The Uganda Microfinance Support Centre needs up to 313 billion Shillings to cushion microfinance institutions from the effects of the lockdown occasioned by the outbreak of coronavirus disease.
Peter Mujuni, the executive director of the centre says the money would support up to 14,800 Village Savings and Loan Associations, 1,749 Savings and Credits Cooperative Societies (SACCOS). Collectively, the support will benefit over two million people in the aftermath of the pandemic which left several businesses in an abyss.
He adds that they intend to provide liquidity support to SACCOs and microfinance institutions, ensure revision of interest rates to borrowers, support SACCOs to develop new products and capitalize the capacity building department at Uganda Retirements Benefits Regulatory Authority (UBRA) among others.
Mujuni was today appearing before the National Economy Committee of Parliament which is currently scrutinizing the effects of COVID-19 on businesses. He said that several microfinance clients have already applied for funds worth 80 billion Shillings and this money will go a long way in meeting the demand of clients whose credit needs were fully appraised in the various sectors.
According to the centre, the borrower’s inability to pay back loans will put pressure on the lenders’ ability to repay their own investors and funders. Mujuni says the institution’s survival will depend on the duration of the crisis and the financial cushion given to them among others.
The committee chairperson Syda Bbumba however said that although the concerns of the institutions are genuine and businesses have been hit, they have been advised to reduce their request to 100 billion Shillings.The Microfinance support centre has also called on Parliament to allocate money to set up the savings protection fund.