- Uganda Auditor-General says out of $27.7 million meant for SACCOs under the Emyooga programme only $21.8 million was disbursed.
- Lawmakers say failure of Microfinance Support Centre staff to follow due diligence in loan disbursement was indicative of incompetence.
- Parliament tasks MSC officials to detail the efforts put in place to ensure that the intended beneficiaries receive the funding.
A report by the Auditor-General has revealed that Uganda’s Microfinance Support Centre (MSC) failed to absorb a total of $5.87 million (USh21.2 billion) of the Emyooga grant during the 2021/22 financial year.
In his report to Parliament, the Auditor-General observed that out of $27.7 million meant for SACCOs under the Emyooga programme, only $21.8 million was disbursed.
In a meeting on July 25, with officials from the Microfinance Support Centre (MSC), legislators on the Public Accounts Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) queried the way the funds were used.
“The moment you make a budget and Parliament appropriates the money, you are sure that you are going to spend that money. Failure to spend that money means you are limiting other sectors who want an opportunity to do service delivery,” said Roland Ndyomugenyi (Indep., Rukiga County).
Poor SACCO support
Hon. Muwada Nkunyingi (NUP, Kyadondo County East) cited delayed support to SACCOs, including registration. This delay, he said, is limiting timely access to funds.
“The process of identifying beneficiaries, especially the Emyooga SACCOs, appeared to be bureaucratic. The money came and communities were excited that they would receive the funds but now they are hearing that you took back the money,” Nkunyingi added.
Nkunyingi said that failure of MSC staff to follow due diligence in loan disbursement indicated was indicative of incompetent loan officers on their part. He tasked the MSC officials to detail the efforts in place to ensure that the intended beneficiaries receive the funding.
On her part, Microfinance Support Centre Deputy Executive Director Hellen Masika attributed incomplete absorption of Emyooga funds to a long verification process.
“This money was not supposed to be touched because it was committed for SACCOs that had certificates of registration. However, the process of verification delayed their access to the funds,” Masika said.
The Committee Chairperson Joel Ssenyonyi put the MSC officials to task over the disbursement of loans worth USh4.1 billion that was done without proper loan appraisals.
“Without a loan appraisal, there should be no recommendation for one to get a loan. On what basis was this money given? We are beginning to think that either there are untouchable people or your staff members got this money somehow” said Ssenyonyi.
Irregular loan disbursement
According to the Auditor-General, MSC did not give due attention to assessment of the financial performance of SACCOs seeking loans. In his report, a total of Ush3.7 billion in loans was disbursed to clients who lacked vital documents. another USh1.3 billion was advanced to clients without the due collateral.
Masika admitted that loans were paid out without adequate appraisals. This was because of recruitment of staff, who have varying levels of experience, at different levels. “When we are referring staff to zones, there are those who are very experienced and those who are new and are learning. But through continuous training, this weakness has been improved as of today,” she added.
Hon. Nathan Itungo (Indep. Kashari South County) alluded to section 4.5 of the Microfinance Support Centre Credit and Operations Manual 2017 that provides for areas of focus during the loan due diligence process, including security for collateral.
“This is a law that is within your section. Your explanation that there are new loan officers who cannot follow the law does not hold anything. Whoever comes into the organisation should follow the manual,” Itungo said.
Nwoya District Woman Representative Judith Achan said there was likely to be fraud and connivance at MSC. She said fraud is likely facilitated the irregular loan disbursements.