The Microfinance Support Centre failed to absorb a total of shs21.2 billion of the Emyooga grant in financial year 2021/2022 according to a report by the Auditor General.
In his report to Parliament, the Auditor General observed that shs100 billion was meant for SACCOs under the Emyooga programme but only shs78.8 billion was disbursed.
In a meeting 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 absorbed.
The meeting was held on Tuesday, 25 July 2023.
Hon. Roland Ndyomugenyi (Indep., Rukiga County) asked officials from MSC to explain why they failed to fully absorb the money yet it was budgeted for.
“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 Ndyomugenyi.
Hon. Muwada Nkunyingi (NUP, Kyadondo County East) said there has been delayed support to SACCOs including registration, which has limited their 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 said.
Nkunyingi added that failure of MSC staff to follow due diligence in loan disbursement indicated that incompetent loans officers were employed.
He tasked the MSC officials to detail the efforts put in place to ensure that the intended beneficiaries receive the funding.
Hellen Masika, the Deputy Executive Director at the Microfinance Support Centre attributed incomplete absorption of Emyooga funds to the winding 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, Hon. Joel Ssenyonyi also put the MSC officials to task over the disbursement of four loans worth shs4.1 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 because we are beginning to think that either there are untouchable people or your staff members got this money somehow?” said Ssenyonyi.
According to the Auditor General, MSC did not give due attention to assessment of the financial performance of SACCOs that applied for loans in the year under scrutiny.
His report indicates that a total of shs3.7 billion in loans was disbursed to clients who lacked vital documents, whereas shs1.3 billion was advanced to clients without collateral.
Masika said loans were paid out without adequate appraisals due to recruitment of staff at different levels who have varying levels of experience.
“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 to be offered.
“This is a law that is within your section. Your explanation that there are new loans 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, Hon. Judith Achan said there was likely to be fraud and connivance at MSC which facilitated the irregular loan disbursements.
Source: Parliament of Uganda