MFIs in Uganda
MFIs in Uganda
MFIs in Uganda
A. S. Paul
Financial Sector
Financial institutions, products and rules and regulations governing the sector
Benefits of Regulation
For institution Diversify sources of funding Decreased reliance on donor funds/ whims Increase services to clients/Professional image Become more efficient and financially sound Gain competitive advantage over non-regulated MFIs For clients Savings services Potential reduction in costs For industry Increased outreach to rural areas
Role of Microfinance
Microfinance is a financial service for low income entities or people: Key roles include:
o Production process and exchange o Increasing productivity o Growing the economy o Affording people exploit opportunities o Acquiring basic needs o Reducing vulnerability and creating confidence
In phase I, a total of 3,360 Tier 4 MFI Outlets in Uganda was listed. In phase II, a total of 1,248 Tier 4 MFI Outlets was mapped. In phase III and part of phase IV, a total of 741 MFIs and 1064 MFI Outlets have been found to be eligible MFIs and MFI Outlets under this study.
Challenges
The financial system in Uganda lacks information and confidence about contracts. Poor savings culture perpetuated by limited access to safe and sound institutions, confidence in the financial system etc.
Challenges of MFIs
Lack of protection of savings of clients Mistaken assumption that MF is a poverty savior Politicizing MFI services during elections Entandikwa Week monitoring and supervision of MFIs Over and Under regulation High operational costs lack of credit information Underdeveloped institutions