By Geofrey Mutegeki, The Monitor
Government has unveiled plans to support and develop science and technology innovations among rural communities as a vehicle for achieving economic growth and development. The plan was announced at the ongoing National Science Week in Fort Portal, under the theme, “Science, Technology, Innovations and You”.
The State Minister for Microfinance, Ms Caroline Okao, while launching the activity on Monday, observed that scientific knowledge and its application through technological innovations are the main drivers of global economic growth which Uganda is now emphasising.
“Government desires to achieve a science and technology-led economic growth and development, and this is why it supports the policy,” Ms Okao said.
She noted that the government has embarked on implementing the recently adopted national science, technology and innovation policy, and other science policies to create a more conducive environment for the programme.
Ms Okao added that Uganda is yet to achieve the critical mass of scientists and researchers, at 25 researchers per million inhabitants. Uganda is still among the lowest in the sub-Saharan Africa.
Dr Peter Ndemere, the executive secretary, Uganda National Council for Science and Technology, said the week seeks to raise awareness on the role of science and technology in Uganda’s social economic development process.
The week will be crowned by among others, Science Journalists Awards, Science Excellence Awards Organisation and Partnership.
From Ultimate Media
More and more people are recounting the benefits of getting loans to finance their income generating activities from micro finance institituions spread across Uganda.
Grace Nalwanga, a resident of Ttula in Kawempe division in Kampala Capital City Authority is a mother of two: a nine-year-old daughter and a seven-year-old boy.
She has been borrowing money from a number of microfinance institutions in Kampala over the last five years.
Nalwanga says she has received and paid back several loans to microfinance institutions.
She belongs to Ttula women development group in Kawempe division, Kampala.
Nalwanga says poverty awakened her to start borrowing money from microfinance businesses and started up a restaurant in Kampala.
She says no body can now persuade her to stop borrowing money for development of her business.
“Before I borrowed money from Pride microfinance, I was struggling to sell vegetables. I borrowed money and I moved on to sell silver fish, charcoal, ground nuts and later I opened up a restaurant on Kampala road. I am happy because I make more money and I have been able to raise my two children. I meet all their needs and are both going to school,” she says.
By Martin Luther Oketch, Daily Monitor
At least 71 per cent of Ugandans aged 16 and above are engaged in some form of saving, statistics at the Ministry of Finance shows. The data indicates an improvement after years of a low savings trend in the country.
Presenting a paper during a public dialogue in Kampala last week, Mr Moses Kaggwa the commissioner for Microfinance in the Ministry of Finance said 17 per cent of Ugandans save with the central bank’s regulated institutions, 4 per cent with Saccos and Micro Deposit Taking Institutions whereas 31 per cent use informal saving methods. He said: “People with higher education save mostly with banks and other formal institutions.”
Whereas, according to Mr Kaggwa, most of the low income earners save to meet their daily needs, and to minimize risks, this has led to an improvement in productivity. Saving is a fundamental importance to families and individuals as it enables the transformation of economic resources. It also finances productive investments, which is one of the sources of increasing personal or national wealth.
Drawing global examples, Mr Kaggwa said about 2.5 billion adults globally do not use formal sources to save or borrow. He said 42 households in Bangladesh save an average of $144-only 9 per cent in formal sources whereas 48 per cent households in India saved an average of $167-21 per cent in formal sources.
In South Africa 152 households saved an average of $676-42 per cent in formal sources. The data shows that, although the numbers of banks have increased in recent years there is a lack of a well-established network of banks in rural area, which says hinders the rural population from making formal savings.
By Faridah Kulabako, Daily Monitor Uganda -
Imagine what happens when the intelligence of 32 million people in Uganda is unlocked, and the untapped reserves of the country’s innovation flow freely.
Building the developed world was possible because start-up capital was linked to people with brilliant and unproven ideas.
Uganda is home to many enterprising people, who have brilliant ideas but the only thing inhibiting them from fulfilling their dreams is access to funds.
Providing capital to low-income entrepreneurs to create or improve existing businesses through microfinance not only creates higher incomes for such people, but also creates employment, promotes macroeconomic growth and stabilisation and encourages economic and social inclusion.
Uganda, like in many other developing countries, small and medium enterprises and the informal sector form the engine of economic growth and the greatest employment generators.
Provision of capital therefore, helps awaken the entrepreneurial talent hidden within people and help them start small businesses they once could not imagine.
For instance, ten years ago, Ms Ruth Wamulo could not have attained a small business loan because she had no collateral in form of a land title, which financial institutions wanted before giving out loans.
Ms Wamulo barely made ends meet by operating a small stall selling matooke and maize in her home town, Iganga, because she hardly had enough capital to start another business.
Sustainable enterprise development requires finance to adequately address project needs, unleash the productive forces and the numerous human capabilities.
So when Ms Wamulo got her first loan of Shs200, 000 from Brac -an international development organisation with roots in Bangladesh – in 2007, she used it to further capitalise her business.
In partnership with MasterCard Foundation, Whole Planet Foundation and Nike Foundation, Brac, works with people whose lives are dominated by extreme poverty, illiteracy, and disease to train and give them microloans to better their lives.
“I am grateful that Brac trusted me, and I always try to repay my loans on time,” she says. Increased access to loans unleashed her skills of establishing and managing a restaurant business.
Today, she is the proprietor and manager of Shawe Investments and outside catering based at Busoga University campus.
Her restaurant feeds all the students and staff at the university.
Ms Wamulo has not only been able to meet all her essential needs but also pays for her daughter’s education, reinvests back into the business and also bought a piece of land where she intends to construct a hostel to supplement her income.
She used her latest loan of Shs1.5 million to expand her business, buying furniture and kitchenware for her restaurant.
Her business is now worth more than Shs15 million, up from the Shs10 million startup capital three years ago.
She also employs seven more people who she pays Shs2,000 per day.
It is this capability that makes small enterprises an engine of growth and can also help in achieving the millennium development goal on poverty reduction.
Mr Ariful Khondoker Islam, Brac Uganda programme head says that to spur entrepreneurship in the country, people should have access to both skills and financial resources.
“If you have skills without means, you can’t realise your potential and the reverse is true,” Mr Khondoker adds.
Mr Charles Ocici, the executive director Enterprise Uganda says most people are sitting on their entrepreneurial talents because they believe to start any business, they should have a certain amount of money.
“Some people have magical figures in their minds that they believe before they get it, they can’t start any business,” he adds.
He advises that people should start small, progress slowly until they raise the needed capital to venture into their dream businesses. In Uganda, majority of the poor are self-employed either in agriculture or other small businesses and their businesses are always vulnerable to market forces.
Although access to microfinance can help make small business competitive, there still exists a demand-supply mismatch in the market and high interest rates of between 16 and 24 per cent, making loans too expensive.
Mr David Baguma, the executive director of the Association of Microfinance Institutions of Uganda, however, identifies lack of access as the biggest challenge hampering microfinance development in Uganda and not high interest rates.
He says the reach of microfinance services is still low with only 2 million people accessing finances out of a population of over 32 million.
Therefore he calls on the government to improve infrastructure and communication facilities to make it easy for the providers to expand outreach.
Mr Mukasa Kassajja, the branch director Young Men’s Christian Association, teachers and commercial college, Mukono says Uganda could not have had such huge unemployment levels if people had access to capital.
“Capital is the biggest challenge to people’s entrepreneurship, government needs to assist the youths through training to get loans and start their own businesses because the available jobs are not enough,” he adds.
Mr Ocici, however, says though loans can create investment capacity, people should take advantage of the available opportunities; it still makes it hard for a person who has taken a loan to compete with another operating a similar business on personal funds.
“A person who has taken a loan has to work tirelessly and more efficiently because by any case, that person conducts business at a much higher rate if you add interest than his counterpart who uses personal funds,” he says.
First it was the grand entry of Helios with some Ksh11 billion ($135.9 million). Then the bank acquired Uganda’s mirco finance bank.
In May, China gave Equity Bank $4 million for loaning to small and medium enterprises, as Kenya became the first country in Africa to benefit from the $5 billion Chinese fund for the development of SMEs .
“Since the investment by Helios EB in Equity, we have been consolidating our dominant banking position in the country and seeking prudent regional entry points,” said the bank’s chief executive, James Mwangi.
Equity became Kenya’s biggest bank in terms of capitalisation after Helios EB invested Ksh11 billion ($190.47 million) pushing its capital to Ksh21 billion ($333 million) from Ksh2.2 billion ($34.9 million) in 2006. Equity has perfected the strategy of growth through mergers, acquisitions and greenfields.
The bank entered Ugandan in its first cross border expansion upon signing a conditional agreement with Uganda’s largest microfinance firm, Microfinance Company of Uganda Ltd (UML) after forking out Ksh1.66 billion ($25.3 million) in a deal that saw it take up 100 per cent of the bank’s share capital in 2008. Equity inherited 28 branches and 14 contact offices from the deal.
Although Equity Uganda posted a loss of Ksh600 million ($7.414 million) for the first half of 2010 (see story below), Mr Mwangi said it is its learning centre, whose experiences will inform future expansion to complete its plans to venture into at least 10 countries in Africa in the next five years, and roll out into the Comesa region in ten years.
Mr Mwangi described the acquisition as fitting the bank’s growth strategy. Moving into Uganda, Mr Mwangi said, was part of an expansion strategy aimed at tapping business opportunities in new markets. Through the acquisition, Equity targeted a lucrative trade base in Uganda, which sources 56 per cent of its imports from Kenya.
Uganda is in fact the single largest destination of Kenya’s commodity exports in Africa, accounting for a total of Ksh108 billion ($1.7 billion).
“Equity Bank will tap into the business of issuing letters of credit and guarantees to exporters,” said Mr Mwangi. The bank is also targeting the money transfer business, especially by parents sending school fees to Uganda.
According to recent data, Kenya provides the highest percentage of foreign students in high schools and universities in Uganda.
There are at least 21,000 Kenyans studying in Uganda. Uganda also offers a natural fit for the bank’s microfinance business model. As in Kenya, many Ugandans still cannot afford or have no access to banking services.
Some of the proceeds have already been channelled into the acquisition of a 24 per cent stake in Housing Finance, making it a major shareholder and there are plans to roll out partnerships in Rwanda and expand its branch network in Southern Sudan. It intends to foray into Tanzania at a date it is yet to disclose.
The bank that was registered in 1984 currently has 56 per cent of the accounts in Kenya. When Equity Bank was named one of the most respected companies in Kenya at the Most Respected Companies Survey in 2008, Mr Mwangi remarked that it was a surprising achievement for the institution considering that probably non of the CEO’s who voted for it held an account with it.
Last week, the bank reported a 46 per cent jump in pre-tax profits for half of 2010, with earnings standing at Ksh3.8 billion ($46.9 million) compared with Ksh2.6 billion ($32.1 million) for the same period in 2009.
Profit after tax grew by 44 per cent from Ksh2 billion ($24.7 million) to Ksh3 billion ($37 million). Its total assets grew by 40 per cent to Ksh123 billion ($1.52 billion) from Ksh 88 billion ($1.087 billion) during the period that also saw loans grow from Ksh54 billion ($667.3 million) to Ksh68 billion ($840.3 million).
The figures are the highest reported as half-year results from the banking sector are released, and are attributed to the improving macroeconomic environment especially agriculture.
In June, Mr Mwangi, together with Safaricom CEO Michael Joseph received honorary doctorate degrees from the Africa Nazarene University, for their participation towards improving the standards of living of Kenyans and for their innovative ideas.
Chancellor Prof Leah Marangu said Mr Mwangi was honoured for his role in steering Equity from a microfinance institution to a commercial bank that is listed in the Nairobi Stock Exchange.
Mr Mwangi has previously been awarded an Honorary Doctorate in Business Administration from Kenya Methodist University, Doctor of Humane from the Kenyatta University and Doctor of Entrepreneurship from Jomo Kenyatta University of Agriculture and Technology.
The latest mobile phone bank, M-Kesho, operated by the two institutions is likely to pool about 10 million subscribers by December, making it the largest bank account in the region.
According to Mr Mwangi, Mkesho, an account operated through a mobile phone simcard and allows all banking transactions is a Kenyan innovation, and is already pulling the world to the country.
The success of Mkesho reinforces what Equity has achieved for Kenya since it has become a model for micro finance.
By James Allman-Gulino, KF11 Uganda –
Some of the best work that microfinance can do is in post-conflict regions, particularly those with internally displaced persons (IDPs). These people may have been forcibly relocated from their homes and made to stay in makeshift camps because violence was too severe around their villages, as was the case in Northern Uganda during the government’s fight against the Lord’s Resistance Army (LRA). The conflict with the LRA had been off-and-on for over twenty years, with the LRA committing many atrocities against civilian populations, but in 2008-9 the Ugandan Army managed to significantly weaken the LRA and expel most of their remaining fighters. However, many IDPs in Northern Uganda are still living in IDP camps, or are just starting to return home in piecemeal fashion. This often leads to severely fragmented social structures, and unsurprisingly means there is a lack of stable jobs for IDPs both at home and around the camps.
Microfinance, particularly group borrowing, can go a long way towards addressing these problems. The capital that borrowers receive can expand a business enough to generate profit for a return journey home, or can allow a borrower to diversify their sales (i.e., selling sorghum in addition to running a small restaurant). This diversity of product can help the borrower when movement of people has thinned the customer base for their primary business. Groups of borrowers can also help support one another and rebuild social connections. A group of women borrowers I met in Acholibur, a village in Northern Uganda that was significantly affected in the LRA war, said that borrowing has “given the group a sisterhood” and helped unite them when they’ve been separated from other family members. The borrowers pictured below belong to groups organized mostly from IDPs still living in the camps near Acholibur, and basically couldn’t stop talking about what their group membership has meant to them in the wake of the conflict.
As I always like to stay realistic about things, it’s important to note that obviously microfinance isn’t a cure-all in these situations. Effective administration of group loans can be particularly difficult when you have a transient population. The groups I met talked about the significant challenges they faced because some members were moving back to their villages or might have to relocate from a camp dwelling quickly, leaving their weekly contribution unpaid and the group responsible for the money. Additionally, operating in these regions often requires external support to allow MFIs to keep their employees safe. BRAC, for instance, which has programs in Northern Uganda, Afghanistan, and other post-conflict regions, has funding partnerships with the UN and other organizations that allow them to work in such challenging areas. It’s certainly no detractor that MFIs may need donor financing to keep safe employees who are doing such valuable work for IDPs and other populations affected by war; it’s just worth pointing out that the organizations who operate in these dangerous areas aren’t always magically “self-sustainable” just because they work in microfinance.
But more than any of my impressions here in Northern Uganda, I’ve been amazed by the resiliency of the borrowers and the larger community. Many people here were LRA prisoners and just narrowly survived – yet only casually mentioned this fact after talking to me about the conflict for 15-20 minutes. But almost everyone here is hopeful for the region, and believes that new stability and programs like BRAC’s microfinance can really help people improve their lives. Several people I talked to said that re-establishing trust and social bonds were the first key steps for Northern Uganda, and achieving those ends in a way that also strengthens local businesses is an incredibly powerful program for the region and its IDPs.
By Martin Ssebuyira, Daily Monitor Uganda –
Mr David Baguma, the executive director of the Association of Microfinance Institutions of Uganda has advised the government against politicising micro-financing as it affects development.
Speaking at the Association’s Annual General Meeting in Kampala Mr Baguma said schemes like ‘Entandikwa’ failed because they were politicised.
He said: “Government brings these programmes during elections and promises to give people money and, when people are given money they don’t return it thinking it was a reward.”
Mr Baguma said government needs to emulate developed countries like China where micro-finance is left to technical people to deliver desired goals.
The Association of Microfinance Institutions of Uganda (AMFIU) is an umbrella organisation of small-finance institutions that was established to have a common voice for micro finance institutions, lobby government for favourable policies, share information and experiences and network with both local and international actors.
Mr Baguma said AMFIU has managed to improve the financial depth of Ugandans by bridging the gap between commercial banks and central banks which has increased the country’s GDP figure.
Prof. Augustus Nuwagaba, a Makerere University don said such programmes don’t benefit people because; they only look out for people who supported sitting governments.
AMFIU was founded in 1996, through the collaboration of several organisations with interest in micro-finance to have a common voice for small finance institutions across in the country.
By Walter Wafula, Daily Monitor –
To plug the human resource gap in the booming financial services industry in Uganda, Kyambogo University has introduced a degree programme in microfinance.
Mr Muhammad Mpanso, a lecturer at the Department of Economics and Statistics says the programme was initiated in the academic year 2006/07 to address the urgent managerial and technical skills inadequacies in the microfinance industry.
“The human resource in the microfinance institutions needs to be equipped with contemporary knowledge and skills applicable to the Ugandan situation,” Mr Mpanso said at the launch of the courses last week.
The new programme is a blend of economics, management, finance, accounting and microfinance. The course content furnishes students with a clear perspective of the environment in the microfinance industry, in addition to management and decision making tools.
Mr David Kalyango, the executive director of Pride Microfinance urged the university to invest in research to help the finance industry come up with innovative products.
By Sylvia Juuko, New Vision Uganda –
REGULATING the micro-finance sector will encourage more people to use its services and protect clients’ savings, Ruth Nankabirwa, the micro-finance state minister, has observed.
“One area that will give confidence to the masses is to have a law under which all micro-finance institutions can be regulated and supervised,” she said.
Nankabirwa noted that the law would improve delivery of financial services, especially in the rural areas. A policy framework to regulate micro-finance activities is expected before the reading of the 2010/2011 budget in June.
The minister was speaking at the third financial inclusion advisors conference convened by the Bank of Uganda, the Bank Negara Malaysia and the CPTM smart partnership movement at the Kampala Serena Hotel recently.
It brought together financial services providers, policy-makers and regulators to seek efficient ways to deliver financial services to the rural areas through micro-finance institutions.
According to statistics presented by the minister, a huge portfolio of funds within the savings and credit organisations is not regulated. Nankabirwa also revealed that out of the 1,085 administrative units, 613 had SACCOs.
“The results so far are promising because the membership of savings and co-operatives has grown from 644,318 in 2008, to 1,154,715 in 2009. Savings have risen from sh55m to sh83b,” she explained.
She said the loan portfolio within the unregulated institutions stood at sh122b.“The rural financial services programme has shown that poor people can save and are trustworthy, but they need guidance. The rural folk borrow money and pay back.
“These small loans have made big differences in their lives. For instance, women have been able to pay fees for their children,” she noted. According to Nankabirwa, there are over 1,340 micro-finance firms in Uganda that are not regulated.
Justine Bagyenda, the Central Bank’s executive director for supervision, suggested that the financial service providers adopt home-grown technologies that can support branchless banking to reach the unbanked population.
However, leveraging mobile phone technology to provide banking solutions to a wider population could face challenges of poor infrastructure and high branch start-up costs.
“The sector should devise ways to establish branchless banking so that we can extend financial services to the rural areas. “We need policies that can guide the implementation of financial inclusion for the unbanked,” Bagyenda explained.
By Martin Luther Oketch, Daily Monitor –
Ms Ruth Nankabirwa, the state minister for Microfinance, has said commercial banks should extend mobile banking to the rural poor through the use of Information Communications Technology.
The Minister said during a Smart Partnership conference on financial programme in Kampala recently that technological innovations in communication can be utilised to extend financial services to the poor. “Today, thousands of Ugandans use mobile money to make payments. What needs to be done is for Bank of Uganda, the Communications Commission and financial institution to dialogue on how mobile money transfer can operate in a regulated environment to serve the financially excluded,” she said.
Uganda is seeing remarkable growth of between 25-30 per cent in the telecommunication sector, where by the mobile phone platform is being utilised to reach people in hard to reach areas.
Ms Nankabirwa said Uganda should focus on financial inclusion that goes beyond ensuring a bare minimum access to bank accounts and views it in a much wider perspective. “Having an account alone can’t be regarded as an accurate indicator of financial inclusion,” she said adding that it should be considered as a linchpin in the social and economic transformation of people.
She said the government has realised that large parts of the population lack information on the financial sector, which impairs their ability to participate in development. Under the Rural Sector Services Programmes, the government has designed a communications strategy to inform the public on financial literacy in languages they understand.
In its efforts to offer financial services to the unbanked population in the country, in 2007 government designed a policy for financial inclusion under the ‘Prosperity for All’ programme with the aim of establishing cooperative unions in 1085 sub counties in the country. Micro-finance, as a form of delivery of financial services to poot in Uganda with a considerable number of operators-ranging from groups to individuals.