By Namugerwa Martha
Ministry of Trade, Industry and Cooperatives (MTIC) has embarked on a journey to promote financial inclusions in rural areas in a project named Promoting Financial Inclusions in Rural Areas (PROFIRA).
While addressing the media at the Ministry of Trade head quarters, Henry Mbaguta the commissioner of finance in the MTIC said that they are going to promote financial inclusions trough micro finance services and Savings and Credit Cooperative Societies (SACCOs) in order to improve on the income of people in rural areas.
“Microfinance services are going to help people who need where to save, people who need credit while the collateral which will be used will more less be based on trust,” Mbaguta said.
He added that the introduction of Microfinance in Uganda reduced poverty levels to 19.5% from 56% in 2002 as well as contributing significantly to the reduction of poverty levels in rural areas were the investment has also increased the sector.
“In the financial sector we have over 200 Forex Bureaus that have about 25 commercial banks with over 600 branches and 3 credit institutions with over 50 branches and Microfinance deposit Institutions,” Mbaguta added.
Mbaguta further added that the government supported establishment of SACCOS in every sub county to create financial infrastructure in communities which they were communally funded, managed and controlled.
However, the project manager of PROFIRA, Lance Kashugyera said that the project has some difficulties because Banks have not yet reached to serve the entire Uganda, especially people in the rural areas whereas this project seeks to strengthen SACCOs which are already in existence but are weak.
“A SACCO is a cooperative financial institution, owned and controlled by its members and today Uganda has SACCOs which serve more than one million Ugandans around the country,” Kashugyera said.
He added that SACCOs typically serve groups of people who have something in common, where they live, work or attend church and they are not for profits but exist to provide members with a place to save money and get loans at reasonable rates which is democratically controlled by only financial institutions.