Financial Inclusion
The National Financial Inclusion Strategy (NFIS) for Uganda envisions that all citizens have access to, and are using a broad range of quality and affordable financial services which helps ensure their financial security.
KRC Uganda employs a 3-strand microfinance approach, which includes:
Microfinance Associations (MFAs),Village Savings and Loans Associations (VSLAs) ad Youth Savings and Loans Associations (YSLAs), all aimed at strengthening people’s safety nets, diversifying income sources, building financial and other assets and improving socio-economic conditions of the poor. KRC implements these microfinance approaches across the humanitarian and development spectrum, targeting refugees and host communities.
The KRC Microfinance Association (MFA) Model
KRC-Uganda started its Micro Finance Associations (MFA) programme in 2002. An MFA is an association made up of 10-25 groups, which are involved in their own savings and credit activities. After the initial sensitization of communities, the emerging MFAs are assessed by KRC against a set of minimum criteria (number of groups, minimum number of shares bought, amount of savings mobilized, gender composition of leadership etc.). Once the MFAs have been registered as secondary cooperatives, they enter into a signed MOU with KRC-Uganda, which specifies the obligations of both parties.
MFAs are registered at the national level under the Ministry of Trade and Industry, as Microfinance Cooperative Societies (secondary cooperatives, consisting of groups). Before an MFA can be registered, at least two of its groups must have registered as primary Savings & Credit Cooperative Societies, with a minimum of 30 members each. The General Assembly is the supreme body of the MFA, made up from representatives of each group. The General Assembly elects its Board of Directors, as well as the Audit/Supervisory Committee. The MFAs also have a Credit Committee and employed Microfinance Officer(s). The majority of the Board must be women. MFAs directly target self-help groups of poor rural farmers, especially women (constituting a minimum of 70% women).
Village Savings and Loans Associations (VSLAs)
Savings Groups are self-managed groups of 15-25 individual members from within a community who meet regularly to save their money in a safe space, access small loans and obtain emergency insurance.
First developed by CARE International in 1991, the VSLA model has grown in importance and scope, with potential to bankroll the majority of poor and un-bankable populations. The VSLA model uses tools and methods that are tailored primarily to illiterate and extremely excluded sections of society, including women, youth, the refugees and the very poor.
Youth Savings and Loans Associations (YSLAs)
YSLAs are a replica of VSLAs which are specifically tailored to the financial needs of young people. Needs of young people are often so distinct that they are uniquely excluded from the financial and social system. Socially and also by their age, they do not have assets to participate meaningly in productive activities. They lack collateral to access formal finance, lack land to engage in agriculture and also lack skills obtained through education or passed on from older generations. The generational gap also excludes them from social fabric of society. Some YSLAs chose to enrol a few elderly people to for guidance, mentorship and creating a platform to promote intergenerational exchange of knowledge.
