Micro-Credit Loans

“Good” Micro-credit Loans for Our Ugandan Women 

Africa micro-loans at work: Ugandan woman at her small scale silver fish business.

Africa micro-loans at work: Jinja beader, Anna, selling silver fish at Masese Port

Access to micro-credit loans is a key component of Outreach Uganda’s empowerment efforts with its women’s groups. We combine the micro-credit programs with with comprehensive management, leadership and business training. This equips women to manage successful businesses, as well as operate their own micro-credit loan funds.

This internal revolving loan fund serves as the group’s own micro-credit lending arm which makes micro-credit loans for business needs of the Ugandan women in the group. Such small scale businesses are critical to the group’s income-generation efforts.

Outreach Uganda’s Micro-credit Support Helps Women’s  Businesses

Out of all of Outreach Uganda’s activities to help our beaders, this is the most exciting item to our beaders.  34% per annum is the current lending rate to poor people by standard micro-credit lenders in Jinja Uganda.  Our Jinja women’s group was a member of a standard micro-credit lending agency for over 15 years with no defaults.  But because its members are poor with no collateral, the standard lending rate for them was still 34%. This was the same rate as any new group getting their first loan.  If they had collateral such as land or a car, they could receive a 24% rate loan. But what poor person has collateral like that?

In uganda, small micro-credit loans help women expand their businesses. Small loans to African women help them generate income.

Doreen used a small revolving loan to help expand her grocery kiosk business.

Avoiding Usurious Standard Micro-credit Loan Rates in Developing Countries

Even Muhammad Yunus, the initiator of the micro-credit concept, states in his book, Creating a World Without Poverty , that he thinks anything 30% and above is usurious. He believes that typical micro-credit loan rates for poverty-focused micro-credit programs should be in the 10 to 15% range.

One study of the Jinja poor population found that high 34 to 36% interest rates charged by standard micro-credit lenders was one reason people were poor.  Indeed, we found that many Jinja group members had been receiving loans from micro-credit lenders for over 10 years. And they were still as poor as the day they started receiving loans when living on less than $1 per day.  If 34% is not a good rate in the U.S., it is also not a good rate in Africa.

Our women’s group members love being their own lender. This allows them to have a sustainable fund while charging their members a 21% rate.  This covers their costs of operating the fund, plus provides for an inflation factor of 10% per year. As Christine Latigo, the group’s treasurer notes, “We get to keep the interest to benefit our group.”  The women added the 10% inflation factor so their loan fund does not lose its value over time.

Internal Micro-credit Loan Program Gives Women a Good Interest Rate Which Promotes Business Growth

Micro-credit loans from the women's group helped Cecilia expand her business.

You can barely see Cecilia who is showing her tablecloths that she embroiders. She expanded her business with a small revolving loan.

Our largest beader group’s (Jinja’s) fund was established in March 2008 and has been building steadily since that time.  First of all, income from fair trade craft sales was an important funding source. Later, other donors saw the capabilities of these enterprising women and their demonstrated record of handling their loan funds responsibly. They contributed additional funding.  In mid-2011, the group discontinued its use of outside micro-credit loans and is now relying entirely on its internal revolving loan fund.

Women’s Groups Gain Experience in Providing Micro-Credit Loans for Their Members

The beader group’s internal business committee and loan committee handle all aspects of making and collecting these Africa micro-loans. They train members, and monitor the status of the members’ individual businesses that are receiving the loans.  Money is not handed out freely.  Among other things, members must demonstrate a business need, good character, and the ability to repay their loans. Only after completing the necessary paperwork and meeting stringent requirements, does the group’s loan committee approve members’ micro-credit loan requests.

Through its volunteers, Outreach Uganda provides ongoing business training relative to the women’s businesses. In addition, it provides technical assistance as requested relative to the women’s micro-credit loan fund’s operation.

Once the internal revolving loan fund is fully funded, the group hopes to add a supplemental fund to provide home-related loans to qualified group members. This will allow them build their own homes and move out of the slums forever.

Smaller Micro-credit Programs in our Northern Uganda Women’s Groups

Small Africa micro-loans help northern Ugandan women expand cash crop business.

Our northern Ugandan women selling garden produce. Small internal business loans help them expand their cash crops.

During 2011 and 2012,  our Kitgum and Agwata women’s groups started their own internal revolving loan funds.  Since that time, these women have also gained valuable experience in managing their own small micro-credit programs. As a result, several of these women’s groups have demonstrated they have the capacity and record keeping ability to successfully manage, grow and lend these monies.  Therefore, we are seeking additional donors (corporate, other nonprofits or individuals) who can help the women expand these funds to a higher level.

Donate now to help expand the revolving loan funds of all three of our beader groups or to build seed money for the Jinja group’s home loan program.

Please email us if you would like to receive more information on how you can help with the groups’ micro-credit programs.

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Micro Loan Programs Empower Ugandan Women

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