The UN Capital Development Fund in Uganda offered 1 million dollars to kick-start the fundraising, while Stanbic Bank Uganda has set aside 5 million dollars towards the initiative.
The UN and Stanbic Bank have launched an initiative in which
they hope to raise up to USD 100 million to help small and informal enterprises
out of the effects of the COVID-19 pandemic.
The initiative dubbed, the Economic Enterprise Restart Fund is
a three –year initiative and is aimed at helping the enterprises that find it
hard to access formal financial services, especially credit.
While it aims to reach the beneficiaries through village
savings and loans association and Savings and Credit Cooperative Societies or
SACCOs, special emphasis will be on those involved in agriculture.
The UN Capital Development Fund in Uganda offered 1 million
dollars to kick-start the fundraising, while Stanbic Bank Uganda has set aside
5 million dollars towards the initiative.
The money will be channeled to the beneficiaries partly as a
grant and partly as a soft loan.
But it will also be used for training of the beneficiaries
on how to adopt management systems that can be recognized by lenders and enable
the enterprises access credit.
This will include digitalizing the operations and the
dealings between the individual and the group they belong to, and well as
between the group and the bank, which will in turn create a bridge between the entrepreneur
and the bank.
According to the Bank of Uganda, about 11 million Ugandans
have bank accounts and can therefore access formal financial services. However,
almost a half of Uganda can access a form of financial service from SACCOs and
VSLAs.
According to the Ministry of Trade, Industry and
Cooperatives, there are more than 21,000 registers SACCOs in the country.
The UN believes that women and youth have been hit more by
the pandemic and its effects, and since they usually dominate the SACCOs and
VLSAs, it is hoped that the fund will have a big and fast impact.
The UN Representative to Uganda Rosa Malango says the
pandemic has erased many economic gains the country had made, including the
journey to attaining the Sustainable Development Goals, adding that the EERF’s
objective is to increase job opportunities.
// ‘Cue in: The United Nations has committed…..
Cue out: …… job creation and service delivery.”//
The project initially set to run for 3-years is also planned
to be executed in conjunction with government’s rural-based programs like
Operation Wealth Creation as well as district cooperative and commercial
officers, for easy reach to the targeted communities.
The banks will deliver the money to the SACCOs in a way of a
loan depending on the amount requested, then the SACCOs which will have
evaluated the members, will on-lend to the members who will then be expected to
repay the money back to the SACCO.
The training of SACCO managers and the entrepreneurs will be
free of charge.
Stanbic Bank Chief Executive Officer, Anne Juuko says banks
mainly rely on the assessment of the customer’s ability to pay, unfortunately,
the informal entrepreneurs have no financial history of records of their
businesses to prove that they are worth lending to.
// “ Cue in: We usually look at the history…….
Cue out: …. the quality of the business, however small.”//
The Deputy Chief Coordinator of Operation Wealth Creation,
Charles Angina says this will go a long way in overcoming the perception by the
informal entrepreneurs that commercial banks are not meant for them. He says this perception has seen them lose out on
initiatives like the Agriculture Credit Facility or the Agriculture Insurance
Scheme.
// “Cue in: Even government took a step……
Cue out: …… people whom we should not leave behind.”//
