Ivan Asiimwe, General Secretary of the Uganda Cooperative Alliance. PHOTO/ RONAH NAHABWE
What did the investigation reveal about the closure of the previous cooperative bank?
According to the instructions from Parliament, Cosase was directed to meet with all defunct banks, including the Cooperative Bank.
We discovered that the institution which was closed was not the Cooperative Bank established in 1964. Instead, it was a company formed on November 20th, 1997.
Two years later, the assets of the cooperatives were liquidated under this same name. Upon further investigation, we found that this newer entity had only seven members, none of whom were actual cooperatives.
The Cooperative Bank of 1964, had been properly registered with the Trade Ministry as a cooperative society, whereas the 1997 company was registered with the Companies Registry. Thus, it is clear that these two entities are fundamentally different.
What actions have been taken following these findings?
Since then, we have been advocating for the Bank of Uganda to provide a liquidation report. As the apex body representing cooperative interests, we currently do not possess this report. Therefore, while I can't discuss too much without it, I believe the Central Bank needs to provide more clarity on this issue.
When should we expect to have the Bank up and running?
The timing is contingent on the availability of resources. Once the funding is secured to conduct this research study, we can have the Bank operational.
Our goal is to complete this research within a year. After its release, we shall be able to advance to the next stage, which involves mobilising resources to establish the Bank.
What efforts are underway to revive it?
Fortunately, the Cabinet has approved the decision to start a Cooperative Bank. The ministry has formed a committee that has traveled across the country to engage with cooperators. There has been a unanimous agreement among them to initiate and capitalise the bank. Our next step is to conduct a comprehensive study.
Following that, we shall launch a report for discussion among stakeholders to understand the legal, economic, financial, and political landscapes required for the bank's success.
How different will the Union be once it is back?
The Cooperative Bank will provide affordable and appropriate financing. Unlike commercial banks which we do not own, we want a bank where cooperators have a stake. We envision a structure that allows us to collectively discuss interest rates and operate under cooperative principles. This bank will specifically help farmers by providing credit with appropriate timelines for harvest.
What financial gaps will it address?
The Cooperative Bank aims to fill significant financial gaps for smallholder farmers, ensuring they can access credit. It is crucial to understand that borrowing at an interest rate of 2 percent can be unsustainable.
We plan to offer agricultural loans that are patient and specifically designed to help our cooperators thrive. This means providing them with viable financial solutions that align with their unique needs.
Are there liquidity concerns?
I want to tell you that co-operators have money, for instance, Wazalendo has assets in trillions, surpassing some banks with a portfolio of over Shs1 trillion, indicating it is capable of starting a bank.
Although initiating a bank requires more than Shs150 billion, there is a clear opportunity.
We count over 46,000 registered cooperatives with a total membership of 18 million. If each member were to contribute Shs20,000, that would amount to Shs360 billion, which would be sufficient to establish a bank.
But at this point, we need a shift in mindset, encouraging people to recognise that enough is enough, and it is time to create our bank.
We are moving forward rapidly, but research will guide us. You might wonder what this research will entail—whether we are looking at a commercial bank or an MDI. The findings will provide clarity.
Cooperatives were initially developed to serve specific needs. Over time, these cooperatives have evolved into companies. As they grow, some of these companies become multinational corporations, which then send agents to teach the principles of capitalism in other regions
