Mbale- Members of Parliament have offered a dim assessment of the Project for Financial Inclusion in Rural Areas (PROFIRA), accusing it of failing to train Ugandans on key factors that can help the rural poor to get out of poverty.
The MPs on the parliamentary committee on Finance, Planning and Economic Development said the project had failed to expand financial services in rural areas and instead merely trains people and gives them saving boxes without money.
In order to strengthen and increase access to financial services especially in the rural communities, the Ministry of Finance and Economic Planning commissioned the Project for Financial Inclusion in Rural Areas (PROFIRA) with the objective of increasing access to sustainable financial services by the rural poor through promoting savings and credit cooperative organisations (SACCOs).
Mr Lawrence Bategeka, the vice chairperson of the Parliamentary Committee on The Economy, said there is little to show for the sound policies on financial inclusion, or the billions of shillings that have been sunk into the sector through PROFIRA over the past one year.
“How do you just focus on training people without creating for them linkages to the banking system? Government borrowed $29 for rural agriculture financing under PROFIRA but all this is going down the drain because there is no impact on ground,” said Mr Bategeka.
The committee was on a tour of Iganga, Namayingo, Mbale and Sironko to assess the impact of Profira work on rural farmers on March 16.
Agago District Woman Member of Parliament Judith F. Adong, said although women have been trained on how to save in Agago, they have kept the saving boxes in anticipation of money to save. “My people received boxes from PROFIRA for saving but they have just kept the boxes because they don’t have money to save there,” said Ms Adong.
Mr James Acidri [Maracha East] said whereas its PROFIRA’s primary focus is to mobilise members’ own resources for on-lending within the group, most of the groups formed in the villages consider the PROFIRA a cash cow that will solve the myriad financial problems they were facing.
“There is need to explain this to the rural poor that you will not give out any money to the groups and encourage them to save locally otherwise they will continue looking at PROFIRA as the source of the money to help them fight poverty,” said Mr Acidri.
He added that the unique challenges of rural poor financial exclusion call for reforms and creative interventions to undo rural shackles as well as directly target the expansion of inclusive finance.
The members noted that although the organizations across the country had been registered as SACCOs, the expectations of members are at variance with the norms and objectives of cooperatives in rural areas.
Mr Bategeka explained that financial inclusion was key in helping the rural people get out of poverty and that PROFIRA should target the number of adult Ugandans who have a bank account and the degree of usage of that bank account.
Mr Lance Kashugyera, the PROFIRA project manager told MPs that the government-supported project also targets the development of community-based financial services through ensuring sound policy formulation and implementation.
Statistics available at the Ministry of Finance indicate that the percentage of adult Ugandans excluded from financial services has reduced from 30% in 2009 to the current 15%, which is in line with the country’s reduction of absolute poverty from 56% in 2002 to less than 19% at the moment.
Further figures show that, 80% of Uganda’s population lives in rural areas and currently, 35% of the rural population access financial services informally while 32% access through non-bank formal institutions. Seventeen percent of the rural population has access to a formal bank while an equivalent number is financially excluded.