The Uganda Microfinance Support Centre needs up to UGX313 billion to cushion microfinance institutions from the effects of the lockdown, occasioned by the outbreak of coronavirus disease.
Peter Mujuni, the Executive Director of the centre, said the money would support up to 14,800 Village Savings and Loan Associations (VSLAs), 1,749 Savings and Credits Cooperative Societies (SACCOS). Collectively, the support will benefit over two million people in the aftermath of the pandemic which left several businesses in an abyss.
He adds that they intend to provide liquidity support to SACCOs and microfinance institutions, ensure revision of interest rates to borrowers, support SACCOs to develop new products, and capitalize the capacity building department at Uganda Retirements Benefits Regulatory Authority (UBRA) among others.
Mujuni was today appearing before the National Economy Committee of Parliament which is currently scrutinizing the effects of COVID-19 on businesses. He said that several microfinance clients have already applied for funds worth UGX80 billion and this money will go a long way in meeting the demand of clients whose credit needs were fully appraised in the various sectors.
“We have created, though a quite small, a microfinance recovery fund – not liquid as yet, to be able to target the SACCOs and VSLAs that have lost their capital. And we estimated this and think that we will need UGX313 billion to be able to get these rural saving schemes back on the feet.”
According to the centre, the borrower’s inability to pay back loans will put pressure on the lenders’ ability to repay their own investors and funders. Mujuni says the institution’s survival will depend on the duration of the crisis and the financial cushion given to them among others.
The committee chairperson Syda Bbumba, however, said that although the concerns of the institutions are genuine, and businesses have been hit, they have been advised to reduce their request to UGX100 billion. The Microfinance support centre has also called on Parliament to allocate money to set up the savings protection fund
Microfinance Support Centre Seeks UGX 300b To support saving schemes
The Microfinance support centre has also called on Parliament to allocate money to set up the savings protection fund
