Aggrey David Kibenge, the Permanent Secretary of the Ministry of Gender, Labour and Social Development, says women entrepreneurs who will pay back their loans as scheduled, halfway through their loan period, will receive a grant/reduction of their loan value by 5%.
This is contained in a press statement on the status of implementation of the Generating Growth Opportunities and Productivity for Women Entrepreneurs (GROW) Project dated October 8, 2024.
According to PS Kibenge, the GROW loan amounts that are being given out to the eligible beneficiaries range from UGX 4 million to UGX 200 million for a period of up to twenty-four (24) months. Currently, the five (5) Commercial Banks are offering the GROW Loans at a rate not exceeding 10.5% per annum, with no loan application/arrangement fees, making the actual interest paid even much lower.
“It should, however, be noted that the eligible borrowers will be required to meet only the statutory costs associated with their specific loan applications, for instance, the Credit Reference Bureau (CRB) Fees, Security Valuation Fees, among others as may be deemed fit,” he explained.
He said the agreements signed with the initial five (05) Commercial Banks are valued at UGX 98.55 billion of which UGX 26.052 billion was advanced to the Participating Financial Institutions (PFIs) in August 2024. By 25th September 2024, UGX 18.98 billion had been lent out to 1,193 women entrepreneurs. Of these, 995 (83%) women entrepreneurs received loans in the category of UGX 4-20 million with a value of UGX 9.03 billion; 132 (11%) women entrepreneurs borrowed amounts in the range of UGX 20-40 million with the total amount of UGX 3.97 billion while 66 (5.5%) borrowed under the category of 40-200 million with a value of UGX 5.987 billion.
Update On the GROW Loan
“From our review, most of the loans are being made toward the priority sectors of the agricultural value chain, real estate, and trade. As affirmative action, refugee women and those in refugee host communities that will pay well will also receive a grant of 8% of their loan value, while women entrepreneurs from ethnic minorities and those from Karamoja, Busoga, and Bukedi regions will receive grants of 10% of their loan value as a reward for good performance,” he said.
The above-mentioned regions were identified from studies conducted by the Uganda National Bureau of Statistics (UBOS) to be having relatively higher poverty levels. The GROW loan is being lent out through a combined network of 279 branches that are spread across the country.
“Working with the Participating Financial Institutions, the Government is going to make a deliberate effort to improve awareness and mobilization of women in the under-served areas to improve uptake and equity. In addition, Microfinance Institutions (MFIs), and Savings and Credit Cooperatives (SACCOs) will be brought on board to serve women entrepreneurs who may not have access to traditional banking services,” noted PS Kibenge.
He said according to the current design of the GROW loan, Participating Financial Institutions are bearing the entire GROW loan risk and in case they lend money to a woman entrepreneur and the loan is not repaid, the financial institutions are required to absorb the credit losses.
“The financial institutions are, therefore, taking the responsibility of assessing creditworthiness and lending to only those women entrepreneurs who can repay according to their credit assessment protocols.”
He also clarified reports that Centenary Bank and Finance Trust Bank exhausted funds (i.e. UGX Six (6) Billion each) that were released in the first tranche, saying the government is now set to release the next tranche of funds to the two banks before the end of October 2024.
He said the other; Post Bank, DFCU Bank, and Equity Bank have not yet exhausted the first tranche of funds released.
“The results from the assessments so far indicate that the funds released so far are being lent out to eligible women entrepreneurs. We are however going to require the Participating Financial Institutions to profile all the eligible borrowers,” PS Kibenge pointed out.
He added: “Government will be monitoring to confirm and ensure that the funds lent out are indeed being used for the right purpose as intended. Government will also be keen to assess the contribution of the GROW loans to creation of new jobs and growth of enterprises.”
On women who express interest in the GROW loan but lack the collateral and cash flow required to access the loans, PS Kibenge said they negotiated with the participating commercial banks to broaden the securities accepted to include basic forms of security like unregistered land, movable household items, and business assets.
The GROW Loan
The GROW Loan is implemented in partnership with the Private Sector Foundation Uganda (PSFU) through Participating Financial Institutions (PFIs) like Post Bank, Centenary Bank, Finance Trust Bank, DFCU Bank, and Equity Bank. The project, which was launched in March 2023 by President Museveni, is a Government initiative funded by a Grant from the International Development Association of the World Bank.
The Project aims to increase access to entrepreneurial services that enable female entrepreneurs to grow their enterprises, including refugee women and women in host districts. It was designed to respond to multiple constraints hindering women in business including inadequate business management skills; lack of access to affordable capital; limited access to common user manufacturing infrastructure and negative social norms that affect their participation in business.
The project provides an integrated package of services to meet the needs of women entrepreneurs that include mobilizing women entrepreneurs to network, receive mentorship and information on services of the project under district/city-based women entrepreneurship platforms; training women entrepreneurs and their employees on basic entrepreneurship development; provision of trade or sector-specific training and access to business development services; apprenticeship training for women entrepreneurs and their employees; business competition grants; access to affordable credit and improving access to common user production infrastructure.