Project Proposal

I. Executive Summary:

Despite the growth of the microfinance industry in Uganda, the industry currently serves only 150,000 of the 8.5 million people below the poverty line.[1] In Jinja, a major concern of current and potential borrowers is the high interest rates attached to these microfinance loans, which on average is between 25-35% per annum. In addition, most major microfinance institutions demand that repayments are fulfilled weekly instead of monthly, with penalties for late weekly payments. Due to the conditionality of servicing these loans, many have discontinued receiving loans from these institutions or refused to access loans all together. In response to these concerns within the microfinance industry, in 2004, Jinja Savings and Credit Cooperative Organization (Jinja SACCO) partnered with UN-Habitat which targeted three women’s groups within the municipality as eligible to receive microfinance loans with low interest rates and monthly repayments. Although the project has so far been successful, the current interest rate of 10% per annum has created a bottleneck in the UN-Habitat funding. While 20,000,000 Ushs (approx $1,200 USD) was available for the first target group, the second target group, the Walukuba Maama Women’s Development Association (Maama Group) has only been cleared for 6,000,000 Ushs (approx $3750 USD) for the loans of 50 women, or an average of 120,000 Ushs ( approx $75 USD) per loan recipient. Through our needs assessment it was also determined that members of the Walukuba Maama’s Group lacked some of the skills, particularly in accurate bookkeeping, necessary to repay a microfinance loan.

The purpose of this project is to create a second revolving fund through a group membership profile website blog to solicit external funding through which the Walukuba Maama’s Group can obtain access to sustained capital, as well as provide adequate training for the target group. Currently funding available is not sufficient to distribute meaningful loans to the target group or to additional groups in the future, and the member’s of Jinja SACCO’s target group currently lack some of the skills necessary for successful loan repayment. However, the target group is eagerly looking forward to participating in skills training workshops, and was enthusiastic to not only be trained in bookkeeping, but also in business administration, savings, and marketing. The goal of this project is to both provide the organization with an additional resource to obtain sustained capital as well as to provide the target group with the necessary financial management skills to repay microfinance loans.

The function of this proposal is to purchase the necessary items for the Walukuba Maama’s groups two training workshops as well as to provide the organization with a digital camera and flash drive in order to maintain their donor website. By creating a second revolving fund, the organization will increase its capital base and thus service additional loans efficiently, as demand is high for microfinance loans within the community. In addition the internet provides a valuable link between donors and lenders in the developing world. The target group will undergo two business development training workshops and receive training manuals in order to ensure the success of their micro-enterprises, while the training manuals will allow the organization to replicate the training program for future lending groups.

II. Statement of Need:

The biggest constraint faced by both the organization and the Walukuba Maama’s group is access to reliable capital. During needs assessment, it became apparent that many of the women had sustainable income generating activities; however, the profitability of these activities would be greatly improved by ‘injecting’ capital into their business. Although there are numerous microfinance institutions in the Jinja Municipality, including international organizations such as Finca Uganda and Pride Africa, many offer interest rates that are too high and therefore unsustainable.

During our needs assessment, we interviewed Christy, who runs an import export business selling Chana and Turdal grains from Tanzania to supermarkets in Jinja. She explained that demand is great but she lacks the financial resources to supply her growing demand. She further explained that she had previous borrowed from Pride Africa, but at an interest rate of 35% per annum, her profit margin was not sustainable.

In addition to a need for capital, there was not only a universal need for bookkeeping among the target group but a universal interest as well, which is clear confirmation that a culture of saving exists for the women of Walukuba. For example, Betty’s business is selling ground posho (maize meal) to Jinja Secondary School. Every two weeks she sells 60 50 kg bags to the school, however despite the consistency of her business she was unable to calculate her profit margin over the past month, quarter, or year. In addition, many of the women also expressed the need for business and savings training, particularly the elderly group members who have less experience in the financial economy. For these women training is essential to repaying a microfinance loan.

All SACCOs in Uganda are government registered organizations, which entitles them to government funding when available. The Ugandan government recently stated in its National Budget Proposal that it would triple microfinance spending over the next fiscal year.[2] However, the manager expressed that at this point there is no process available to receive government funding because of a lack of institutional capacity and corruption. In addition, local organizations have had little success in soliciting government funds, including a $150,000 microfinance pledge to the Organization of the Good Life of the Marginalized in 2007 that has yet to be received.

By contrast, Jinja SACCO’s current partnership with UN-Habitat has thus far been crucial in initiating their microfinance program. However, due to the issue of bottleneck funding, the existing capital base for the organization’s microfinance initiative is not sufficient to expand its program. The organization has expressed interest in utilizing additional partnerships, and the manager was particularly enthusiastic by the opportunity to create a positive sustainable relationship with private donors in the developed world.

By providing Jinja SACCO with a basic digital camera and flash drive to and the training necessary update and maintain Jinja SACCO’s website blog, this project not only has the opportunity to add much needed additional capital to provide loans to the Walukuba Maama’s group, but also to groups requesting to receive microfinance loans in the future.

TARGET GROUP

The beneficiaries of the project will be the 50 members of Walukuba Maama Women Development Association, who will receive both the capital access and training necessary for successful micro-entrepreneurship. The Walukuba Maama’s Group is a well established organization with a chairperson, secretary and treasurer, group mobilizers, and over 25 years of community experience.

III. Project Description:

GOAL

To increase the capital base and provide the financial management skills necessary to prepare the 50 members of Walukuba’s Maama Group for successful micro-entrepreneurship.

OBJECTIVES

1. To prepare the 50 members of the Walukuba Women’s Group and determine eligibility for microfinance loans through two lender training workshops in financial management skills.
2. To create a website blog that solicits external donors based on group member profiles and to train Jinja SACCO’s staff in maintaining a website as a means to obtain the finances necessary to expand their microfinance program membership in the future.
3. To ensure implementation and monitoring of microfinance loans for the aforementioned target group(s) through community and staff training workshops.

PROJECT IMPLEMENTATION

PHASE I

The UN-Habitat’s initial target group (Mpumudde Low-Income Women’s Group) was trained by Akright Projects Ltd.; however Jinja SACCO cannot afford to hire the private company for future training. It will therefore be the responsibility of the Intern and Loans officer to design a training program based on consultation with Akright Projects Ltd, the loans officer’s previous experience in business administration and with the initial target group, and the Intern’s previous experience in micro-entrepreneurship training. A training manual will be developed to be used to train Walukuba Maama’s Group as well as future loan group recipients to ensure its sustainability. The topics covered in the workshop will be business administration, savings, bookkeeping, marketing, and adding value to a product or service.

PHASE II

The second task of this project is to create a blog that solicits external funding through a partnership with FSD’s Grant Fund. Each sub-group will have their own profile with a link to donate (through PayPal) to the specific member group. All donations will be collected through the FSD Grant Fund and channeled directly to Jinja SACCO and recorded as a second revolving fund for microfinance loans within the cooperative micro credit. The donations will be monitored through a partnership with FSD ensure accountability of funds. In addition to FSD’s 5% servicing fee, the SACCO will retain an additional 5% of all donations for technical support. The Loans Officer will be responsible for the maintenance of the website after departure of the Intern, and will be trained in how to effectively use the blog to solicit external funding. This will include training in networking to increase the number of potential donors, uploading digital photos, monitoring donations through email. The goal of the blog project is to raise an additional $3,000 USD (approx 5,000,000 Ushs) in external funding by the departure of the intern, and to have trained the Loans Officer in updating and maintaining the blog in order to solicit future funding.

EXPECTED OUTCOMES

By the end of the training sessions it is expected that the women targeted to receive loans will have received their loans and have developed the capacity to repay them, and Jinja SACCO’s staff will have the tools and capacity to maintain the blog and solicit future funding through the partnership with the FSD Grant Fund.

SUSTAINABILITY

The microfinance industry has proven to be a successful way to provide direct empowerment to individuals. Through training workshops and the creation of a business training manual, the organization will have a direct resource and the qualified personnel to expand their microfinance initiative in the future. In addition, partnering with the FSD Grant Fund is a sustainable way to generate income for the SACCO by ensuring the accountability of funds for donors in the developed world. As the website is a pilot project it will be essential to for there to be an understanding of the roles and responsibilities of each stakeholder in order for the partnership to be successful and sustainable. This project is an opportunity to expand upon the success of Jinja SACCO’s microfinance initiative by providing training and access to sustainable capital to more individuals who have both the capacity and character to run a successful business.

---

[1] Developing Capacity to Provide Sustainable Access to Capital in the Busoga Region through Skills Training, July 2007

[2] New Vision June 2008