Calls for Co-operative Bank revival as President orders Shs13b loan payoff
President Museveni arrives at Kyankwanzi last week for the NRM retreat. The President has directed ministry of Finance to pay off co-operative loans. PHOTO BY PPU
What you need to know:
Push factor. Bank expected to boost cooperative unions performance and provide affordable loans to farmers.
Kampala.
Minister of Trade, Industry and Cooperatives Amelia Kyambadde has put up a case for the revival of Cooperative bank, saying without it, the dream for commercialising agriculture could take longer than predicted.
“Government should revive the Cooperative Bank in order to steer the performance of cooperative unions in the country,” Ms Kyambadde is quoted to have said.
Speaking last week at the NRM caucus retreat in Kyankwanzi, Ms Kyambadde, said the revival of the cooperative bank also known as the agricultural bank, will help provide affordable loans to farmers.
She said: “Farmers and traders find it difficult to access loans in commercial banks due to the high interest rates which range between 20 and 30 per cent.”
Analysts argue that government’s renewed interest in co-operatives is informed by its desire to modernise agriculture and improve the social and economic welfare of its people.
In an earlier interview, Mr Morrison Rwakakamba, a researcher and consultant, said with the cooperative bank in place, farmers will not only strengthen their collective bargaining powers over meagre prices, but also be in position to secure fair credits that that will see them graduate from subsistence to commercial agriculture.
Despite earlier efforts to revive Cooperative Bank, it is believed that lack of insufficient capital saw the collapse of the agricultural bank in 1999—nearly one and half decades ago.
“Government still owes a number of Cooperative Societies for properties lost during the bush war that brought NRM in power in the 1980s. This has hindered the progress of the cooperatives,” Ms Kyambadde said.
She said the cooperatives included Banyankore Kweterana Union, Masaka Cooperative Union Ltd, West Mengo Cooperative Union Ltd, East Mengo Cooperative Union Ltd, Bunyoro Growers Cooperative Union, West Acholi Cooperative Union Ltd among others.
Loan payoff
While in the meeting at Kyankwanzi, President Museveni also directed the ministry of Finance to quickly pay off all loans that government owes Co-operative Unions.
The amount to be paid to about 10 cooperative union is in excess of Shs13billion.
Pressing issues and the death of cooperatives
Because of pressing security and economic issues in the mid-1980s, co-operatives ceased to be among the priorities of the government of the day.
With Structural Adjustment Programme (SAPs), co-operatives were treated as State parastatals. And among other things, the World Bank/IMF programme demanded that government sell all its parastatals to private investors, for better management.
In the place of co-operatives emerged the shrewd private business people who eroded the co-operatives’ market share.
All this happened under the SAPs that were expected to turn around cooperatives.
Now, the government is beginning to think of revitalising co-operatives with a view to address farmers’ issues and other community development agendas.
