Gulu, Uganda: Experts have warned Tier 4 financial institutions, including SACCOs and microfinance entities, against lending to enterprises that degrade the environment or inflict social harm, citing the urgent need to align grassroots finance with sustainable development goals.
The caution was issued during a nationwide Environmental, Social, and Governance (ESG) sensitization training held on Tuesday at Acholi Inn Hotel in Gulu City.
The session, facilitated by aBi Finance in partnership with the Uganda Institute of Banking and Financial Services (UIBFS), targeted SACCO leaders from across Northern Uganda.
“People borrow without understanding the broader implications,” said Mr. Joram Ssozi, an Associate Trainer with UIBFS. “Loans should support socio-economic transformation, not environmental destruction or social damage.”
The ESG training, part of a broader campaign targeting over 1,600 SACCOs in 18 sub-regions, seeks to integrate sustainability principles into financial decision-making at the community level.
While Uganda’s Tier 1 to Tier 3 banks are regularly guided on ESG through platforms like the Uganda Bankers Association (UBA), Tier 4 institutions have historically been left behind.
According to Mr. Moses Bwire, Investment Manager for Green Growth and Business Services at aBi Finance, this knowledge gap has enabled micro-lenders to unknowingly fund unsustainable ventures.
“We found that SACCOs were financing activities like charcoal burning and timber harvesting without environmental screening,” Bwire said. “This training is designed to bridge that gap and drive responsible lending.”
Several participants confessed that the session exposed blind spots in their current lending practices.
Mr. Okela Kwo, Branch Manager of Talanta Finance Limited in Gulu City, admitted: “We’ve been lending to charcoal dealers without knowing the long-term effects. Going forward, we’ll promote cleaner energy alternatives like briquettes and biogas.”
In Oyam District, Mr. Tonny Ogwang, Manager of Alukot Finance, welcomed the training as a timely intervention. “Most Tier 4 institutions were applying ESG in bits without knowing it. Now we are intentional. We’ll prioritize lending to schools, hospitals, and prisons adopting clean energy over firewood,” he said.
Bob Alinda, another expert trainer from UIBFS, noted that a biogas unit costs around UGX 1 million and can serve for up to 15 years, urging public-private partnerships to drive uptake.
The initiative aligns with the United Nations Sustainable Development Goal 17, which emphasizes partnerships for sustainable development. Mr Ssozi urged the government and private players in green finance to subsidize clean energy solutions and promote innovation through community-level SACCOs.
“Governance, accountability, and environmental stewardship must be central to every financial decision—from Kampala to the village SACCO,” he said.
If you would like your article/opinion to be published on Uganda’s most authoritative anews platform, send your submission on: [email protected]. You can also follow DailyExpress on WhatsApp for realtime updates.
