By David Maclaren Kiiza
For the last 20 years, the government of Uganda has loaned out over 600 billion shillings to disadvantaged Ugandans to get out of the poverty bracket.
This means that on average government has bailed poor Ugandans with only 20 billion shillings annually.
Under different presidential initiatives government has been channeling affordable credit facilities to the vulnerable poor through the Micro-Finance Support Centre.
In Uganda, 41% of people live in poverty, and almost half of Uganda’s population is under the age of 15, representing one of the youngest populations in the world.
A report on the operations of the Microfinance Support Centre by the finance ministry, shows that the annual loan demand stands at Ush167bn with an average annual credit financing standing at about Ush26bn.
Beneficiaries of these small loans have been complaining about the average processing time for loans at MSC. According to the ministry of finance investigations, loan processing takes three months against a target of one month.
The Microfinance Support Centre is under immense pressure to satisfy the increasing demand for loans, a problem that has been worsened by limited outreach centers to effectively cover the entire country.
The public finance institution operates in only 12 regional offices: Arua, Hoima, Jinja, Kabale, Kabarole, Kampala, Lira, Masaka, Mbale, Mbarara, Moroto and Soroti.
The report showed that there were fewer SACCOS supported by MSC, especially in the south-western, eastern and northern regions.
The low number was attributed to the collapse of SACCOS due to poor saving culture, lack of policies to guide SACCOS, managerial problems – board members connive with management, political interference, founder member syndrome, multiple borrowing, stringent requirements and need for large savings and capital for accessing a loan from MSC.
In 20 years, the Micro-Finance Support Centre has registered 6,757 SACCO’s, disbursed money to 6,606 emyooga SACCO’s with 594,475 individuals as beneficiaries of emyooga; offered financial services to 134,816 active associations; disbursed 231 billion shillings as seed capital and created 2,696,320 jobs.
Emyooga is a Presidential initiative on wealth and job creation which became so popular in the last quarter of 2020 during the presidential election campaign season.
The Microfinance Support Centre offers affordable credit to SACCO’s, microfinance institutions, groups and individuals at an interest of 8% per annum and 0.6% per month.
Under the current loan scheme popularly known as emyooga, 18 specialized enterprises are targeted. They are; Boda Bodas, women enterprises, carpenters, salon operators, taxi operators, restaurant owners, market vendors, youth leaders, persons with disabilities(PWDs), produce dealers, mechanics, tailors, journalists, performing artists, former soldiers, fishermen, local leaders and welders.
In the last 10 years, MSC has disbursed loans at an interest rate of 13% per annum for SMEs and 9% for SACCOS in the agricultural value chains. This is against an average annual demand of Ush167bn.
In the financial year 2019/20, MSC was allocated sh54.72b for lending at the lowest interest rates of 9% per annum for SACCOS, agricultural loans, 13%, commercial loans, 17%, and 11% for the Teachers’ SACCO compared to commercial rates that were on average 23%.
In 2017, the Microfinance Support Centre pioneered conventional microfinancing and Islamic microfinancing with 82 billion shillings investment.