Set up of a cooperative bank in Uganda About the Cooperative Bank
The Cooperative Bank in Uganda was incorporated in 1964 with the main objective of providing affordable financial services to Cooperatives and their businesses most especially to enhance the availability of affordable financing to viable projects in Agriculture and Micro and Medium scale enterprises development in the country.  
  
However on the 9th May 1999, the Cooperative Bank was closed by the Central Bank of Uganda with reasons that it had “inadequate capitalization” and insolvency consequently creating a big financing gap in the economy. Uganda's co-operative societies, Cooperative Unions, Traders, farmers and other Agriculture value chain actors experience difficulty in accessing credit and other financial services from commercial banks on account of high interest rates and unfavourable repayment terms hence resorting to money sharks.
  
Nevertheless, as a result of the efforts of UCA and its development partners including Agriterra, the cooperative movement has greatly recovered from its past. The government of Uganda is very supportive of the Cooperative movement. The prevalent challenge for Cooperatives and their Members mostly in Agriculture is lack of access to affordable financing that matches with the gestation periods of their enterprises. Uganda Cooperative Alliance with support from her development partners and government mobilized the public to form Savings and Credit Cooperative Organizations (SACCOs) and other forms of Cooperatives to harness service delivery to Ugandans. The Cooperatives later established a financial Union at secondary level called Uganda Central Cooperative Financial Services (UCCFS) to bridge the gap in financing. 
  
UCCFS currently serves as a central financing facility to Cooperative Unions, Area Cooperative Enterprises, SACCOs and other forms of Cooperatives. However, both the existing SACCOs and UCCFS are limited by finances and hence unable to cover all the financial needs of the Cooperators and SMEs. This calls for the establishment of a high level financing arm; the cooperative bank at national level to serve the majority of Ugandans. 
It is the desire of UCA to work with different stakeholders to provide the much-needed leadership, lobby and advocacy efforts required to ensure the re-introduction of a Cooperative Bank in Uganda. UCA is using an informed and participatory process that would build consensus about the issue. Together with partners and stakeholders they aim to have a structured Roadmap to aid its evidence-based engagement with the relevant decision makers in pursuit of this dream.




A feasibility study will be done in July 2018.  The exercise will be done between 9th July to 17th July 2018. 
The feasibility study is expected to be done in three phases but this particular project in 2018  will focus on phase 1 of the project
The three phases include:
A 3-phased approach:
  
  Context exploration
  Feasibility study
  Effectuation
 
Each phase ends with a decision on whether or not to continue and whether or not the cooperative bank should actually be set up.

Phase 1 activities 9th July to 17th July 2018
a) Estimate volumes of business conducted by the cooperatives in Uganda during the past 5-10 years. Build a case for establishment of a bank for these cooperatives;
b.          capture  lessons from the past, especially from the problems of the previous cooperative bank
  
c.           Take an inventory of the financial services provision for the agric sector in Uganda, prevailing conditions and rates and propose strategies for leveraging the existing cooperative institutions e.g. SACCOs, other.
  
d.           Assess opinion/need at different stakeholders (see Annex 1 ‘National consultation’) 
  
e.           Inventory of the envisioned future clients, their profile, their economic feasibility and potential; savings potential, scope for serving credits, their constraints and limitations
  
f.            Funding and capitalization possibilities; commitments en envisaged stakeholders
  
g.           Propose and evaluate options for new financial service provision, including:
i.            Strategic partnerships with existing FIs geared at creating divisions for cooperative banking; directly and through linkage.

ii.           Establishing a cooperative division under an ‘agricultural bank’, with a wider scope.
iii.          Establishing a fully-fledged commercial bank.
  
h.           Critically examine the role of government and its participation in the previous cooperative bank
  
i.            Financial authorities, legislation, licenses required, support from financial authorities, etc.
  
j.             Recommended follow-up and proposed time-schedule
Note: The  draft report will be shared with key stakeholders by end July/ early August 2018 and the final report will be presented to UCA in the last week of September 2018.



Establishment of a strong and viable financial institution that will provide affordable financing to Cooperatives and their Businesses.