Uganda Microfinance Union (Umu): A Case Study

The Uganda Microfinance Union (UMU) has become one of Uganda?s leading microfinance institutions. It began four years ago with a small equity loan of about US$30,000 and has grown to US$1.5 million in total assets. Through a network of five branches, UMU serves16,577 clients (70% women), all of whom savers and 63% are borrowers. As of July 2001, UMU?s outstanding loan portfolio was US$1 million and savings were over US$400,000. It is diversified: 50% of its portfolio is in trade, 35% in agriculture, 12% in services, and 3% in manufacturing. Its repayment rate has remained at 98% or above. Its operational sustainability is 111% and its financial selfsustainability 92%. What factors have contributed to UMU?s success? --

Women And Men In Rural Microfinance: The Case Of Uganda

Uganda, where 85 % of the population live in rural areas, has experienced a rapid rise of rural and microfinance over the last ten years. There is a pronounced gender awareness in public policities and programs. Best practices have been mastered by institutions in the formal and the NGO sector. In the latter, women dominate as borrowers. Yet, as the vast majority still have no access to deposit and credit services, expansion of outreach remains as the biggest challenge. Rapid expansion of sustainable financial services to women is best achieved in Uganda not through women-only programs, but by a broad range of financial institutions with unbiased services to both women and men, the poor and the near-poor. NGO-supported microfinance institutions (MFIs), through group lending up to a ceiling, have provided start-up finance, particularly for women; but this has added borrower transaction costs and restricted growth. In Centenary Rural Development Bank and some MFIs, voluntary savings and individual lending to enterprising men and women have fostered sustainable farm and nonfarm business growth beyond the poverty line, creating at the same time employment opportunities for the very poor. Under the prevailing conditions of a conducive policy environment, diversified agricultural and microenterprise opportunities, good practices in agriculture and microfinance, and effective agency coordination, the most effective means of donor assistance are equity investments in rural banks to extend their branch network and staff; equity investments in MFIs to transform into regulated deposit-taking institutions; support to banks and MFIs for staff selection and training; the facilitation of linkages between MFIs and banks; and the development of gender-sensitive strategies in different culture areas of Uganda based on the differential analysis of customer information in each institution?s management information system. --

Women and Men in Rural Microfinance: The Case of Jordan

Rajwa is a 50 years old widow in the area of Karak, with five children. Her husband died 10 years ago. In January 2000, she received a collateral-free loan of JD 2,100 (US$ 3,000) from the ACC/IFAD Income Diversification Project, repayable over 8 years. She bought 20 sheep, which have increased to 24, and went into dairy production. By September 2001, she had sold only 2 kg of goat butter and 6 kg of jameed. Everybody produces jameed and butter, there is no market, she says. She has made two payments of JD 30 each, which covers less than the interest due. ACC keeps writing letters and visiting her, but to no avail. With a loan of JD 200 for 8 months, less than one-tenth of the actual loan amount and period, Rajwa could have purchased the equipment and bought milk for dairy production instead of raising sheep. This would have given her the opportunity of testing the market and her entrepreneurial skills at a manageable risk. Now she is stuck with a bad loan and ineligible for another to go into a more profitable line of business. It was the loan terms imposed on her that made her start big - and fail big. She would like to apply for a loan to buy a sewing machine at a cost JD 120; but she is a defaulter, and the amount is too small to be financed from an ACC loan. --

Dinero que cuenta: Servicios financieros al alcance de la mujer microempresaria

El acceso de la mujer microempresaria a los servicios financieros es clave para sus estrategias de inversión. Como parte de los esfuerzos del BID para fortalecer el papel de las mujeres en el desarrollo económico, la Unidad de Mujer en el Desarrollo realizó un estudio con el fin de analizar los servicios financieros ofrecidos por una gama de instituciones --bancos comerciales, cooperativas de ahorro y crédito y organizaciones no gubernamentales-- en seis países de América Latina y el Caribe. Este libro sintetiza los resultados del estudio, comparando los servicios financieros disponibles en las diversas instituciones. Asimismo demuestra que, además de las organizaciones no gubernamentales, existen cooperativas de ahorro y crédito y algunos bancos que pueden ofrecer, y de hecho ya lo hacen, servicios de ahorro, crédito y de otros tipos que se ajustan a las características de los microempresarios en general y de la mujer microempresaria en particular. Esta publicación contribuye así a enriquecer el nuevo campo de las microfinanzas.

Apoyo del Grupo BID al sector de la microempresa (2000-2002): Logros, lecciones y desafíos

Durante los últimos 25 años de apoyo del BID, el sector de la microempresa en la región ha crecido y madurado y se ha ubicado a la vanguardia de un movimiento mundial para apoyar a la microempresa. El presente informe presenta los avances, logros y desafíos basados en las enseñanzas institucionales, y resume la experiencia del BID al servicio de la microempresa. Hoy, las inversiones realizadas por el Grupo BID están comenzando a dar su fruto. El sector privado se ha aunado al esfuerzo del BID ampliando el flujo de recursos privados hacia la microempresa y su entorno, dirigiendo cada vez más fondos hacia el mejoramiento de las empresas, hogares y comunidades de millones de microempresarios en la región

IDB Group Support to the Small and Medium Enterprise Sector (1990-2002): Achievements, Lessons and Challenges

Small and medium enterprises are estimated to account for at least 10 percent of the number of total businesses in most Latin American countries and between 20-40 percent of total employment. In the 1990's, 30 percent of new jobs were created by SMEs. Small companies have played a major role in developing clusters and productive chains that can compete in international markets and also show great potential for innovation and support for technological development. This technical report summarizes the achievements, lessons, and challenges of IDB Group operations over the period 1990-2002. As a regional development organization, the IDB Group (which includes the Inter-American Development Bank, the Inter-American Investment Corporation, and the Multilateral Investment Fund) has worked with governments and the private sector to overcome SME deficiencies and explore alternatives to maximize SME development across the region

Apoyo del Grupo BID al sector de la microempresa (2000-2002): Logros, lecciones y desafíos

Durante los últimos 25 años de apoyo del BID, el sector de la microempresa en la región ha crecido y madurado y se ha ubicado a la vanguardia de un movimiento mundial para apoyar a la microempresa. El presente informe presenta los avances, logros y desafíos basados en las enseñanzas institucionales, y resume la experiencia del BID al servicio de la microempresa. Hoy, las inversiones realizadas por el Grupo BID están comenzando a dar su fruto. El sector privado se ha aunado al esfuerzo del BID ampliando el flujo de recursos privados hacia la microempresa y su entorno, dirigiendo cada vez más fondos hacia el mejoramiento de las empresas, hogares y comunidades de millones de microempresarios en la región.Microempresas y microfinanciamiento, microempresa; empleo; producción, economia informal; fuerza laboral

Uganda Microfinance Union (UMU) A case study

Der vorliegende Beitrag stellt die 'Uganda Microfinance Union (UMU)' vor. Die UMU ist innerhalb von vier Jahren zu einer der fuehrenden Mikrofinanzinstitutionen in Uganda geworden . Durch ein Netzwerk bestehend aus fuenf Niederlassungen bedient die UMU 16.577 Kunden (70% davon Frauen). Alle Klienten sind Sparer und 63% Kreditnehmer. Seit Juli 2001, belaeuft sich der Kreditbestand auf eine Million USD und das Sparvermoegen auf ueber 400.000 USD. 50% des Portfolios liegen im Handel, 35% in der Landwirtschaft, 12% in den Dienstleistungen und 3% in der Herstellung. Die Tilgungsrate liegt bei 98% oder darueber. Welche Faktoren haben zu dieser Erfolgsgeschichte beigetragen? Die Autorin macht folgende Eckpunkte aus: (1) Lokale Initiative und Ausrichtung - UMU mobilisierte zunaechst lokales Kapital, anstatt von Spenden finanziert zu werden; (2) Synergien aus Kombination und Kollaboration, wofuer auf lokale und internationale Erfahrungen zurueckgegriffen wurde; (3) Laendliches Klientel, d.h. UMU fing in den laendlichen Gebieten an, in denen die Menschen wenig Zugang zu finanziellen Dienstleistungen hatten; (4) Diversifizierte Kundschaft; (5) Gruendliche Untersuchung der vorhandenen Praxis; (6) Flexibilitaet; (7) Taegliches System des 'Darlehen-Monitoring'; (8) Genderperspektive, die auf Geschlechtergleichheit abzielt und ueber eine rein quantitative Betrachtung hinausgeht. (ICDUebers)'The Uganda Microfinance Union (UMU) has become one of Uganda's leading microfinance institutions. It began four years ago with a small equity loan of about US Dollar 30,000 and has grown to US Dollar 1.5 million in total assets. Through a network of five branches, UMU serves16,577 clients (70% women), all of whom savers and 63% are borrowers. As of July 2001, UMU's outstanding loan portfolio was US$1 million and savings were over US Dollar 400,000. It is diversified: 50% of its portfolio is in trade, 35% in agriculture, 12% in services, and 3% in manufacturing. Its repayment rate has remained at 98% or above. Its operational sustainability is 111% and its financial selfsustainability 92%. What factors have contributed to UMU's success? Local initiative and vision: UMU started with a small amount of local capital. Rather than remaining as a 'project' funded by donors, it was guided by a vision of becoming an institution that mobilized local resources, both savings and capital. Synergies from combinations and collaborations: UMUs' founders, a Ugandan and an American, grafted onto local experiences time-tested international microfinance practices, leveraging the best of each. Rural clientele: UMU began in rural areas where people had little access to financial services. It has expanded into peri-urban and urban areas, zeroing in on specific, underserved market niches. Most clients reside in the countryside. Diversified clientele: UMU believes that it is not simply the poorest of the poor who benefit from microfinance. UMU reaches out to a broader clientele of poor and not so poor, the larger group of 'the working poor,' both self-employed and employed. Sound practices: The founders identified sound practices that were working in Uganda. These include solidarity groups and individual lending. Flexibility: UMU listens to clients and remains flexible, adjusting its financial products within certain parameters. Loans can be used for any purpose. Repayment schedules are flexible based on clients' choice (weekly, biweekly, monthly). A client can start with savings first. Setting aside money in savings is voluntary; competitive interest rates help to promote fixed deposits. Daily loan monitoring reporting system: UMU monitors loans daily. Using a card system, officials collect information every day about borrowers who need to pay that day. At the end of the day, UMU knows who did not pay. Immediately, the branch notifies borrowers of their delinquency. Gender perspective of equity, not simply 'numbers' of participants: UMU believes women need financial services, particularly because they are responsible for the well-being of their families. However, this belief does not mean it ignores men, since they also need access to credit. At least 50% of the members in solidarity groups must be women. In actual fact, seventy percent of the clients are women. Client-oriented research with CEEWA, a women's advocacy and research NGO, resulted in a new product, Kikalu, one that responds to the complaints of women clients that small loans did not permit them to improve their productive assets. UMU's evolution and expansion has been based on developing sound practices - listening to clients, testing and customizing new products, and developing policy and operational standards. Currently, UMU offers: loans: working capital, fixed asset, and salary earners' loans; savings accounts: savings passbooks and fixed-term deposits at competitive rates; access: five branches in four different districts. UMU's growth has been measured because management has been cautious. It is supported with loans from Suffice, USh 120 million, from the Stromme Foundation, USh 200 million, and from the BoU, USh20 million, as well as by equity grants from USAID and NOVIB.' (extract)German title: Uganda Microfinance Union (UMU): eine FallstudieSIGLEAvailable from http://www.uni-koeln.de/ew-fak/aef/PDFnew/UG%20UMU.pdf / FIZ - Fachinformationszzentrum Karlsruhe / TIB - Technische InformationsbibliothekDEGerman