Uganda relaxes terms for women groups to access $155m credit

April 10, 2019 in Business, Finance, Financial Services, Investment, Policy, Trade & Industry by Editor

The government wants the programme to get more women involved in value-addition projects that can improve their incomes.

April 10—The government wants to ease the conditions in which recognised women groups across Uganda can access credit dispensed under a subsidized $155 million programme intended to improve their incomes.

Addressing a news conference on Tuesday gender, labour and social development permanent secretary, Pius Bigirimana said,  “In its creation the Uganda Women Entrepreneurship Programme (UWEP) was intended to address the challenge women face in accessing credit from the formal financial institutions like commercial banks. The banks still regard women to be uncrediworthy, because they lack collateral among other improbable reasons.”

UWEP is a revolving fund started during the 2015/2016 financial year with the main aim of increasing women access to affordable credit.  Among the changes are that money will be disbursed directly to approved women beneficiary groups’ accounts from the Bank of Uganda. Previously, funds were sent to a special programme account at the district from where funds would be passed on to group accounts.

UWEP has received UGX 85,483,476,837, ($22,792,032) representing only 14.6 pc of the overall approved budget of UGX 585,000,000,000 ($155,975,625) So far, 9,381 women projects have been financed, directly benefiting 117,551 women.

“With the new Cabinet approval, the Ministry of Gender, Labour and Social Development will henceforth send money directly from Bank of Uganda to group accounts. This will go a long way in solving the delays we have experienced in some districts and municipalities,” Bigirimana said.

Women groups will also maintain only group members as signatories to their accounts, specifically the Chairperson, Secretary and Treasurer. Previously, the groups had the sub-county Chief as a signatory to their account.

Availability of this credit is expected to raise financial inclusion, promote entrepreneurship development and effective participation of women in the economic development of the country. The Ministry is keen to prioritize enterprises in value-addition so as to enable women to set up small-scale cottage industries which will have a high multiplier effect on job-creation.

Bigirimana said, “Cabinet also approved our request for flexibility in management of enterprises to allow groups decentralize management of their enterprises into individual and/or mini- groups where applicable. This means group members can borrow money and finance individual enterprises. But they remain collectively responsible for the loan repayment”.

Referring to how many banks treat women loan applicants, Bigirimana said, “UWEP has demystified this and shown that women are actually credible debtors than any other demographic.  For example, to-date, we have recovered UGX 7,069,684,946 out of the UGX 8,710,321,031 that is due for repayment. That represents an 80.1 pc repayment rate. If indeed women were not creditworthy they couldn’t have had such impressive recoveries. And remember that our credit is unsecured. We don’t take security from the women. Their groups act as security.”

He said the commercial banks are fully aware of this impressive women performance since all funds are disbursed and recovered through accounts held in commercial banks. “Our desire is to see commercial banks opening up more facilities for women and cutting back on the stringent requirements,” he said.

He said the increased Resource Allocation for institutional support to 20 pc from the current 15 pc will also provide additional resources for the training, technical support and supervision of groups.