In 2019, KinoSol was looking at ways to expand our impact in Uganda and help more community members. We were introduced to the one and only, Steven Mutebi. Mr. Mutebi is the leader of Overcomers SACCO Ltd, a financial institution that provides microfinance loans and financial literacy training, all aimed at improving the economic and social wellbeing of communities.
We sat down with Steven to give you an inside look at all things microfinance!
What is microfinance?
Microfinance is a financial service provided to individuals or groups categorized as low income or underserved with limited access to financial services.
What impact does microfinance have on communities?
Microfinance is a breeding place for successful entrepreneurs. It leads to prosperity and economic stability of a nation and it is more evident in developing countries. Microfinance enables people to acquire small loans payable in a short period without rigidities, like collateral. It instead emphasizes group or individual guarantees, and also encourages beneficiaries to accumulate savings in the long run leading to a successful business.
In the short run, it helps to improve household incomes. Microfinance enables low-income earners to acquire a small loan based on individual or group guarantees.
Why did Overcomers decide to start a microfinance fund?
Overcomers SACCO serves a majority of low-income earners involved in small scale businesses like market traders, saloons, retail shops, groceries, and food vendors. Overcomers SACCO saw it as paramount to start the program in order to enable members to grow their business.
Describe the structure of your program.
Our microfinance program promotes economic growth in economically disadvantaged and emerging communities where Overcomers SACCO operates. The main target is the poor who spend their money on providing household necessities and providing education to their children. Overcomers SACCO covers a wide category of people both low-income earners and professional businesses who in the long run could invest more than $3000-5000.
The program serves members who have a saving account with the institution and can save at least $1 a day. Loans are provided to groups or individuals backed by a guarantor. We also look at the members saving history and character of the borrower to determine their ability to pay back a loan. Loans range from $100-3,000 or more depending on the purpose of the loan and saving records of the borrower.
How does microfinance differ from traditional bank lending?
Microfinance differs from traditional banking in that traditional banks require security to take out a loan. Traditional banks also have longer repayment periods, higher interest, and loan sizes are bigger compared to microfinance. Microfinance loans are typically smaller, have lower interest rates, and are targeted at disadvantaged population groups.
What has been the track record of your fund?
Overcomers SACCO started in 2011 and grown to about 2,000 members. We operate two branches all located in low-income communities.
Since majorities are low-income earners, savings portfolios have accumulated slowly to about $150,000 by 2019. In 2019 we disbursed roughly $104,000, to 189borrowers.
The fund has improved members’ household incomes to the extent of affording life necessities and provided access to education. Our members have also acquired financial literacy through our training programs enabling them to accumulate savings for future investment.
Talk about the collaboration with KinoSol.
In November 2019, Overcomers SACCO started collaborating with KinoSol. We established a microfinance fund of 8,497,000 Uganda shillings to be given to members as loans. Seven members were able to access loans and the fund has grown by 319,500 Uganda shillings, generated from the interest paid back by members.
This microfinance fund is an amazing opportunity for students to get a behind the scene look at what microfinance is and help approve microloans for members. On our trip in 2019, students from Iowa State University helped approve these loans!
The fund enables members to pay school fees for their children and invest in their small businesses. I strongly believe that the collaboration with KinoSol shall enable members to have access to funds especially within and after the Covid19 Pandemic. This pandemic has affected members’ businesses since they are low income. Given the fact that borrowers pay back with interest, the fund will continue to grow. This will lead to more opportunities for more borrowers.
We are so excited to be working with Steven and Overcomers SACCO to help support the communities in Uganda. We look forward to seeing the new businesses that are started by budding entrepreneurs and the impact this microfinance fund will have for families across Uganda.
If you want to find out more about Overcomers SACCO please check out their website. Don’t forget to tune in next week to read our newest post!