Piloting Microcredit in Uganda

Our microcredit pilot targets individuals who have active, small businesses with limited or no access to traditional financial services. These small-scale entrepreneurs are from underprivileged communities and low-income households. By reaching out to this specific audience, we aim to address the financial inclusion gap and support economic development at the grassroots level. There is a special focus on women entrepreneurs, aged between 21 and 51, with the majority of loans being distributed to this target group.

The pilot allows the company to better understand the microcredit requirements of users in the country and the region, at large. Additionally, the pilot is testing the feasibility of replicating established conditions, such as interest rates and disbursement methods in a different market of entrepreneurs and a new, customized approach to microcredit. The pilot is also testing the Cash-In/ Cash-Out (CICO) flow within the Libera wallet and providing relevant data to create a fully fleshed Mobile Banker Dashboard.

Key points from the Microcredit Pilot in Uganda:

  1. The pilot has shown tremendous progress in identifying some of the key incentives, such as: repeat loans for those who repay with an increased amount; women borrowers; and certain categories of business that generate quick revenue (like Mobile Money trades).

  2. With the mechanism of Country Ambassadors carefully selecting applicants for the pilot, the quality of applicants has ensured a high selection rate of borrowers.

  3. Of 196 interviews conducted, 165 individual borrowers were approved to receive a microcredit.

  4. 59.05% of borrowers are women and 40.95% are men. The average age of applicants is 28, ranging between 21 and 51. 84% are under the age of 30.

  5. The average loan amount granted is $620.75, ranging from $200 to $2500. The average amount requested is $765, ranging from $50 to $5350.

  6. A majority of applicants, 58% intend to use the loan to expand their business e.g. rent a bigger store, acquire new equipment, increase the variety of their product or services, etc., while 42% of applicants intend to use the loan to maintain their current businesses e.g replace produce/stocks, exchange broken equipment for newer, functioning ones, aim to match customer demands, etc. 60% of female-owned businesses indicate a desire to expand compared to 56% of male-owned businesses.

  7. About 12% of loans have been fully repaid. All before reaching full maturity.

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