President Museveni at the launch of the GROW Project loan
Nearly 1,200 women have received about Shs19bn under the Generating Growth Opportunities and Productivity for Women Entrepreneurs (GROW) Project, Aggrey David Kibenge, the Permanent Secretary, Ministry of Gender, Labour and Social Development, has confirmed.
Launched in March 2023 by President Yoweri Kaguta Museveni, GROW is a Government initiative funded by a grant from the International Development Association of the World Bank.
With the GROW Project, Government seeks to increase access to entrepreneurial services that enable female entrepreneurs, including refugee women and women in host districts, to grow their enterprises.
The project was put in place to deal with challenges women in business or entrepreneurs were encountering. These challenges – such as inadequate business management skills, lack of access to affordable capital, limited access to common user manufacturing infrastructure and negative social norms – had over the years hindered the growth of such business.
Under GROW Project, government is providing an integrated package of services to meet the needs of women entrepreneurs. This package includes mobilising women entrepreneurs to network, receive mentorship and information on services of the project under district or city-based women entrepreneurship platforms, and training of women entrepreneurs and their employees on basic entrepreneurship development.
The package of services for business women and entrepreneurs also includes provision of trade or sector-specific training and access to business development services offered by specialised departments of the Government of Uganda.
Other services under the project are apprenticeship training for women entrepreneurs and their employees, business competition grants, access to affordable credit or the GROW loan, as well as improving access to common user production infrastructure.
MONEY RECEIVED SO FAR
According to PS Kibenge, Shs 18.98 billion had been lent out to 1,193 women entrepreneurs as GROW Loan under the project being implemented in partnership with the Private Sector Foundation Uganda (PSFU) through the Participating Financial Institutions (PFIs), as of September 25, 2024.
Up to Shs 98.55 billion will be given to the women entrepreneurs, channeled through the PFIs. As of August 2024, government had sent up to Shs 26.052 billion to the commercial banks.
Most of the women entrepreneurs – up to 995 or 83 per cent – have so far received loans in the category of Shs 4-20 million, totaling to Shs 9.03 billion. Up to 132 or 11 per cent of the women entrepreneurs had borrowed amounts in the range of Shs 20-40 million, totaling to Shs 3.97 billion. A total of 66 or 5.5 per cent of women entrepreneurs had received between 40-200 million, totaling to Shs 5.987 billion.
The Permanent Secretary says that most of the loans had been channeled to the priority sectors of the agricultural value chain, real estate and trade.
It should be remembered that Vice President Jessica Alupo launched the GROW Loan on August 28, 2024. Under this product, qualifying women entrepreneurs receive their loans through participating commercial banks: Post Bank, Centenary Bank, Finance Trust Bank, DFCU Bank and Equity Bank, which have up to 279 branches spread across Uganda. PS Kibenge says “arrangements are being finalised to bring Stanbic Bank onboard” and so will be Microfinance Institutions (MFIs), and Savings and Credit Cooperatives (SACCOs) for women entrepreneurs who may not have access to mainstream banking services.
The GROW loan amounts range from Shs 4 million to Shs 200 million at an interest rate of 10.5 per annum for a period of 24 months. No loan application or arrangement fees are charged on the amount. There are also incentives for repayment on schedule.
“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,” explained PS Kibenge.
“It should be noted that 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%. 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.”
LOAN RISK
In the current design of the GROW Loan, noted Kibenge, Participating Financial Institutions are bearing the entire GROW loan risk. On what this implies, he adds that “in case they [banks] lend money to a woman entrepreneur and they do not repay the loan or a part thereof, 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 are able to repay according to their credit assessment protocols,” the Permanent Secretary further noted.
This responsibility on the side of Participating Financial Institutions or commercial banks at the moment means that they must pay attention to the collateral security that is acceptable for the GROW loan.
“The GROW loan, therefore and in accordance with Bank of Uganda Regulations, requires appropriate collateral, and the Government has negotiated with the Banks to accept a wide range of security including untitled land and movable business assets (Chattels),” PS Kibenge explained.
“Some financial institutions are also accepting group and personal guarantees as a form of security for smaller loan values. Key to note is that the financial institutions are required to pay back all the money advanced by Government so that the GROW loan is sustained as a Revolving Fund that will be available to women entrepreneurs even beyond the life of the Project.”
The Ministry of Gender, Labour and Social Development has also clarified on the nature of collateral security.
“Knowing that many women may not possess registered land, we 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,” noted Kibenge.
“Provision of security by those intending to borrow should not be seen as a limiting factor but rather a demonstration of commitment to repay the loan.”
MORE FUNDS COMING
There have been reports that some commercial banks have already spent all the money by giving it to the women entrepreneurs. Up to Shs 6 billion meant for women entrepreneurs had been channeled through Centenary Bank and Finance Trust Bank but these PFIs have confirmed that the cash is used up.
The Ministry of Gender, Labour and Social Development has confirmed that more money will be sent to these banks following an audit by independent firm KPMG.
“Drawing lessons from similar interventions delivered through financial institutions, under the GROW Project, Government put in place an arrangement where GROW funds are disbursed in tranches with corresponding targets over a given period. As part of the same arrangement, Government contracted an independent firm (KPMG), to undertake a due diligence and verify the loan funds given out by the Participating Financial Institutions before the release of additional funds to the specific banks that have depleted the total amount initially released,” noted PS Kibenge.
“In this case, Centenary Bank and Finance Trust Bank exhausted funds (i.e. UGX Six (6) Billion each) that were released in the first tranche. The independent firm (KPMG) has finalised the due diligence/verification exercise and Government is now set to release the next tranche of funds to the two (2) aforementioned Banks before the end of October 2024.”
But the ministry says there is still money in Post Bank, DFCU Bank and Equity Bank that women entrepreneurs can access. Kibenge went on to note that that 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. 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,” he added
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