The National Coordinator for Operation Wealth Creation, Gen. Salim Saleh, has lauded Stanbic Bank for easing the process to access low cost financing for agriculture based Savings and Credit Cooperative Societies (SACCOs).
Speaking at the launch of Stanbic’s SACCO proposition for Northern Uganda at the Kaunda Grounds, Bardege Division in Gulu recently, Gen. Salah said: “It is commendable that Uganda’s largest bank is coming off its high-horse to partner with local SACCOs.
“Normally, a SACCO would have to provide a stream of documents to even access one million shillings in a commercial bank. But with this new offering, you have made borrowing easy for SACCOs and our farmers.”
He added: “Your efforts, combined with the government efforts and programs like the Parish Development Model, Operation Wealth Creation, will help deliver households out of poverty.”
Stanbic Bank Uganda, 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% annually.
And, the bank has since last year (when the fund started lending) disbursed over Shs 20bn to nearly 2,000 farmer groups around the country.
Anne Juuko, the Stanbic Chief Executive, said the bank has put a side 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.”
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% interest rate for SACCOs in the agriculture sector and 12.5% for non-agricultural SACCOs together with an unsecured term loan of up to UGX200 million with a tenor of not more than 12 months.
The 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.
In addition to giving them loans at affordable interest rates, we will also train them to use our online platforms like Flexipay so that they can handle their finances better. They will also benefit from insurance packages that we are offering as a bank.”
Gulu City Woman MP, Betty Aol Ochan, advised business owners not to opt for unregulated money lenders who offer financial bailouts at exorbitant rates and unrealistic terms and borrowers end up having their properties confiscated.
“Money lenders are lending money at 10% 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%. No business can survive at such a rate.
SACCOs are one of the major avenues through which common Ugandans/farmers and who form the majority of the country’s productive population, can pool efforts together to address challenges that currently affect agriculture in Uganda,” she said.
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 that they can be able to export and broaden their enterprises and create more jobs.”
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 Shs 10 million, financial literacy sessions for the management and selected members, as well as participation in capacity building programmes at the Stanbic Business Incubator.
Last week, Stanbic Bank also announced it has slashed lending rates on ordinary personal loans to 15.5% (against a market average rate of 19%) as well as 100% financing for outright home purchase and construction loans at 14.5% over a 20-year-period.