By Mulengera Reporters
Government is set to introduce a standard definition of women-owned and women-led enterprises in Uganda, a move expected to improve the way financial institutions identify, finance and report on women entrepreneurs.
The standard definition will establish common criteria for categorizing women-led businesses across the different levels of enterprise development, from Nano and micro businesses to small and medium enterprises.
Dr. Ruth Aisha Kasolo Biyinzika, National Coordinator of the Generating Growth Opportunities and Productivity for Women Enterprises (GROW) Project at the Private Sector Foundation Uganda (PSFU), said the initiative is intended to address inconsistencies in how financial institutions currently identify women-owned businesses.
She said the country already has a general definition of a small and medium enterprise, but it does not specifically distinguish businesses owned or led by women.
“Now this country would have one standard definition,” Kasolo said, adding that the move would ensure that information collected by different financial institutions can be compared using the same criteria.
The initiative is expected to bring greater consistency to data collected by commercial banks, microfinance institutions and other financial service providers on women entrepreneurs.
Kasolo said the Bank of Uganda will aggregate the information, allowing the country to obtain a clearer picture of women’s participation in the business and financial sectors.
The announcement was made during the closing of a two-day Strategic Capacity Building Conference for Tier IV financial institutions held at Motiv Creation Centre in Bugoloobi under the theme “Built to Last: Governance, Leadership and Transformation for Sustainable Tier IV Institutions.”
According to Dr. Kasolo, reliable and standardised data will be important in designing financial products that respond to the actual needs of women-owned businesses.
The move comes as the GROW Project continues efforts to expand women’s access to affordable finance and help them transition their enterprises from the micro level to small and medium businesses.
Women remain a major financial market
Dr. Ruth Kasolo said women constitute a significant proportion of the customers served by Tier IV financial institutions, making it important for lenders to better understand and respond to their needs.
“Your biggest customers are women,” she said, noting that women account for a large share of the clientele of institutions operating in the segment.
She said improved identification and reporting of women-owned enterprises would help financial institutions understand the market better and develop products specifically suited to women entrepreneurs.
The GROW Project is a $217 million Government of Uganda initiative funded by the World Bank and implemented through the Ministry of Gender, Labour and Social Development alongside PSFU.
It seeks to support women entrepreneurs to grow their businesses from micro to small and from small to medium enterprises, while improving productivity, access to finance and market opportunities.
Data to support access to finance
The standard definition is also expected to support efforts to address some of the challenges women entrepreneurs face when seeking financing.
Dr. Kasolo said financial institutions need to move beyond traditional approaches to lending and consider innovative ways of assessing women borrowers.
She pointed to alternative considerations such as a borrower’s character and commitment, alongside conventional collateral requirements.
A number of Tier IV institutions already lend to women without requiring traditional security, she said, creating an opportunity for the sector to develop more flexible financing models.
The GROW Project currently operates a financing facility through which funds are channelled to participating financial institutions for on-lending to women entrepreneurs.
Dr. Kasolo said more than Shs170 billion has so far been disbursed through the facility, with another phase of funding expected.
Under the facility, participating financial institutions access funds at 2 percent and lend to women entrepreneurs at a rate not exceeding 10 percent.
The institutions also receive grants to support financial literacy, staff training and the development of programmes targeting their members.
Innovation grant in the pipeline
Alongside the push for standardised data, GROW is preparing to launch an innovation grant targeting financial institutions.
Kasolo said the grant will support institutions to develop financial products specifically designed to meet the needs of women entrepreneurs.
The competitive grant is expected to encourage institutions to explore approaches such as digital lending and non-collateralized loan products.
“We want them to come up with products that are suitable to attract women in their market segment,” Kasolo said.
She said the grant will be open to financial institutions across different tiers.
Women in Finance Code
The standardisation of women-owned SME data is also being pursued alongside the Women in Finance Code, an initiative that encourages financial institutions to recognise women as an important market segment and commit to improving services for them.
Kasolo said 34 banks, microfinance institutions and other financial institutions in Uganda have already signed onto the code.
Institutions that sign up commit to setting targets for serving women and reporting their progress annually.
She said the initiatives are intended to ensure that women entrepreneurs receive not only greater access to finance, but financing that can help them expand, create employment and enter larger markets.
The GROW Project is also working with the financial sector on governance, environmental and social standards and non-discrimination, particularly among Tier IV institutions that have historically received less attention from sector-wide capacity-building initiatives.
Kasolo said establishing a common definition of women-owned and women-led enterprises will provide a stronger foundation for measuring progress and determining whether financial institutions are effectively reaching the women entrepreneurs they seek to serve.
