By Lydia Labanya
Gen Salim Saleh, the national coordinator for Operation Wealth Creation, has commended Stanbic Bank for easing the process to access low cost financing for agriculture -based Savings and Credit Cooperative Societies (SACCOs).
“It is commendable that Uganda’s largest bank is coming off its high-horse to partner with local SACCOs,” he said.
According to Gen Saleh, normally, a SACCO would have to provide a stream of documents to even access one million shillings in a commercial bank, but with Stanbic’s new offering, borrowing has been made easy for SACCOs and farmers.
He said, “Your efforts, combined with the government efforts and programmes like the Parish Development Model and Operation Wealth Creation, will help deliver households out of poverty.”
He made the remarks while officiating the launch of Stanbic’s SACCO proposition for Northern Uganda, at the Kaunda Grounds, Bardege Division in Gulu on May 27, 2022.
(Photo/Lydia Labanya)
How SACCOs will gain
The Chief Executive Officer, Stanbic Bank Uganda, Ann Juuko, said the bank, through its US$40m Economic Enterprise Restart Fund which was pooled by development partners, is currently lending to SACCOs in the agricultural sector at 10 per cent annually.
Since last year (when the fund started lending), they have disbursed over Shs 20 billion to nearly 2,000 farmer groups around the country.
Juuko said Stanbic Bank has put aside Shs 50 billion for Northern Uganda SACCOs alone for the next 12 months.
“This money is not a gift and will only be given to qualifying SACCOs. Our new proposition shows the bank’s unwavering commitment to facilitating Uganda’s growth by availing credit to critical sectors such as agriculture, crucial for job creation and income generation,” Juuko said.
She said the proposition is aimed at improving the financial management capacity of SACCOs and Village Savings and Loans Associations (VSLAs).
“The bank is quoting an affordable 10 per cent interest rate for SACCOs in the agriculture sector and 12.5 per cent for non-agricultural SACCOs together with an unsecured term loan of up to shs 200 million with a tenor of not more than 12 months,” Juuko said.
According to Juuko, other option is a secured term loan of up to shs 1.5 billion with a tenor of between 12 and 36 months maximum.
Juuko said: “We are hopeful that a product like this will have a measurable impact on the lives of our people on the ground.
“What we seek to do with this SACCO offering is to share our years of expertise and build the capacity of these organisations to operate at the same level of excellence and in a modern manner, similar to that of a bank.”
She further said, in addition to giving loans at affordable interest rates, as Stanbic Bank, they will also train beneficiaries to use their online platforms like Flexipay so that they can handle their finances better and also benefit from insurance packages the bank is offering.
Caution
Gulu City Woman Member of Parliament, Betty Aol Ochan, advised business owners against money lenders who offer financial bailouts at exorbitant rates and unrealistic terms where borrowers end up having their properties confiscated.
“Money lenders are lending money at 10 per cent interest rate per month, and some people think it is small, but if you are paying for a month, you have paid an interest of 120 per cent. No business can survive at such a rate,” Aol said.
According to her, SACCOs are one of the major avenues through which common Ugandans/farmers who form the majority of the country’s productive population, can pool efforts together to address challenges that currently affect agriculture in Uganda.
Gulu City Lord Mayor, Alfred Okwonga, said: “We have a problem in business leadership. We need exposure to train our businesses in agro-processing so they can be able to export and broaden their enterprises and create more jobs.”
He further said beneficiaries will be offered an opportunity to open a SACCO account which features free cash and cheque deposits, free transfers into the account from members and free cash withdrawals.
Other conveniences include free online banking, no monthly management fees, tiered interest paid on balances above Shs10m, financial literacy sessions for both the management and selected members, as well as participation in capacity building programmes at the Stanbic Business Incubator.
Stanbic Bank also announced it has slashed lending rates on ordinary personal loans to 15.5 per cent (against a market average rate of 19 per cent) as well as 100 per cent financing for outright home purchase and construction loans at 14.5 per cent over a 20 year period.
