President Yoweri Museveni has thrown his weight behind Savings and Credit Cooperative Organisations (SACCOs) seeking relief from the Bank of Uganda’s strict licensing campaign, hinting at possible political intervention in a growing dispute over how the sector should be regulated. His position emerged after high-level engagements with SACCO leaders, legal representatives, and parliamentary officials, culminating in discussions at State House.
The meetings, which included officials from the Uganda Cooperative Alliance and lawyers from Kampala Associated Advocates (KAA), centered on complaints about recent directives from the central bank. BoU has been pushing to place large SACCOs under the Microfinance Deposit-Taking Institutions regulatory framework, a move that cooperative leaders say does not reflect the true nature of their operations.
According to KAA, the discussions were constructive, with the President reportedly agreeing that enforcement should be slowed to allow for wider consultations and legal alignment. The legal team argued that harmonising the law is essential before imposing central bank licensing on institutions that operate under a fundamentally different ownership and governance model.SACCO leaders insist that cooperatives are not profit-driven financial corporations but member-owned and member-managed entities built to serve communities.
They argue that imposing the same regulatory standards used for commercial banks and microfinance institutions could suffocate a system designed to extend affordable credit to ordinary citizens, especially in rural and peri-urban areas.Sector representatives warn that overly rigid rules could derail government efforts to use cooperatives as engines of grassroots economic growth. Many SACCOs provide the only accessible financial services in remote communities, and leaders fear that heavy compliance costs would reduce lending capacity and weaken financial inclusion.
Beyond licensing concerns, Museveni is also said to have supported extending the tax holiday currently enjoyed by SACCOs, which is set to expire next year. Industry players believe this relief would help stabilise cooperatives as regulatory uncertainties are addressed, cushioning them from financial strain during the transition.The President’s stance diverges from that of Attorney General Kiryowa Kiwanuka, who recently advised authorities to halt operations of large SACCOs operating without required licences.
His legal opinion underscored the need for strict adherence to existing laws, intensifying pressure on non-compliant institutions.BoU maintains that nearly 100 SACCOs have crossed the legal thresholds that warrant central bank oversight, yet only a small number have applied for licences.
As debate continues, policymakers now face the delicate task of balancing financial stability and legal compliance with the social and developmental role SACCOs play for millions of Ugandans.
