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UGANDA FINANCE TRUST Presentation Growth and Transformation into Microfinance

UGANDA FINANCE TRUST Presentation Growth and Transformation into Microfinance. U-TRUST BACK GROUND. Incorporated in March 2004 taking over business from UWFT which started in 1984. This was in accordance with the MDI (2003) act under which all MFIs in Uganda are regulated. Vision :

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UGANDA FINANCE TRUST Presentation Growth and Transformation into Microfinance

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  1. UGANDA FINANCE TRUST Presentation Growth and Transformation into Microfinance UGANDA FINANCE TRUST

  2. U-TRUST BACK GROUND • Incorporated in March 2004 taking over business from UWFT which started in 1984. • This was in accordance with the MDI (2003) act under which all MFIs in Uganda are regulated. Vision : • Low- Income people should have access to financial services Mission: • “To provide unique financial services to low income people in Uganda in a manner that delights customers and adds value to all stakeholders’’ UGANDA FINANCE TRUST

  3. U-Trust Background Cont’d Ownership: • U-Trust is owned by : • UWFT -29.8%, • I&P- 20.5%, • Oiko Credit-24.1%, • Founder members 13.5% • staff Company (Sun-Mutual) 12.1% Governance: • U-Trust is governed by the AGM, B.O.D, C.E.O, and the senior management approved by Bank of Uganda. UGANDA FINANCE TRUST

  4. Context Structure of the finance sector • Bank of Uganda • 15 commercial Banks • 7 credit institutions • 4 MDIs • Over 1000 MFIs • Umbrella institution: AMFIU UGANDA FINANCE TRUST

  5. Context GOVERNMENT OF UGANDA (GOU) FOCUS • Focusing on private sector-led growth as contribution to economic development and poverty eradication. • Belief that access to financial services is critical to eradication of poverty and economic growth (PEAP, PMA, NAADS) • GOU focuses on promotion of micro enterprises in rural areas to increase livelihoods of the rural population. • Government focusing on creating, maintaining an enabling environment for MFIs to operate (freely and optimally) • GOU provides funds at cheaper rates than the Commercial banks UGANDA FINANCE TRUST

  6. Context cont’d Competition: • MDIs - UMU,FINCA,PRIDE,FAULU ,CMF. • Commercial Banks • Micro Finance Institutions. • SACCOS all competing for the same market. • Money Lenders UGANDA FINANCE TRUST

  7. Context Outreach • U-Trust operates through 21 branches, In 20 districts of Uganda with a head office in Kampala. • All especially the low income people in Uganda are eligible to become clients of U-TRUST. • The low income women carrying about 70% of the total client base • Number of clients countrywide • Savers- 85,000 • Borrowers – 17,000. • Outstanding Loan Portfolio.-$7,000,000/= • Savings volume- $2,700,000/= UGANDA FINANCE TRUST

  8. Context cont’d Products offered a) LOANS • 1. Micro enterprises loans to individuals and groups • 2. Small and medium enterprise loans (SME) • 3. Consumer loans (salary based employees) • 4. Village phone loans • 5. School fees loans b) SAVINGS • 1. Ordinary savings accounts • 2. Easy access savings accounts • 3.Developing Fixed deposit accounts c) MONEY TRANSFER (Moneygram) UGANDA FINANCE TRUST

  9. IMPACT OF U-TRUST TO SOCIETY • Women have been empowered economically • Low income people have acquired own assets. • Women have got a chance contribute to the family • Educated their Children. • Women have acquired entrepreneurial skills • Expanded their businesses • Learnt to save • Poor people have immensely joined the money economy hence development • Development of the finance sector to meet the needs of the majority UGANDA FINANCE TRUST

  10. SUCCESS FACTORS • Obtained MDI license can freely intermediate savings • Country wide branch Net work. • All branch network upgraded to comply with the Central bank standards. • Robust MIS system (WAN) - improved customer service UGANDA FINANCE TRUST

  11. CHALLENGES IN THE INDUSTRY • Rural/agricultural financing: products v. Risks • New Vision-Pro-poor Financial system • Multiple borrowing/default V. credit reference services • Tier 1V MFIs regulation: self regulation v. statutory • MFIs governance; poor man's bank V. professionalism • MFIs transformation: MDI Act 2003 v. mission drift and costs • High Interest rate charged by MFIs: How to bring it down? • Politics v. Technical realities. • Sustainability and rural outreach: profit vs. social mission. • AMFIU becoming an information hub. UGANDA FINANCE TRUST

  12. U-Trust Challenges • Competition from within the microfinance industry • Clients minimal loyalty because of a multiplicity of service providers • Lack of funds for deepening rural outreach • Donor assistance in form of, technical support, grants and loans are no longer reliable to sustain the growth. • Access commercial capital to fund operations which are so expensive thereby making our overhead expenses very high. UGANDA FINANCE TRUST

  13. Challenges cont’d • Costs to revitalize and refurbish the business premises too high • cultural organizational change to instill new confidence • Sourcing for the new investors to inject and improve the capital base. • Competition for specific required skills which are not easily accessible. UGANDA FINANCE TRUST

  14. RECOMMENDATION • Setting up a credit reference bureau • Intensified Savings mobilization campaigns • Strengthen Corporate Image UGANDA FINANCE TRUST

  15. END THANK YOU UGANDA FINANCE TRUST

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