The process of turning the Wafanyikazi Savings and Credit Cooperative Organisation into a fully-fledged commercial bank has started but with warning from the industry regulator that not until the necessary requirements are met, the transformation will not be granted.
One of the stricter conditions include raising the capital requirement of above Shs25 billion, something the Secretary General of Confederation of Free Trade Unions of Uganda, Dr Sam Lyomoki, has said is not only possible but already underway.
“All we need to do is to raise our numbers and agree on a certain contribution,” Dr Lyomoki, who is also Workers Member of Parliament, said earlier in the week at COFTU offices in Kampala.
He continued: “The plan we have is that between 2-3 years we should transform into a bank after operating as a Savings and Credit Cooperative Organisation (Sacco) for sometimes—and we are already on that course.”
With the Workers bank in place, Dr Lyomoki said employees (savers) will be encouraged to save as they also benefit from lower interest on loans that they borrow, including on facilities such as mortgages (houses).
He said: “The bank will link you up with different services and property providers, ensure that the terms and conditions is favourable and help you (workers) acquire a house for yourself using the rent you pay every month as a tenants.”
According to Dr Lyomoki, an arrangement will be struck where workers will do a down payment of not more than 30 percent then continue paying for the rent (money) until the mortgage is serviced—and the worker takes up the ownership of the property.
And in a situation where there is a default, the worker will be allowed to let out the property with the rent being channelled to service the loan before he/she reclaims it.
Industry analysts, Prof Augustus Nuwagaba, lauded the workers initiative to transform into a bank saying it will expand their fortunes and opportunity compared to the current status quo—Sacco.
He said: “This is a prudent move, And If they want they can list and transform into the bank. This is because the chances of raising investment as a bank are much more than just being a Sacco.”
He continued: “Members should support this effort because it will take them places and have their dreams to access mortgages and other facilities come true. This is because they will be in charge of the rates and it will be directly under their control.”