Savings and credit cooperative organizations (SACCOs) across the country are planning a delegation to meet President Museveni, urging him to extend their 10-year tax waiver, which is set to expire in 2027.
The SACCOs argue that the current 30% tax waiver has provided significant benefits to their members, including increased profits from annual dividends and savings.
“While we’re planning a SACCO delegation to meet the president, we are worried about two possibilities. He might extend the waiver, or he may remove it and ask us to start paying. The uncertainty about what decision he will take is what worries us,” said Kahigi Paul, chairman of the Board for Kyamuhunga People’s SACCO in Bushenyi District.
In 2017, the government exempted all SACCOs from remitting 30% off their surplus, a move that has contributed to the growth and investment of these financial institutions and their members.
“I feel so proud to see that my savings and dividends have accumulated profits, which I have used to buy fertilizer for my tea gardens,” said Harriet Muhebwa, a beneficiary member of Kyamuhunga People’s SACCO.
With just two years remaining until the waiver expires, SACCOs are now pleading with President Museveni for another 10-year tax waiver extension.
“The 30% tax waiver has given us much-needed relief. For example, Kyamuhunga People’s SACCO has saved over 3 billion shillings, and in the remaining two years, we could reach 5 billion shillings,” Kahigi added.
Atwijukire Johnbosco, the General Manager for KYAPS, also highlighted the importance of the tax waiver for SACCO development.
“We serve a unique category of members, and the president’s initiative has been elevating local people from poverty. We are on the right trajectory, and we again appeal to him for an additional 10-year extension so that we can continue supporting those who are joining us,” said Atwijukire.
Although SACCOs were granted the tax exemption, they continued paying a 15% withholding tax on members’ dividends and interest earned on their savings.
However, after a petition by Wazalendo SACCO, President Museveni directed that these charges be scrapped.
“You can imagine that we have members who walk to the bank to withdraw just 500 shillings, but now they have relief because we’re no longer paying those taxes. They’re extremely happy,” said Kahigi.
However, SACCOs continue to face confusion over multiple regulations. The government has yet to clarify which body should regulate SACCOs—the Uganda Microfinance Regulatory Authority, the Ministry of Trade, or the Bank of Uganda.
“What we’re asking for is a single regulator for all SACCOs. We are not against the Bank of Uganda, the Ministry of Trade, or the Uganda Microfinance Regulatory Authority. We just want the government to identify one regulator to whom we should report,” said Atwijukire.
He also pointed to Kenya’s SACCOs, which are governed by a single regulator, as an example of how regulation could be streamlined.
“We recently visited Kenya to benchmark the performance of their SACCOs, and what we observed was impressive. Their government has provided them with a single regulator, and as a result, their SACCOs now have the capacity to lend money to Kenya’s commercial banks,” Atwijukire noted.
At their 26th Annual General Meeting, Kahigi emphasized that the presence of multiple regulators has cost SACCOs millions of shillings that could have been used to build their capital base, enabling them to offer cheaper loans to members.
“We are spending a lot of money on these regulators. Every time they ask for reports, we submit them, only for another body to ask for the same reports. It’s like a circus, and all this is costing us money. That’s why we insist that we need a single regulator,” said Kahigi.
Kyamuhunga People’s SACCO is one of Uganda’s many SACCOs that made an annual surplus of over 2 billion shillings, helping its members elevate themselves from poverty.
