Obumwe Microfinance has now been operating with a 100% repayment record since its inception at the start of 2014. It has provided more than 50 loans to marginalised and disadvantaged groups in south western Uganda, providing opportunities, not aid to those who need it most.
What is a microfinance scheme?
Obumwe was designed in collaboration with recipient groups and its principle is that monetary loans of between one and two million shillings (£250 – £500) are provided to disadvantaged or marginalised groups to start a business.
The loan is subject to interest at a much lower rate than is available locally, especially for unsecured loans, and is repaid over a 6 month period, coinciding with the length of a growing season in the region. Subsequent loans are not made until the original loan is repaid, resulting in strong inter-group peer pressure and a high repayment success from the loan recipients.
The key benefit of this scheme is that the same funds are used time and again whilst the recipient groups become less reliant on aid.
What are the principles of the Obumwe microfinance scheme?
Alongside Africa Uganda (AAU) manages the scheme; which is currently focused on supporting mainly womens’ groups, many of whom are AIDS widows in Muko and Ikumba Sub Counties of Kabale District, South Western Uganda. The name for our new scheme ‘Obumwe’ was chosen by our local AAU colleagues, meaning ‘Unity’ in the local Bakiga (pronounced Bachiga) language with the guiding principles of oneness, unity, mutual good will, transparency, and collective pooling of resources and ideas. The Alongside Africa team, including our appointed Alongside Africa Uganda Field Assistant have been busy identifying interested and able community based groups that need financial assistance to get their trade or business off the ground, which currently include potato growing, goat rearing, poultry rearing, and bee-keeping. Once they are proved suitable for the Scheme, training is undertaken on how they can participate and benefit and Village Savings and Loans Association (VSLA) savings kits are provided. In the training these principles are taught:
- Working hard and group work is encouraged
- A savings’ culture and financial discipline is trained
- The qualities of transparency, ethical conduct and integrity developed
You can help us grow this valuable scheme by adding to the Obumwe fund – a donation of £250 will allow 2 loans to be made each year.