Nakaseke Authorities, Residents Disagree On Interest Rates

Ignatius Koomu Kiwanuka, the Nakaseke LC 5 Chairman, says the district prefers that the interest rate be raised to 8-10% to cater for the high operational costs.
LC 5 Chairman Ignatius Koomu handing over a dummy cheque of 120 million shs to PCAs in Nakaseke sub county on Friday

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Nakaseke district authorities and residents have disagreed over proposed interest rates on Parish Community Association funds.

In the 2018/19 financial year, the Luweero Triangle Ministry under the Parish Community Associations programme injected Shillings 540million in the Parish associations in Nakaseke district to boast household incomes.

  Each parish received Shillings 30million to support the associations within its jurisdiction to start income generating projects. The benefiting sub counties are Semuto, Nakaseke, Kapeeka and Semuto town council in Nakaseke district.

The Policy guidelines empower Associations to set own annual interest rates for borrowing the money. As result the Associations set the interest at between 1-3 percent on the loans that are payable in a year.

The Parish Community Association members have defended the low interest rates, saying they are poor and need to maximize profits from the revolving funds. Others said they intend to invest in agriculture, which suffers adverse weather changes.

Juma Ssewanyana. the Chairperson Kasaga Parish Community Association in Nakaseke Sub county, says that meeting which was convened by group resolved to set the interest rate at 1% to enable residents maximize profits and get out of poverty.

Betty Nakiboneka, a resident of Kigege village in Nakaseke Sub County, says that most residents intend to invest the money in agriculture, which attracts low profits because of the adverse climate change effects.  

Geoffrey Ndugga, a member of Tree Growers Association in Kasambya A village, says that they set the interest rate at 2% to attract people to join the Associations as drivers of development.

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But district authorities have rejected the interest rates saying it can’t cater for operations and growth of the fund. Richard Mavuma, the Nakaseke District Finance Secretary, says the interest rate will be helpful to enable Association executives to process documents, cover their transport and bank charges among other expenses.

Mavuma warns that setting low interests means that the executive will use money intended for loans to cater for their operational costs, which may kill the idea. He says they also want the time for servicing the loans reduced to six months to enable other people benefit from the funds within the shortest time possible.

Ignatius Koomu Kiwanuka, the Nakaseke LC 5 Chairman, says the district prefers that the interest rate be raised to 8-10% to cater for the high operational costs. He says low interest rates will kill the idea of the revolving fund like other related programs in the past.

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Ramathan Kato, the Nakaseke District Focal Person for the Parish Community Association program, says although the policy guidelines empowers PCAs to set own interest rates, they will sensitise the beneficiaries o the need to raise it if they want the program to create a bigger impact in the area.

The program is being piloted in selected sub counties in eight districts before it’s rolled out in all districts in Luweero Triangle. The targeted districts include Luweero, Nakaseke, Kyankwanzi, Kabarole, Kasese and Bunyagabu among others. Shillings 8 billion was allocated in the first phase of the scheme.  

Luweero Triangle has introduced several program intended to boast the income of veterans and residents affected by the National Resistance Army war. However, the programs have failed to create impact as residents often default on repaying the revolving funds claiming it is in appreciation of their support to president, Yoweri Museveni.

In the 2010/2011 financial year, the office of the Prime Minister through the Luweero Triangle Ministry released funds to be issued to residents as soft loans to set up small scale businesses to boost their household incomes.

The prime minister’s officer later suspended the program because of the high loan default rate. In 2008, the Agriculture, Animal Industry and Fisheries Ministry distributed hundreds of head of cattle to farmers in Luweero under the livestock restocking program. 

The beneficiary farmers were expected to pass over calves to other farmers for continuity of the program but this was also suspended indefinitely after the farmers sold the cows.