The Uganda Credit, Savings, and Cooperatives Union (UCSCU) has raised concerns about the fragmented regulatory environment governing Savings and Credit Cooperative Organisations (Saccos), warning that the current system is hindering the sector's growth.
Jalia Bintu, board chairperson of UCSCU, called on the government to streamline Sacco oversight under a single regulatory authority, arguing that conflicting laws and overlapping mandates are causing confusion and uncertainty within the industry.
Currently, the Sacco sector operates under multiple legal frameworks, primarily the Microfinance Deposit-taking Institutions (MDI) Act of 2003 and the Cooperative Societies Amendment Act of 2020.
While the MDI Act places SACCOs under the regulation of the Bank of Uganda, the 2020 amendments to the Cooperative Societies Act empower SACCO directors with regulatory and supervisory authority.
This dual regulatory structure has led to an unclear operational environment, with both the Ministry of Trade, Industry, and Cooperatives and the Bank of Uganda claiming oversight of the same institutions.
“We need a single regulator to oversee SACCO operations efficiently,” said Bintu.
She stressed that the current system is slowing down decision-making, stifling the ability of Saccos to expand, and affecting millions of Ugandans who depend on cooperatives for financial services.
In 2023, the Ministry of Finance introduced the Microfinance Deposit Institutions (Amendment) Bill of 2022, aiming to clarify the Bank of Uganda’s role in overseeing Saccos and reduce the influence of the Cooperative Societies Act.
However, the bill remains unimplemented, leaving concerns about Sacco regulation unresolved.
Financial experts warn that unless urgent reforms are made, Saccos will continue to face operational challenges that could limit their ability to offer affordable financial services to communities.
David Kato, a financial consultant specializing in cooperative banking, argues that a single regulatory body would improve the efficiency of Saccos: “A fragmented regulatory system makes it difficult for Saccos to operate efficiently. Having one regulator would simplify compliance, reduce bureaucratic delays, and encourage more Ugandans to participate in Saccos.”
Saccos are critical to Uganda’s economy, providing low-cost financial services to individuals and small businesses, particularly in rural areas where access to traditional banking is limited.
A well-regulated Sacco industry could drive financial inclusion and economic empowerment.
As the government continues to debate Sacco regulation, sector leaders are calling for swift policy changes to avert further disruption.
UCSCU insists that without reform, Uganda risks weakening one of its most vital financial sectors.
“With the current confusion, Saccos cannot grow effectively,” Bintu warned. “We need urgent reforms to protect members and ensure sustainability.”
The government now faces growing pressure to resolve the regulatory conflict and create a unified legal framework for Sacco operations.
If reforms are delayed, Saccos may struggle to compete with commercial banks, potentially leading to a decline in financial inclusion.
For millions of Ugandans relying on Saccos for savings, loans, and financial security, the outcome of this debate will shape the future of cooperative banking in the country.