The Rotary Club of Innisfail is donating $25,000 to fund microfinance loans in five different Ugandan communities.
The Rotary Club of Innisfail is donating $25,000 to fund microfinance loans in five different Ugandan communities. Clustered near Masaka, a town 140 kilometres southwest of the capital Kampala, each village will receive $5,000 to capitalize locally run financial institutions through non-profit organization FINCA Canada.
"Typically the loans are given for women," said Jean Barclay, who helped spearhead the local chapter of Rotary’s adopt a village program in the country. "Microcredit was kind of our next logical step in what we were doing in Uganda."
Mircrocredit financing is a method of loaning money where very small sums of money are given out and must be paid back in a strict time frame. FINCA says 98 per cent of microfinance loans are repaid, allowing the money to continue to cycle within the community.
"I think the power behind those funds is they keep on turning and turning again," said Stephanie Emond, development manager at FINCA Canada. "That $25,000 in that first four months will reach hundreds of clients. As the money is repaid it is loaned out again."
Village banks made up of 10-25 residents in Kyeera, Bulalo, Ggulama and two other communities will receive funds.
Emond says MicroEnergy loans, which help residents purchase solar home systems, are particularly popular in Uganda right now.
"We thought our clients would use this just for their home to save on kerosene costs, which can rack up really quickly," she said. "What we found is that 60 per cent of our clients actually turned this into a business."
Because so many people have cellphones and with the ease of access to wireless networks already in place the real need in Uganda is a place to charge devices. Borrowers have started charging mobile phone users for access to their solar power.
FINCA itself is tapping into the cellphone boom sweeping Africa, allowing borrowers in Tanzania to access their loan and make payments through their mobile device.
The next step is to roll this technology out in Uganda, Emond said.
According to FINCA 93 per cent of its funding goes to programming with five per cent allocated to administration and two per cent to fundraising.
Emond says the organization welcomes those who want to make the trek to the villages to see the effect of microcredit financing.
"Having people in Canada provide loan capital to people who just need a hand up, not a handout, to lift themselves and their family out of poverty is so important," she said. "We love to have people come and visit."
