Uganda microfinance centre due for $14m recap

March 1, 2018 in Finance, Financial Services, Policy by Editor

March 1—The Microfinance Support Centre (MSC), a government agency set up to provide affordable financial services, is to be recapitalised with a UGX 50 billion (about $14 million) injection next financial year (2018/19).

‘If Uganda is to achieve a middle income status, each Ugandan must be able to be productive so that they can be able to earn a daily income. The only way to ensure that this is possible is by providing affordable credit to them so that they can be able to do business. There is no way businesses are going to grow without affordable credit,” Haruna Kasolo, the junior minister for microfinance said in mid-week while inaugurating the new MSC board members.

Started in 2001, MSC is fully owned by the government as a company limited by guarantee. The new team is led by Dr. Kisamba Mugwera, the current Chairman of the National Planning Authority (NPA) and a former agriculture minister.

At present MSC is in partnership with the Islamic Development Bank (IDB) for developing Islamic micro financing models in Uganda. Some $10 million is being disb

Others on the board include Mayanja Gonzaga, the acting Commissioner for Monitoring and Evaluation in the Office of the Prime Minister, Ruth Musoke Biyinzika from Private Sector Foundation Uganda, Juma Yusuf Walusimbi, a formerly with Bank of Uganda and Robert Bariyo Barigye, the Assistant. Commissioner of Cooperative Development and Policy in the trade ministry.

rsed through the arrangement.  This is part of the Rural Income and Employment Enhancement Project (RIEEP) implemented by MSC on behalf of the government.

Kasolo said the demand for affordable capital is huge, but the available money under MSC is limited. Dr. Kisamba Mugerwa said the new team will focus on financial inclusion by  concentrating on savings cooperatives (SACCOs) so that all Ugandans, especially small and medium income earners can be able to access credit at low costs.

He also asked the government to entrust MSC with all the various government micro-credit funds so that this money can easily be moderated and distributed.

“For years, we have seen the President handing over finances to different groups in campaigns and different functions. This kind of financing is not sustainable. We would like to suggest that all that money be put in MSC and loaned out to these different SACCOs and groups so that they can have sustainable income to do small businesses and earn a living,” Dr. Kisamba Mugerwa.

Kasolo said, “This is the new era. MSC deals with a lot of cooperatives in the village. Instead of people traveling from different parts of the country to Kampala to clear documents, we want them to be able to do it online from their offices and get in touch with us  so that we can look through them and give an immediate response. This will improve service delivery to our customers.”

Outgoing Board Chairperson Justine Bagyenda said during her tenure MSC encountered budgetary constraints in supporting all its clients hence the need for a strong capital base in order to be more effective and efficient in service delivery and also remain relevant as a competitive player in the financial sector. She agreed with Dr. Kisamba Mugerwa that all credit for small borrowers provided by the government should be channeled through MSC.

She said, “As of today, MSC is an integral part of Uganda’s financial service delivery. I am confident that MSC is now ripe to manage all government micro-credit funds on behalf of the government.”