them of refusing to fulfil withdrawal requests completely and offering high-value loans against low-value collateral. Kampala Extra Region Police Spokesman Simeo Nsubuga said, “We have summoned the bosses of these institutions and they have recorded statements at CPS (Central Police Station) in Kampala. We are investigating them and their institutions. So far no charges have been preferred against them because the cases are still under investigation.” As a result there are reports that hundreds of clients of the largest firm under investigation, Front Page, flocked to their offices to withdraw their money.
Uganda’s SACCOs are a rapidly expanding network of credit unions that have developed to provide finance to low-income households. There are now approximately 2,000, 40% more than in 2000. Of these, 1,400 are fully registered while 600 are on probation. However, a report by the Consultative Group to Assist the Poor (CGAP) in 2005 reported that overall access to financial services is still very low in the country, with only 4% of the population saving with SACCOs.
The World Council of Credit Unions (WOCCU), a worldwide development agency supporting credit unions, claims that one of the biggest challenges facing Ugandan SACCOs today is the lack of a legal framework and supervisory system that can help protect member savings and generate confidence. They are working with the Ugandan government to prepare all Ugandan SACCOs for government supervision to develop the credit union legislation and regulation that are currently lacking.
Amy Rennison, MicroCapital writer
Additional Resources:
New Vision
http://www.newvision.co.ug/D/8/13/587130
Daily Monitor
http://www.monitor.co.ug/news/news09182.php
AllAfrica.com
http://allafrica.com/stories/200709200258.html
NextBillion.net
http://www.nextbillion.net/newsroom/2006/02/02/more-credit-lines-lower-interest-uganda
Microfinance Gateway
http://www.microfinancegateway.org/resource_centers/savings/cgapsavings1/_assessments/_uganda
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