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4 th AFRACA MICROFINANCE FORUM MICRO & RURAL FINANCE “Challenges Facing Stakeholders” Charles Kilibo **AMFIU**

4 th AFRACA MICROFINANCE FORUM MICRO & RURAL FINANCE “Challenges Facing Stakeholders” Charles Kilibo **AMFIU**. Presentation Outline. Some concepts . Overview of Uganda Banking Sector Identification of Stakeholders Stakeholders Challenges Conclusion & Recommendations. Key Concepts.

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4 th AFRACA MICROFINANCE FORUM MICRO & RURAL FINANCE “Challenges Facing Stakeholders” Charles Kilibo **AMFIU**

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  1. 4th AFRACA MICROFINANCE FORUM MICRO & RURAL FINANCE “Challenges Facing Stakeholders” Charles Kilibo **AMFIU**

  2. Presentation Outline • Some concepts. • Overview of Uganda Banking Sector • Identification of Stakeholders • Stakeholders Challenges • Conclusion & Recommendations

  3. Key Concepts • Stakeholder:“A person or Company that is involved in a particular organisation project, system etc. Especially because hey invested money in it” • Micro Finance: Provision of financial services o the lower end of the market often not served/underserved by mainstream financial system.

  4. Key Concepts • Rural Finance: Provision of financial services to target clientele and projects in the the countryside. • Financial services: savings, loans money transfers, leases insurance

  5. Overview of Uganda’s Banking sector

  6. Micro & Rural Finance Stakeholders

  7. Stakeholder Challenges • Government • Intervention Strategy? - Direct Credit Delivery V. Policy Environment creation • Appropriate regulatory framework? - Prudential V. Non-Prudential - Liberalisation v. Interventionism

  8. Stakeholder Challenges Cont’d • Bank of Uganda • Regulation & Supervision - Very many small institutions - cost of supervision - Expertise & Capacity

  9. Donor Challenges • Stakeholder participation: design, development and implementation • MFIs Capacity building strategy • Impact Measurement: Contribution v. Attribution. • Experience: Practical, Contextual, Theoretical • Entry – Exit – Re-entry strategy.

  10. Microfinance Associations/Networks Challenges Sustainability: Internal v. Donor financing Nature Services provided:Public goods – free rides: Code of Conduct: Enforcement of compliance Managing Expectations: member, government,donors etc

  11. Financial Institutions Challenges • High costs of operations: - Methodology, infrastructure cost of fund • Management Information System • Inadequate loan capital • Multiple borrowing by clients, • Diversion/fungibility of fund • Rural economy – largely subsistence, • Succession/employee turnover management • Limited Default-Risk Mitigation Instruments

  12. Rural Clients/Farmers Challenges • Access to Deposit services: safety, liquidity, return and Convenience • Limited range of other financial services: insurance payment services, commodity finance, risk management instruments. • Access to markets • Reliance on nature • Price fluctuations • Poor infrastructures: roads, electricity, communication

  13. Conclusions & Recommendations • Rural financial markets: shallow, segmented, and inefficient due to high risk, costs and imperfect information. • There is need to: • Create a favourable policy environment, • Develop the capacity of rural financial institutions, • Deepen financial service offers

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