Co-op Bank will save Uganda the ’embarrassment of borrowing from China’

Co-op Bank will save Uganda the ’embarrassment of borrowing from China’
Eazzy Banking

Civil Society organizations have joined the push for the revival of the defunct Uganda Cooperative Bank.

The Bank, which provided low-interest loans to farmers through cooperative societies, was wound up in 1998 amid reports of fraud and poor credit policies which triggered its insolvency and inability to raise minimum capital requirements.

Its closure implied that farmers had no access to low-interest loans and found difficulty to access funding through commercial banks whose interest rates were far above the rate provided by the cooperative bank.

But civil society organizations argue that only the cooperative bank can decisively deal with the unique credit constraints facing the agriculture sector.

Agnes Kirabo (pictured up), the Executive Director of Uganda Food Rights Alliance advised that revival of the cooperative bank will save Uganda from the ’embarrassment of borrowing from China’.

She was speaking at a consultative meeting organized by the Civil Society Budget Advocacy Group-CSBAG at the NGO forum offices in Kampala.

Why they are right

The collapse of the Cooperative Bank meant that most of the country’s co-operative societies could no longer access low interest loans in the form of Crop Finance to continue purchasing commodities like coffee, cotton, maize and others from the farmers.

In other cases, some of the cooperatives, including Masaka Growers Union, which had installed a plant to process juice from the pineapples that had been in abundance in the Masaka area were forced to close operations. The plant ceased production in 1989.

The collapse of the cooperatives also meant that those who had been engaged in direct and indirect employment no longer had jobs to hold onto.

The collapse also meant that farmers were now bereft of a platform on which they could bargain good prices for their produce.

They were now left at the mercy of unscrupulous produce buyers who were taking their produce for a song.

That inevitably led to a collapse of the rural economies and an increase in the levels of poverty in the countryside.

That resultant poverty and income inequality forced more rural-urban migration as people left the villages to flock the towns in search of jobs or anything that could put food on their tables.

The result has been a sharp rise in the number of slums and the advent the street children phenomenon.

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