By Mulengera Reporters
The government has warned participating financial institutions (PFIs) under the Generating Growth Opportunities and Productivity for Women Enterprises (GROW) Project that Portfolio Expansion Grant (PEG) funding could be reduced or discontinued if banks and other financial institutions fail to utilize the funds effectively and expand lending to women entrepreneurs.
Dr. Ruth Aisha Biyinzika Kasolo, the National Coordinator of the GROW Project, said the government was increasingly concerned about PFIs holding onto PEG funds for extended periods without translating the grants into increased outreach and lending to women-owned businesses.
She said the grant was designed to help financial institutions enter underserved areas, mobilize potential borrowers and create demand for GROW financing—not to finance activities that do not directly contribute to expanding access to credit.
“We are going to reduce that money because we are realizing it’s not meeting the purpose,” Kasolo told PFIs during the GROW Project Joint Participating Financial Institutions Review Meeting at Serena Hotel in Kampala.
Kasolo said some institutions were procuring services for up to a year despite having already received funds, raising questions about whether additional PEG funding was justified.
“If you are procuring for one year and you’ve let out money, then why do you need the money?” she asked.
She warned that institutions that fail to use the grants within a reasonable period could lose access to subsequent funding.
“If it is not there, forget about the second tranche,” she said, adding that the government could recommend cancellation of funding where it finds that the money is not being put to its intended use.
The warning comes as the government reviews the performance of PFIs participating in the GROW Project, including their regional and district expansion, utilization of PEG funds, reporting, due diligence and compliance with environmental and social requirements.
Slow utilization raises concern
Kasolo said the government’s concerns had intensified because some PFIs had used only a small portion of the money advanced to them, despite having substantial PEG budgets.
She noted that some institutions have annual PEG allocations running into billions of shillings, yet their expansion into underserved districts and lending to women remains limited.
“Some of you have budgets of four billion. Some have six. Some have three billion,” she said.
According to Kasolo, the situation represents a shift from earlier periods when PFIs would quickly utilize funds after receiving them. She questioned whether advancing PEG funds upfront had inadvertently reduced the urgency with which some institutions deploy the money.
“Before, I used to give banks money, and within a short time the money is finished. Now we advance your money, you are slower,” she said.
She said the government was therefore considering whether the PEG model should continue in its current form.
“The question for us would be, do we need to maintain this PEG in the future, or no?” Kasolo said, describing the matter as a serious discussion.
Grants intended to drive expansion
Kasolo stressed that PEG funding should be used creatively to help PFIs reach women entrepreneurs in areas where they have limited presence.
She cited districts such as Buvuma, Arua and Bushenyi, where she said PFIs needed to demonstrate greater outreach despite having access to expansion grants.
The GROW coordinator urged institutions to consider alternative approaches such as mobile banking units, motorcycles and other logistical solutions where conventional branch expansion may be difficult.
“If that’s what it means to make it work, and you have the budget, we can accept it,” she said.
Kasolo also encouraged PFIs to use PEG resources to reach groups that remain underserved, including women with disabilities and women in refugee-hosting communities.
She said institutions should move beyond conventional financial-literacy activities and develop interventions tailored to the needs of specific groups.
“Let’s be innovative. If we are not innovative, if we are not using the PEG money properly, it will not be sustained,” she warned.
Government wants measurable results
The government is also concerned about cases where PFIs have exhausted PEG allocations but recorded relatively low results, Kasolo said.
She said future funding decisions would increasingly be linked to performance, including how quickly institutions deploy the money and the number of women reached through their expansion activities.
Kasolo further directed auditors and project officials to examine how long PFIs take to utilize PEG funds and make recommendations where performance is poor.
She said PFIs should also address internal bureaucratic delays that hinder implementation, urging management teams, procurement departments and marketing teams to work more closely with GROW officials.
“Free money is not easy to get. It should be used properly,” she said.
Kasolo indicated that the GROW team could work with PFIs to quickly approve reasonable adjustments to PEG budgets where such changes would improve outreach.
GROW financing to continue
Despite the warning over PEG funding, Kasolo reassured PFIs that the broader GROW financing programme would continue for the long term.
She said GROW financing is a government intervention whose resources are owned by the government and that the programme is expected to evolve into a more permanent government-backed financing mechanism.
“The money for GROW money is not just money to go. It is money to stay for the lifetime for Ugandans,” she said.
The GROW Project provides women entrepreneurs with business expansion and entrepreneur performance grants as well as affordable financing through participating financial institutions. The loans range from Shs4 million to Shs200 million at a flat annual interest rate of 10 per cent, aimed at helping women-owned micro, small and medium enterprises expand.
Kasolo said the terms of GROW financing would continue to be refined as the programme develops, while grants would also continue—although the future of PEG would depend on whether PFIs demonstrate that the funds are achieving their intended purpose.
Push for wider district coverage
The meeting also focused on expanding GROW’s footprint across Uganda, with Kasolo challenging PFIs to set clear targets for underserved districts.
She highlighted Buvuma as a priority area and called on more financial institutions to commit to serving the island district.
Kasolo also urged PFIs to participate in an upcoming GROW engagement in Rubirizi, where project officials and development partners are expected to assess the experiences of women borrowers and the performance of participating financial institutions.
She said such field engagements would help demonstrate the impact of GROW financing in rural communities while identifying gaps in access to credit.
The review meeting brought together GROW officials and participating financial institutions to assess PFI performance, address emerging implementation challenges, review regional and district expansion, and examine utilization of PEG funds.
The meeting also provided guidance on due diligence, reporting requirements, the transition to the GROW online reporting system and environmental and social safeguards applicable to participating financial institutions.
For PFIs, the message from government was clear: access to PEG funding is not guaranteed indefinitely, and institutions will increasingly have to demonstrate that every shilling allocated is translating into wider outreach, stronger lending and tangible results for women entrepreneurs. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
