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A confidential government report this news website has exclusively glanced upon shows the extent to which western Uganda continues to dominate access to cheap and affordable government credit lines and loans. These are low interest loans available through the Microfinance Support Center (MSC), a GoU company charged with increasing access to cheap and affordable loans and credit facilities. Pushed largely by donors who were tired of the finance ministry technocrats’ ineptness when it came to managing microfinance schemes, the MSC initiative was meant to ensure the economically active poor groups (mostly those involved in agriculture) are enabled to access low cost credit facilities to enable them operate more profitably. Whereas commercial banks and other money lenders lend to such farmer groups (SACCOs to enable them process and market their produce) at an interest rate of 25-36%, MSC affordably lends at 9-13% because this is government money meant to finance the realization of the President’s prudent efforts to commercialize and modernize agriculture through value addition. The overall objective is to fetch for farmers higher prices for their produce by way of processing and adding value onto them. MSC was created 17 years ago to avail access to development finance for economically active poor groups of Ugandans as part of the broader GoU strategy to achieve poverty reduction while strengthening wealth creation interventions. The approach is through SACCOs and cooperative societies targeting farmers with a view of involving them in profitable production and marketing of their produce. The areas covered for this production, processing and marketing include milk, coffee, cotton, sugarcane and rice. In the last 17 years of existence, the MSC has annually disbursed an average of Shs26bn supporting these different farmer groups, SACCOs and cooperatives. The confidential report, meant for the consumption of the President who has lately been under pressure to recapitalize both MSC and UDB, shows that these farmer groups are grouped into 1170 SACCOs which MSC was supporting as of December 2017. To its credit, MSC has also invested in capacity building and training of representatives of these SACCOs who later train other members.


The Shs26bn the MSC averagely lends out (disburses) annually is against a well-established demand of Shs104bn by groups that MSC has designated as economically active poor! Clearly MSC is meeting only a quarter (25%) of the demand for access to affordable development finance by the economically active poor. The confidential report shows that since its inception, the GoU has invested (or capitalized) MSC with just Shs52bn! So where then have the MSC executives been getting the Shs26bn they averagely lend out annually? It has largely been through loan repayments by earlier borrower groups. The report shows government capitalization of the company has been alarmingly low and much of such money from government has been going into capacity building and training of private microfinance service providers as well as Model SACCO leaders based at district level.


An extract from the report showing how the economically active poor groups of Ugandans have been borrowing and accessing cheap government credit and loans through ED John Peter Mujuni’s Microfinance Support Center

The report, that was partly meant to enable the new Board work out talking points for the meeting they are anticipating to have with the President to persuade him to recapitalize the company, shows that there have been glaring regional imbalances in the way citizens in the different parts of the country have benefited from this cheap credit. The authors (basically MSC top management) regret the fact that Eastern and Northern regions have been “underserved” when it comes to total disbursements and subsequent access to these monies. They propose an affirmative action approach to bring the economically active poor in the two regions at par with counterparts in Buganda and western region. They are proposing that unique “group loan products” be urgently introduced to emancipate the two marginalized regions. The report justifies the “underserved” status of the two regions on grounds that “they have poorly developed SACCOs and Cooperatives” which is why much less has been disbursed there in the last 10 years. Simply put that is all prospective borrowers in those two regions qualified for. The report carries tables showing how much has been lent out to economically poor groups in each region and the MSC operation districts in the last 10 years. But even when disbursement figures have for the last 10 years stagnated at an annual Shs26bn (against a clear demand of Shs104bn), Buganda and Western region have continued taking the lion’s share. The report authors show this is because the two regions have more organized SACCOs and agricultural groups there appreciate the need for and have formed very strong cooperative societies in comparison to Eastern and Northern regions.

Peter Mujuni


The report shows that in the last 10 years (2008-2018), the MSC has lent out over Shs269bn of which, over Shs81bn has gone to the cosmopolitan central region (basically Kampala, Wakiso & Mukono). Masaka has had over Shs16bn against Mbarara district’s over Shs40.8bn and Kabarole (basically Toro sub region)’s over Shs52.6bn. Hoima, which is part of the greater western region, has so far taken more than Shs12bn and Kabale over Shs22bn. The entire West Nile region, which is captured as Arua in the report, has accessed or borrowed just Shs10.3bn; Acholi & Lango (captured as Gulu/Lira in the report) have so far borrowed slightly over Shs9.3bn; Jinja/Iganga (representing entire Busoga) Shs7.1bn; Mbale (which is entire Bugisu) Shs5.8bn; Moroto (which is entire Karamoja sub region) Shs3.9bn and Soroti (which represents the entire Teso sub region) slightly more than Shs4.7bn. The well elaborated report also shows figures that each of these regions has been permitted (or qualified) to borrow in each of the 10 years (counting from 2008 to end of 2017).

Finance Minister Matia Kasaijja


This report comes on the heels of a recent development involving Finance Minister Matia Kasaijja whose office was stormed by some of the new MSC Board members threatening to quit protesting high levels of inefficiencies, impunity and financial impropriety by some management officials. A recent report in the Red Pepper showed that some of the big officials at MSC were conniving to cheat the GoU by operating proxy private money lending firms to which some of the government money is advanced. It’s then lent out at an interest rate that is as high as 25-36% after which it re-channeled to the MSC whose clients will be made to wait longer than necessary. The Pepper report showed that in some instances the MSC officials approve SACCOs which appear to have many (proxy) members yet in actual sense the money is being lent to one or two speculative tycoons down town who invest it in quick businesses downtown. Patriotic sources inside MSC show that some of those speculative tycoons are facilitated by their allies at MSC to use the government cash to quickly repay would-be expensive loans borrowed elsewhere and escape a bigger liability they would ordinarily have faced resulting from prolonged repayment period. The Pepper story showed that this is how some dubious tycoons (that should ordinarily not have qualified for MSC loans) are able to quickly buy properties cheaply in the city or quickly construct their business arcades in town. The Pepper story also showed that, to overcome the embarrassment that would result from the entire board resigning protesting management indifference and improper conduct, Kasaijja committed himself in writing that he would lobby the President to increase the oversight powers of the board so that the old men and women don’t have their names soiled in the evening of their careers. In fact at Kasaijja’s prompting, a three day retreat was held in Bugolobi to enable the board members and management officials talk over their differences and agree on the best way forward to ensure the poor (for whom the MSC funds are meant) are the only ones benefiting. For comments on this story, email us on or call/text/whatsapp us 0703164755.           




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