My country, Uganda, is often referred to as the “Pearl of Africa” due to its remarkable natural beauty, diverse landscapes, and rich cultural heritage. It is also a country where people cannot easily get a job, so they are forced to go into business for themselves. Self-employment means that the demand for credit is quite high. That is why I was happy to become Envest’s East Africa Regional Representative and connect with local microfinance institutions. Our work has helped so many end borrowers to improve their standard of living and develop their communities. But nothing makes me happy more than to see Ugandan women and girls empowered and supported within their local communities.
Let me explain. In Uganda women are often left without assets to secure bank loans. Due to the local culture, in which women typically do not own property that can serve as collateral, female participation in formal financial services tends to be low. Kigarama Farmers SACCO, a partner of Envest in Western Uganda, has developed a variety of women-specific credit products that have allowed the institution to significantly grow the number of female borrowers, almost half of which are now women.
Kigarama was founded in 2005 with the mission to provide financial and business services to empower its members, especially the rural active poor. The MFI can mobilize savings from members, but these funds are not enough to satisfy the loan demand. Kigarama became an Envest partner in January 2023, and a large proportion of the loan from Envest has been used to launch and grow its micro leasing loan product. This product was introduced to address the challenges of collateral that female borrowers often face. In a micro lease, the borrower uses the loan to purchase an asset such as a water tank or a cow. The asset can then serve as collateral for the loan, thus not requiring additional asset pledges on the part of the borrower. The number of female borrowers in Kigarama is expected to continue to increase as the micro leasing product develops.
Initially, the number of Kigarama’s female clients was small, but it started to increase once they created products specifically for women. The MFI increased the percentage of women in its portfolio from 33% to 43% in the first three quarters of 2023 by implementing the micro leasing product. Once the loan is repaid, the asset belongs to the woman, and it helps generate income.
Access to credit for rural women in low-income countries is particularly challenging. Female participation in Ugandan MFIs is often below 30%, with 50% female participation considered excellent. Many MFIs express the goal of offering more credit products appropriate for women to increase women’s access to credit, but examples of successful implementation are not common. Kigarama’s success in increasing access to credit for women in an environment in which it has proven difficult to do so serves as an excellent case study for MFIs in Uganda and elsewhere. We are proud to support Kigarama’s efforts.