Kenyan Police Beating Anyone, Even for Being a Luo, is A Criminal Act, Period!

The Kenyan Police or any police for that matter, does not have the right to beat anyone, be it Luos or anyone else.

Now before I continue, let me confess that I have many friends, policemen, who are carrying their duties, legally. I even have family members who are policemen, and in the army. So, this is to those few rotten apples. The select few. The twisted brains. Those who beat people. Those who torture Luos. Those who shit on international law, pee on our constitution, and drag our statutory laws in the cow dung mixed with mud. The mavi ya kuku.

Now, there is no law against running from police before you are arrested, and before they speak to you. But, my advise, do not run from the police if you see one (or smell one). Running is enough for a preliminary level of suspicion. If the police show up and you take off running, that is enough to give rise to suspicion by a policeman and they are entitled to chase, an arrest you, and question you!

Now, the police have the power to arrest you, even for a crime you have not committed. They can always say you are helping in investigations, or very smart ones, those whose sisters are lawyers, will say they held you for your security. Remember the phrase, if a policeman follows you for 1 km, you are likely to break a law you never knew existed, like loitering, being a vagabond, idle and disorderly, or looking suspicious, and in today’s Kenya, looking like a Luo.

Now, the police does not have the right to beat you or hurt you after arresting you no matter what offence you are booked for. That is not what the law prescribes.  No law allows the police to beat you, unless it is to apprehend you.

So, a police canning someone who is not fighting back, but is hiding his head from being beaten. Criminal police. A pig of a police. Bure kabisa.

A policeman hitting a woman with a batton, and the woman is holding her hands, shielding her face, not moving at all, cornered. An ass of a policeman. A thug. Mjinga.

A group of policemen, kicking a man on the ground, who is offering no resistance, at all. Chicken shit. Mavi ya kuku. Foolish criminal policeman.

A policeman who enters your house, at midnight, without a warrant or cause, hits a father, while in bed, hurts the baby, and now the baby is in Agha Khan Kisumu, in a comma. Confused and retarded police. Criminal.

Police do not have any right to beat or hurt you in any way to omit or act as per their discretion, if they do so it would be unjust and you can bring this in front of a Magistrate or the Superior Officials. And before NASA Secretariat too.

As per the law, the accused, if arrested, (and if the investigation is not completed within the period of 24 HOURS,  from the time of arrest), then police is required to produce you in court, and no justification of “we are still doing investigations” can be relised on. Those statements are ill informed, illegal, unconstitutional, parajudicial, and extrapolice powers.  

No court gives any kind of permission or authority to police to beat the accused while in or outside its custody. 

As of procedure, every court officer/magistrate, is obliged to ask the accused whether he has "any complaint of ill-treatment" against the police. If you were abused, say yes, then Magistrate has to examine the veracity of that complaint of ill-treatment and if physical or internal, soft tissue injuries are found, then accused is referred to Medical Officer for finding out the truth in the allegation of ill-treatment. If the complaint of accused against the police officer appears to be prima-facie true, then the Magistrate has to register a complaint against the concerning police officer.

Remember, the only time their allowed to use force, is to put you down, and hand cuff you. Not to beat you, like a dog, like Kenyan, Ugandan, and other policemen, even in America, do to protesters. Policemen are all the same, you give them a leeway, they will beat you like a pig. Maybe it is the frustration of their poor houses. I wonder why they do not build them good houses. NASA promised them better houses. Too bad they have not declared Raila the winner.

The police cannot hurt you unless you present them with such conditions where applying force becomes necessary for them. For example if you are resisting arrest or not legitimately complying with their instructions. However if you are complying with their orders and yet subjected to assault, you can drag them to court. Get a lawyer immediately. Do not wait to cordially resolve it with this police. Never negotiate with a policeman who beat you today. They will beat your ex- girlfriend tomorrow.

The police only have right to "question" and "examine" you. They can ask, are you a Luo, you say yes, and they say, you are under arrest, and you should never refuse, say, ok. They should say you are walking like a Luo, and so, we want to examine you for stones, and you should never refuse. And if they do not find stones, they can say you were looking like you want to commit a violent act. Do not argue. Do not talk back rudely. Just say, no sir. Yes sir. No sir. Yes sir. Be very polite.

The basic jurisprudential aspects governing being beaten for being a Luo is found not in law but in customs. Torture has been a practice since long accepted by States universally to retrieve certain information. Now, according to one basic principles of international law, "that which is not explicitly illegal in international law, is otherwise legal." As such torture becomes illegal for the Kenyan police, period.

Man handling is an offence against law. The police know it. In their training school, they are told to beat. But it is illegal. They are told, “nyorosha”, meaning, in English, “nyorosha”. But they know it is illegal. Their trainers know it is illegal. But they are corrupt in their minds. So, they corrupt the recruits. And they beat Luos. For being Luos. And on the day of being taken to court, they threaten you with more beating after court, to such an extent, you will be scared to tell this in the court - while on trial. You say you hit your face on the wall while waking up.

And if the accused is a women then they can't arrest her and put her in the jail at night or late evening. But Kenyan police. Ha! You saw them hitting a woman with sticks. A woman. Sticks. Bure kabisa.

Police didn't have Rights to beat anyone. At the extreme moments like riots they can use tear gas and water spray to control the incident that to with the higher authority's permission. But they cannot beat. They use teargas, to overpower, and arrest. Not to beat. Why do they give you handcuffs, stupid fools!

There two conditions whereby police is empowered to use physical force:

One, to enforce arrest police can use reasonable force. Reasonable force. Hitting a child sleeping is not reasonable, by any stupid fat pig definition.
x

Secondly, in law and order situation, police can use force  to disperse mob if it, using force, remains only way out. But it has to restrained force only for purpose of maintaining law and order. Canning an old man, while coleagues are laughing, is not restrained, or reasonable! It is cancer of the brain. But it is okay, because it was a Luo being canned. An old Luo man. In Kisumu.

The police has no right to beat or assault any person whether he is criminal or suspect. Even if they found you have just finished killing someone, and you are sitting on them. They cannot beat you, or assault you, only arrest you! Even if you are a Luo, eating fish, and they catch you eating the fish, the head, in Kibera, Mathare, or Kisum Cit. They cannot assault you for being NASA sympathizer.

Now, police officers frequently make split-second decisions during fast-evolving confrontations, like in a riot, or when entering a Luo’s home at midnight, in Kondele, Mathare, or Kibira, and should not be subject to overly harsh second guessing, or through 20/20 hindsight. But shooting a fleeing person, who was not already under arrest, who is not a prisoner, is murder. M.U.R.D.E.R. And if that Luo child in Kisumu, Agha Khan, dies, that is Murder. And all those Luos who died because they were Luos, sleeping at night, in Mathare, Kibera, or Kondele, MURDER.

This post is written by Ojijo Pascal Al Amin K’Oteko. You can contact him for clarification on +256776100059, or ojijop@gmail.com  

Light Them Up!

To my Luo families, there are some things, dressed in police uniform, some are rogue policemen, searching premises without warrants or cause, some are Mungiki, attacking you, your wives, and your children, at night, torturing you. Light them up.  Buy petrol, pour in a bottle, put a cloth, and wait for them. When they knock, ask if they have a warrant of search? No warrant of arrest or search or cause to search without a warrant, at night, light them up. If they break open the door, with force, without answering, or warrant, light them up. It is now time for self-defense...not restraint, not peace. We cannot preach peace to a mother whose 6 month old is in a coma, allegedly clobbered by a policeman; we cannot preach peace to the family of the dead boy whose corpse is being kicked by rogue police, stepping on his neck; we cannot preach peace to one old man, being canned by four policemen, like a school child, unarmed, lying on the ground, while other officers are watching, laughing, it is torture, not effecting arrest. The law entitles you to protect yourself. Any person, policeman or not, who bursts into your house at night, without a warrant of search or arrest, or justifiable cause, must be treated like the law breaker he is, and the Luo whose house is invaded must respond with all force possible to protect his life and property. Don't go crying, no one cares about your tears. Not UN, not America, not Jubilee government. Not Raila. You are on your own. At night. In your house. Alone. And a thug in the uniform of a policeman, paid by your tax money, to protect and serve, breaks in, without announcing themselves, or showing warrant, or in the name of Mungiki, to torture and destroy. Defend yourself. Get a license and buy a gun, or a panga, or a club, or petrol. Put them inside your houses arm yourself. Protect yourself. No one will.  There is a law doctrine that allows you to do this. The pater familia doctrine. So, Luos, don't live on your knees. Die standing. Don’t wait for God to punish your killers. Did God punish the apartheid regime of South Africa? Did God punish the ones who murdered Josiah Mwangi Kariuki, Dedam Kimathi, Tom Mboya, Pio Gama Pinto, Chris Msando, Robert Ouko, Bruce McKenzie, George Muchai, G. G. Njuguna Ngengi, Mugabe Were and Maumaus? Did God punish the Nazis for the holocaust? Did God punish the white settlers for murdering the red Indians? Did God punish the Europeans, Arabs, and Americans for enslaving the Africans? As the Russians say, maybe God will help, but until his help arrives, we must help ourselves. God helps those who help themselves; this is a Christian Ethic, and a Qur'anic principle. Let blood answer blood. Remember, warrant of search and arrest is required, unless you are a criminal, or sheltering a criminal. Do not go to the streets, do not demonstrate, but when they come to your house, Light them up. From today hence, stop praying to God to help you. He won't. Stop begging Uhuru to help you. Stop telling the police to be professional. Help yourself. Do not demonstrate. But if they get into your property, in the dead of the night, without warrant, or as Mungiki, light them up!

This post is written by Ojijo Pascal Al Amin K’Oteko. You can contact him for clarification on +256776100059, or ojijop@gmail.com 

Feel free to comment with pictures of policemen harassing luos in their homes!

http://www.the-star.co.ke/news/2017/08/13/video-agony-as-6-month-old-infant-slips-into-coma-after-police-beating_c1615805?platform=hootsuite

https://web.facebook.com/photo.php?fbid=496842257331505&set=a.324776767871389.1073741829.100010172050431&type=3

What I Learnt Today: 17-2-2017

When I was in high school, I had a rule I would break often, but it was a beautiful rule: never go to sleep when you know you do not know something. 

This rule made me strive, often without good luck, to follow and ask teachers questions about everything I knew I did not know. Of course there are many things I did not know, and I did not know I did not know them, and hence, I suffered, blissfully, in ignorance.

Today, I have decided to start recapping the day, focusing on what I have learnt. Period.

I am an author of 51 books, spanning law, politics, religion, Luo and Kiswahili language, talent, financial literacy, personal branding, and school performance, to name but a few. Ohh, and I am also a poet, guitarist, and pianist. But of all the above, what amuses me most is the way I realize I know so little when other people speak to me, with me, or over me (mostly over me).

I have hence decided to spend everyday, recapping the new things I have learnt that day, or the things I knew, but I was taking for granted, and to put in place action plans, for the same. This is part private, part public exercise, so, you can now stop reading, or continue. 

I learnt today the difference between significance, and confidence, in relation to relationships, and life in general. The mentor, one Mr. Kalungi, a singer song writer, CPA tutor, guitarist, and part time lecturer at a company where we, as GoBigHub.com, have a minority interest, CCPInstitute.com, explained, interestingly, that whenever I am scared, it means the level of significance of the task (be it speaking, presenting, or talking to a girl), is very high, and hence, my confidence goes low, given the harm I might face were I to make an error (and there are two types of errors, one is type 1 error, where I reject something which turns out to be right, and type 2 error, where I accept something with turns out to be wrong). Deep stuff. I hope I have not mixed it up. Either way, I learnt that people who are confident do not treat individual activities with a lot of significance, after all, they can get another chance, or they have other options. (Hence players being confident, and getting the good girls, and the good boys, being shaky, and losing out on the good girls. And hence, good girls falling for bad boys, since the good boys lack confidence since they find it significant, and hence, scary, that the girl is good and cute).

That was a great lesson, on confidence, significance, and errors, leading to great mistakes in life. I think I want to be confident. 

Then I met with Andrew Muhimbise, a great mind, investor, champion of investment clubs, footballer (armateur), and poetry enthusiast (he is buying me a ticket for the next poetry event at Design Agenda, on 25th Feb, 2017). He read my poem today, one of my poems, and asked if I still write, to which I responded with a strong no. I went ahead to say that I am now focusing solely on building my dream business, GoBigHub.com-a platform on web, and mobile app, connecting local micro investors to local micro entreprenuers. We had lunch, at Mazima Mall, our offices, and later, had tea, at Passerias (I hope spelling is right), bill paid by Andrew. In between, he took me to get injection at Nsambya Hospital for a disease I will not disclose here.

During our lunch, and tea, he was very kind to share a few thoughts on investing, and life’s purpose, and he said three things I want to live by.

His first point was that his main concern now is health, and investment. I thought to last week when I was admitted at Mulago, yet I had only gone for a checkup. The doctors told me I had high cholesterol, scarred heart, and other conditions I do not want to talk about on social media. Either way, it made a lot of sense the need to really take care of health. He said, and I quote, “you either do it now, or you will be fundraising for India in ten years.” I do not want to fundraise for India.

Secondly, on investment, he said focus should be on working smart, seeking predictability, enhancing productivity, leveraging on efficiency, and doing passive investments, in projects with few moving parts. Of course, for a company like GoBigHub.com, we thrive on active engagement with micro entreprenuers, but the point is clear. There should be some kind of efficiency, a system, with clear results, which can be achieved, predictably. He went ahead to advise that since GoBigHub.com already has interests in a few companies, like Nyadiedo.com, which is a micro finance focused on market women, lending money to be collected daily; Infosis Limited, whose brand, Poketi, is revolutionizing payments over mobile phone; naniwapi.com, which is a an online place for convenience; and CCPInstitute.com, which is focused on cooperative management training and finance courses, our focus should be to build systems, and corporate governance, and less and less on thin and wide diversification on risky investments, with poor grade borrowers, who are actually, “rejects” of formal financial system. Deep knowledge here. 

Third, he spoke of purpose of life, and said that to him, and I think, I subscribe to his thinking, the purpose of being alive is to be at peace. To have independence of thought. To have control over ones destiny, time, and labour. He said those who think their purpose is their organization, like I do with GoBigHub.com, must be aware that things change, nothing lasts forever, and so, pegging purpose on institutions will lead to certain hollowness. He told me how his “old” friends, gentlemen aged over 70 years, and sitting in boards, directors and CEOs, are more interested in him because he goes to talk to them, not to ask for money, or a job, but to ask for knowledge, wisdom, and experience. This, he says, makes them to open their hearts, and minds, for him to learn. Always seek knowledge, and create time to think. To be blank. To imagine. To meditate. To imagine things. He said contentment is the main thing. To have peace, to be contented, is the best cure against greed, corruption, commingling of funds, criminal misuse of finances, and fraudulent behavior. I was amazed.

Fourth, he spoke of the need to be careful about disruption of business services. We shared on platform model of running businesses, like the one being used by facebook, as a platform of media; or Airbnb, as a platform for house accommodation; or uber, as a platform for transport and ride share. We then spoke about GoBigHub.com, being a platform, connecting local micro investors to local micro entrepreneurs, and about the GoBig Fund, which is a pool of investors money, which is invested in short term debt, and private equity deals, focusing on micro enterprises. 

Lastly, we spoke about MoKash, as disrupting money lending, and the fact that all companies which are based on “poor grade clients, will soon collapse, hence, why there is no money lending company that is 10 years old, and yet, there are banks, whose clients are “rich grade”, which are 100 years old, plus. The take home. Focus on building rich grade clientele for GoBigHub. People who understand equity, and debt, and obligations. People who borrow, and pay. People who engage in money lending to not build serious empires, he said, because the clientele are unsustainable, they are poor grade, and do not have ability to be converted into loyal clients. We shared about how naniwapi.com, one of gobighub.com subsidiaries, is seeking to provide a platform for peer to peer lending of money, and about how gobighub.com, is seeking to insure all micro investments in micro enterprises. 

Then we said bye.

…………………………………….

Ojijo, the author, is a lawyer, author of 51 books, poet, pianist, guitarist, and founder and chairman of gobighub.com. you can reach him at +256776100059. ojijo@gobighub.com 

Profile, Ojijo Pascal

Ojijo Pascal is the Founder & Lead at GoBigHub.com.

Ojijo is passionate about the role of profits in fighting poverty by providing incomes to improve livelihoods. Ojijo believes that the solution to Africa’s poverty, unemployment, and low productivity, lies in connecting the entrepreneurs to local sources of capital and strategic business advise and building capacities of local investors and investment clubs to appreciate venture and private equity investing. Ojijo is a lawyer, author of 49 books, public speaker, consultant, entrepreneur, investor, poet, pianist, speaker of 17 languages, and Inua Kijana Fellow.

Ojijo is privately a consultant in communications (public speaking, strategic planning, and writing); an expert lawyer (ICT law, financial services law, law firm management, and legal rhetoric); a public speaker and coach on financial literacy and personal branding; and a consultant in collective investment schemes (investment companies, investment clubs, provident funds, and cooperatives). To aid in his consultancy, Ojijo is a best-selling author of 49 books; owner/inventor of financial literacy board game, ChapChap; a software for investment clubs; and a software for cooperatives.

Over a period of 9 years, Ojijo has worked with a broad scope of clientele including Ministry Of Foreign Affairs Cooperative; National Environmental Management Authority(Uganda); Kenya Association of Investment Groups (AKIG); Kawanda National Agriculture Research Organization; Gender Ministry (Uganda); Nsamizi Institute(Mpigi-Uganda); 4Cs-Kenya; CREDO-Kenya; KHRC-Kenya; Foundation for Human Rights; Africa Youth Development Link; Technoserve; AIESEC; AYDL; UMYDF; CCEDU; FOWODE; PEDN; and over 20 investment clubs, over 50 individual clients, at least 15 cooperatives; and several other universities, companies, and individuals on various areas of expertise.

He offers advisory support in legal and or strategic areas in various boards of various investment clubs, cooperatives, Bank of Uganda Financial Literacy Advisory Group, Uganda Financial Literacy Sharing Group (FLISG), and Competitiveness Secretariat of Uganda Ministry of Finance supported Investment Clubs Association of Uganda-ICAU.

Ojijo is an Inua Kijana Fellow; Performance Poet’ Armature Pianist; speaker of 5 languages (English, Kiswahili, Luo, German, Luganda), and aspiring speaker of 12 languages including French, Portuguese, Dutch, Zulu, Chinese, Spanish, Hausa, Kikuyu, Hindi, Somali, Jamaican Patois, and Arabic; and entrepreneur owner of various startups.

M: +256776100059. E: ojijo@gobighub.com

3 Types of Micro Finance Institutions-Ojijo Pascal

(Extracted from Ojijo’s Successful Saccos - Managers' Guide to Acquire, Retain and Grow Membership, Savings and Assets & Ojijo's Financial Services Law Handbook.)

Microfinance is the provision of financial services to low-income people. It refers to a movement that envisions a world where low-income households have permanent access to high-quality and affordable financial services to finance income-producing activities, build assets, stabilize consumption, and protect against risks.

Initially the term was closely associated with microcredit—very small loans to unsalaried borrowers with little or no collateral—but the term has since evolved to include a range of financial products, such as savings, insurance, payments, and remittances. Poor people need many kinds of financial products and services and there is a growing range of organizations working to reach them with savings, insurance, transfers, and credit services.

Microfinance institutions are legally registered entities which work to develop products and deliver methods to meet the diverse financial needs of low-income people. For example, unlike other forms of lending, microcredit loans use methodologies such as group lending and liability, pre-loan savings requirements, and the gradually increase in loan sizes to evaluate clients’ credit worthiness.

Microfinance institutions can be classified into three major categories, namely:

1.      Village Savings and Loans Associations/Village Banks:

2.      Cooperatives (Savings and Credit Cooperative Societies (saccos) & Multi Purpose Cooperatives)

3.      Micro Deposit Taking Institutions (MDIS)

However, in addition to traditional operators, such as microfinance institutions, credit unions, cooperatives, and banks, other entities, including mobile network operators, are using technology to develop new delivery methods to bring these services to the poor, sometimes in partnership with existing financial institutions.

Village Savings and Loans Associations/Village Banks

Village banking is a microcredit methodology whereby financial services are administered locally rather than centralized in a formal bank.

A village bank is an informal self-help support group of 20-30 members, predominantly female heads-of-household.

The members, mostly women, meet once a week in the home of one of their members to avail themselves of working capital loans, a safe place to save, skill training, mentoring, and motivation. Loans normally start at $50–$100 and are linked to savings such that the more a client saves the more she can borrow. The normal loan period is four months and is repaid in weekly installments.

They are run by non-governmental organizations, registered as such, or as companies limited by guarantee. They can also be branches of mainstream commercial or retail banks

To eliminate the need for collateral (the poor man's obstacle to receiving bank loans), village banks rely on a variation of the solidarity lending methodology. It relies on a system of cross-guarantees, where each member of a village bank ensures the loan of every other member. This system gives rise to an atmosphere of social pressure within the village bank, where the cost of social embarrassment motivates bank members to repay their loans in full. The admixture of cross-guarantees and social pressure makes it possible for even the poorest people to receive loans.

Village banks are highly democratic, self-managed, grassroots organizations. They elect their own leaders, select their own members, create their own bylaws, do their own bookkeeping, manage all funds, disburse and deposit all funds, resolve loan delinquency problems, and levy their own fines on members who come late, miss meetings, or fall behind in their payments.

Market interest rates apply to village bank loans. The village bank itself will usually mark up this rate when it on-lends to individual members. While these rates seem high, they are low compared to those charged by local moneylenders in most countries. Unlike rural banks and credit unions these microfinance institutions do not provide savings services directly to their clients.

Like with other micro finance institutions such as saccos, small loans are more expensive to process than large ones because they take longer to process. Without employment history or collateral, microfinance loans require a more hands-on, time-intensive assessment to determine creditworthiness. Microfinance institutions (MFIs) usually send a representative to visit the client as part of this process, making the process even more challenging and costly in remote or sparsely populated areas. Once a loan is approved, MFIs often send loan officers to disburse loans and collect payments in person, which also adds significant expense when compared with the way traditional banks operate. MFIs have to charge rates that are higher than normal banking rates to cover their costs and keep the service available.

Micro Deposit Taking Institutions (MDIS)

MDI is an institution regulated by the central bank to take deposits and offer other banking services. They have reduced capital requirements, as opposed to commercial or retail banks.  MDIs are allowed to take deposits from the public and on-lend these. They are classified as Tier II institutions. The main activities of MDIs as the taking of time deposits or savings from the public and their employment in lending, which can be and is interpreted as the exemption of deposits from members. Micro Finance Deposit-Taking Institutions (MDI) Regulations address 1) licensing, 2) liquidity and funds management, 3) capital adequacy, 4) asset quality, 5) reporting for microfinance deposit-taking institutions and 6) list of restricted activities.

Ojijo Pascal

Ojijo is the Founder & Lead at GoBigHub.com, the solution to the ever present cry for youth that they lack capital for doing business. GoBigHub creates provides a monthly meeting entrepreneurs to meet and pitch to local institutional and individual investors, as well as business coaching, office space, and online crowdfunding platform. GoBigHub is leading the move away from grants, promoting trade, not aid, by offering African entrepreneurs a chance to get equity funding, with board positions, transparency, and scrutiny to make sure businesses funded are scalable, and hence, profitably sustainable.

Ojijo has also worked extensively with collective investment schemes generally (namely, investment clubs and cooperatives), as a consultant on financial literacy, legal advisory, strategic planning, and leadership dynamics.  In this area, he has also authored two leading texts on collective investment schemes, with one on Cooperatives, Successful Cooperatives - Managers' Guide to Acquire, Retain and Grow Membership, Savings and Assets and one on investment clubs, Making Money Together - Ojijo's Investments Club Manual. He sits in bank of Uganda Financial Literacy Advisory Group/ Financial Literacy Sharing Group (FLISG), and is a co-founder of Uganda Ministry of Finance sponsored committee of Champions promoting Investment clubs, Investment Clubs Association of Uganda-ICAU. He has helped in the training and or setting up of various cooperatives, including ministry of foreign affairs cooperative; finance ministry cooperative; NEMA; NARO; Gender Ministry cooperative, and Nsamizi Institute cooperative (Mpigi), to name but a few.

Ojijo is also a lawyer and guest lecturer in Financial Services Law, ICT Law, Legal Rhetoric and Law Firm Management; and a communications expert specializing in strategic planning, public speaking, and writing skills.  He has worked with various clients including ministry of finance (Uganda); Bank of Uganda; Ministry of Gender; Technoserve; AIESEC; AYDL; UMYDF; CCEDU; PEDN; Foundation for Human Rights; several universities, companies, and individuals on personal branding, financial literacy, business coaching, and entrepreneurship.

Ojijo is an author of 51 books; Inua Kijana Fellow; Performance Poet’ Armature Pianist; and entrepreneur owner of luopedia.com,  lawpronto.com,  naniwapi.com, gobighub.com, allpublicspeakers.com,  bankitgroup.com, and achibela.com.

M: +256776100059. E: ojijo@allpublicspeakers.com

How To Register A Micro Finance Deposit Taking Institution (MDI) in Uganda-Ojijo Pascal

(Extracted from Ojijo’s Successful Saccos - Managers' Guide to Acquire, Retain and Grow Membership, Savings and Assets & Ojijo's Financial Services Law Handbook.)

Microfinance is the provision of financial services to low-income people. It refers to a movement that envisions a world where low-income households have permanent access to high-quality and affordable financial services to finance income-producing activities, build assets, stabilize consumption, and protect against risks.

Microfinance institutions are legally registered entities which work to develop products and deliver methods to meet the diverse financial needs of low-income people. For example, unlike other forms of lending, microcredit loans use methodologies such as group lending and liability, pre-loan savings requirements, and the gradually increase in loan sizes to evaluate clients’ credit worthiness.

Microfinance institutions can be classified into three major categories, namely:

1.       Village Savings and Loans Associations/Village Banks:

2.       Cooperatives (Savings and Credit Cooperative Societies (saccos) & Multi-Purpose Cooperatives)

3.       Micro Deposit Taking Institutions (MDIS)

However, in addition to traditional operators, such as microfinance institutions, credit unions, cooperatives, and banks, other entities, including mobile network operators, are using technology to develop new delivery methods to bring these services to the poor, sometimes in partnership with existing financial institutions.

Cooperatives (Savings and Credit Cooperative Societies (Saccos) & Multi-Purpose Cooperatives)

Cooperatives, either registered as savings and credit cooperatives (SACCOS), or multi-purpose cooperatives, are the most common forms of micro finance institutions.

They are groups of people, not less than 30, who come together to save, access credit, and in case of multi-purpose cooperatives, to engage in various businesses, for their welfare.

The process of registering a cooperative include:

§  Step 1: Reserve a name, with the registrar of business names;

§  Step 2: Purchase cooperative by-law books from the department of cooperatives. The by-laws vary depending on whether the cooperative is a sacco, or a multi-purpose cooperative;

§  Step 3: Fill the by-laws with names and contact details of the promoters, who should number at least 30;

§  Step 4: Fill the by-laws with the details of shares amounts, disciplinary fees, business address, and related issues on management of the cooperative;

§  Step 5: Submit documents to the district or area cooperatives officer for approval. This includes signed by-laws by all members and incase the members are more than the space provided in the by-laws, attach the full member list; financial statements of the society (Income and Expenditure +Balance Sheet); a comprehensive schedule of all shareholders showing shares held by each member; entrance fees, shares, savings, and loans if any; and photographs of respective people to handle the cooperative's accounts, that is, Chairman, Secretary, and Treasurer.

§  Step 6: On approval of documents, which may include the cooperatives officer attending a meeting of the cooperative, the cooperative will pay registration fees.

§  Step 7: Get a certificate of registration of the cooperative.  With this certificate, the cooperative should open a bank account, and deposit the funds you have to the bank account; get a business license from the city council authority, or local government authority; and start active recruitment of members.

It is advisable to use a consultant, as the process can be long winded. The consultant will cost approximately USD. 2,500, and the entire process can take upto 2 months to set up. Apart from consultancy costs, the approximate costs of establishing a branch, with operational equipment’s, stat up capital, and working capital, is projected at USD. 50,000.

Village Savings and Loans Associations/Village Banks

Village banking is a microcredit methodology whereby financial services are administered locally rather than centralized in a formal bank.

A village bank is an informal self-help support group of 20-30 members, predominantly female heads-of-household.

The members, mostly women, meet once a week in the home of one of their members to avail themselves of working capital loans, a safe place to save, skill training, mentoring, and motivation. Loans normally start at $50–$100 and are linked to savings such that the more a client saves the more she can borrow. The normal loan period is four months and is repaid in weekly installments.

They are run by non-governmental organizations, registered as such, or as companies limited by guarantee. They can also be branches of mainstream commercial or retail banks

To eliminate the need for collateral (the poor man's obstacle to receiving bank loans), village banks rely on a variation of the solidarity lending methodology. It relies on a system of cross-guarantees, where each member of a village bank ensures the loan of every other member. This system gives rise to an atmosphere of social pressure within the village bank, where the cost of social embarrassment motivates bank members to repay their loans in full. The admixture of cross-guarantees and social pressure makes it possible for even the poorest people to receive loans.

Village banks are highly democratic, self-managed, grassroots organizations. They elect their own leaders, select their own members, create their own bylaws, do their own bookkeeping, manage all funds, disburse and deposit all funds, resolve loan delinquency problems, and levy their own fines on members who come late, miss meetings, or fall behind in their payments.

Market interest rates apply to village bank loans. The village bank itself will usually mark up this rate when it on-lends to individual members. While these rates seem high, they are low compared to those charged by local moneylenders in most countries. Unlike rural banks and credit unions these microfinance institutions do not provide savings services directly to their clients.

Like with other micro finance institutions such as saccos, small loans are more expensive to process than large ones because they take longer to process. Without employment history or collateral, microfinance loans require a more hands-on, time-intensive assessment to determine creditworthiness. Microfinance institutions (MFIs) usually send a representative to visit the client as part of this process, making the process even more challenging and costly in remote or sparsely populated areas. Once a loan is approved, MFIs often send loan officers to disburse loans and collect payments in person, which also adds significant expense when compared with the way traditional banks operate. MFIs have to charge rates that are higher than normal banking rates to cover their costs and keep the service available.

Village banks are registered as non-governmental organizations, or as associations, with district commercial officers. 

The process of registering a district association is clear and forward, and involves the group visiting a district commercial officer, who will give them a form to fill their names, and then, they can choose to open a group bank account with any bank, and start operations.

The process of registering an NGO is a long winded process, which involves the following:

1.       Name reservation at registrar of companies;

2.       Getting recommendation letters from LC1, LC2, LC3, RDC, Line ministries, law firm, one already operational NGO, district NGO supervisory committee, and an individual.

3.       Submitting the above, together with application letter for registration, constitution, one year plan of operations, report of operations (if already operational), budget, organization structure, sources of funding, and membership minutes to register the NGO, in three copies of files, to the NGO board.

4.       The NGO board meets once a month, and will approve (mostly, very few rejections), the operations.

It is good to use a consultant, as the process can be long winded. The consultant will cost approximately USD. 4,500, and the entire process can take upto 3 months. Apart from consultancy costs, the approximate costs of establishing a branch, with operational equipment’s, stat up capital, and working capital, is projected at USD. 30,000.

Micro Deposit Taking Institutions (MDIS)

MDI is an institution regulated by the central bank to take deposits and offer other banking services. They have reduced capital requirements, as opposed to commercial or retail banks.  MDIs are allowed to take deposits from the public and on-lend these. They are classified as Tier II institutions. The main activities of MDIs as the taking of time deposits or savings from the public and their employment in lending, which can be and is interpreted as the exemption of deposits from members. Micro Finance Deposit-Taking Institutions (MDI) Regulations address 1) licensing, 2) liquidity and funds management, 3) capital adequacy, 4) asset quality, 5) reporting for microfinance deposit-taking institutions and 6) list of restricted activities.

MDIs are registered first as a legal entity, either as non-governmental organizations, as companies limited by shares, or as companies limited by guarantee (foundations).

Then the company seeks to get license to operate as a micro finance deposit taking (MDI) organization, by submitting the following:

1.       CVs and Profiles of proposed directors (who must have not been convicted of financial impropriety, or financial fraud.

2.       Statement of applicant’s relevant experience in micro finance business. Though this is not a determining factor, indicating experience of directors is key.

3.       Business plan for the organization.

4.       Scope of operations, to include services to be offered, area of operation, and related activities.

5.       Proposed staff development programs, with clear explanations of how staff skills and expertise will be developed.

6.       Management and administration, including capacity of the proposed senior management.

7.       Evidence of applicant’s ability to provide adequate capital through retained earnings. (Through business financial projections of P&L and Cashflows).

8.       Evidence of applicant’s ability to meet the statutory minimum paid up capital, and minimum ongoing capital adequacy requirements, and the applicant’s ability to inject core capital when needed in the future.

9.       A copy of registration documents, either articles or memorandum of association for companies, or certificate of registration as NGO.

10.   Verified official notification of company’s registered place of business.

11.   Amount authorized and paid up capital.

12.   The prospective place of operation, indicating that of the head office.

13.   Certificate of time deposit equivalent of 75% of the required minimum paid up capital, that is, UGX. 3 Billion, since the minimum capital is UGX. 4 Billion. The applicant needs to deposit at least 75%, that is, with the bank of Uganda, or a licensed bank, and provide evidence of the money deposit, and will be retained until the license is approved.

14.   Sworn declaration of assets and liabilities of founder shareholders.

15.   Biographical data on each of the founding shareholders, with a breakdown of proposed ownership structure and proposed directors and officers, using a stipulated form (Schedule No. 1).

16.   In case of a wholly owned subsidiary of a commercial bank, or financial institution, a copy of board resolution approving the propose investment.

17.   In case of a foreign financial institution, a copy of approval granted by home regulator.

18.   In case of a company in operation, a copy of the latest audited balance sheet and profit and loss accounts for each of the three years preceding application.

19.   Two copies of feasibility study of the institution, showing the nature of planned business, organizational structure, planned internal monitoring procedures, and projected financials. It should also include mission statement and overall goals, market research, ownership and corporate governance, management, business strategy, and projected financial statements.

20.   Detailed notes to financial statements, including sources and uses of funds, provisions for bad debts, cash and other liquid assets to be maintained, small scale and micro credit to be made and interest receivable, interest payable, major sources of deposits, investments and earnings to be made, stating policy and categories of business and productive activities to be financed, fixed assets, including business premises, operating expenses including rent, salaries, benefits and directors remuneration, capital structure, other income, including commission fees, net operating profit or loss, financial analysis, and interest rate sensitivity analysis.

21.   Copy of applicants risk management program, tailored to its needs, and circumstances covering the following risks: credit, liquidity, interest rate, foreign exchange, operational and strategic risk.

22.   Credit manual , including but not limited to lending and provisioning, borrowers criteria, amounts, terms and collateral, and lending policies and procedures must take into account the different steps of credit process, including analysis, negotiation, approval, disbursement, monitoring an collection, taking into account sound and prudent practices including foreclosure.

23.   Human resource manual

24.   Operations manual.

25.   Liquidity and finds management policies and procedures

26.   Accounting procedures manual

27.   Audit manual

28.   A fully completed questionnaire on the institutions premises (Schedule 5)

29.   A written request to the central bank for a date and time for an interview during which its application for a license to operate an institution shall be appraised.

30.   Availability for onsite inspection of applicant’s institutions premises to determine adequacy of the institutions security system, as well as to confirm other matters.

31.   Application fee of approximately UGX. 500,000.

32.   License fee of approximately UGX. 1 million payable by successful applicants within 14 days of the notification of the decision to grant a license.

33.   Application for a license to conduct micro finance business, as per Schedule 1, directed to the Executive Director, Supervision Function, Bank of Uganda.

34.   When the application is accepted, there is a six month period for consideration and grant or refusal to grant the license.

35.   Set up a banking information management system which functional and expandable features including, but not limited to accounting, portfolio tracking, deposit monitoring, customer information system, loan application, approval and repayment information, savings account information, multiple branching, user interface, reporting system, backup and recovery, end of period processing, administration, support infrastructure and maintenance, and version control and upgrade strategy.

36.   The central bank, shall, on the third working day after appraisal of interview, instruct applicant to run public notice for three consecutive days in a daily newspaper with national circulation as per a given schedule, and provide a copy to central bank.

37.   Directors and shareholders and to be people who have not been involved in illegal financial activities, or who have non-performing loans in financial institutions, or who have been suspended from directorships in other financial institutions.

38.   There is a pre-licensing inspection which checks appropriateness of location offices is key, and covers location, security, internal control systems, presence of cash reserves, endorsement and evidence of payment of 100% of capital as stated in the requirements, presence of information management system, safes, security cameras, separation of banking hall from backrooms.

39.   Public announcement of establishment of a micro finance deposit taking institution, also to be carried in at least three national dailies, for not less than 3 days.

Once again, it is best to secure a consultant for the process, which will cost approximately USD. 10,000, and the entire process will take between 6-12 months. Apart from consultancy costs, the approximate costs of establishing a branch, with operational equipment’s, stat up capital, and working capital, is projected at USD. 1.5-2 million.

 

Ojijo Pascal

Ojijo is the Founder & Lead at GoBigHub.com, the solution to the ever present cry for youth that they lack capital for doing business. GoBigHub creates provides a monthly meeting entrepreneurs to meet and pitch to local institutional and individual investors, as well as business coaching, office space, and online crowdfunding platform. GoBigHub is leading the move away from grants, promoting trade, not aid, by offering African entrepreneurs a chance to get equity funding, with board positions, transparency, and scrutiny to make sure businesses funded are scalable, and hence, profitably sustainable.

Ojijo has also worked extensively with collective investment schemes generally (namely, investment clubs and cooperatives), as a consultant on financial literacy, legal advisory, strategic planning, and leadership dynamics.  In this area, he has also authored two leading texts on collective investment schemes, with one on Cooperatives, Successful Cooperatives - Managers' Guide to Acquire, Retain and Grow Membership, Savings and Assets and one on investment clubs, Making Money Together - Ojijo's Investments Club Manual. He sits in bank of Uganda Financial Literacy Advisory Group/ Financial Literacy Sharing Group (FLISG), and is a co-founder of Uganda Ministry of Finance sponsored committee of Champions promoting Investment clubs, Investment Clubs Association of Uganda-ICAU. He has helped in the training and or setting up of various cooperatives, including ministry of foreign affairs cooperative; finance ministry cooperative; NEMA; NARO; Gender Ministry cooperative, and Nsamizi Institute cooperative (Mpigi), to name but a few.

Ojijo is also a lawyer and guest lecturer in Financial Services Law, ICT Law, Legal Rhetoric and Law Firm Management; and a communications expert specializing in strategic planning, public speaking, and writing skills.  He has worked with various clients including ministry of finance (Uganda); Bank of Uganda; Ministry of Gender; Technoserve; AIESEC; AYDL; UMYDF; CCEDU; PEDN; Foundation for Human Rights; several universities, companies, and individuals on personal branding, financial literacy, business coaching, and entrepreneurship.

Ojijo is an author of 51 books; Inua Kijana Fellow; Performance Poet’ Armature Pianist; and entrepreneur owner of luopedia.com,  lawpronto.com,  naniwapi.com, gobighub.com, allpublicspeakers.com,  bankitgroup.com, commonsense.info, and achibela.com.

M: +256776100059. E: ojijo@allpublicspeakers.com