NEWSLETTER 8 A newsletter published by the Uganda Rural Challenge Fund a project financed by KfW on behalf of the German Federal Government. What is the URCF? New Partner Institutions of the Rural Challenge Fund The Governments of Germany and Uganda decided to set up the Rural Finance Enhancement Programme (RFEP) to improve access to sustainable and demand-driven financial services for the rural population and rural Micro, Small and Medium Enterprises (MSME) in Uganda. This is to contribute to the deepening and broadening of the financial sector in Uganda, as well as to the development of the private sector, thus fostering the improvement of the economic and social conditions of the target group. In the frame of KfW s Uganda Rural Finance Facility the Rural Challenge Fund is the first component and will provide matching grants for the development of new financial products and business approaches for rural financing with the aim to overcome fragmentation in the financial sector. The Rural Challenge Fund will award grants according to predetermined two-step selection criteria, to successful applicants on a competitive basis over multiple funding rounds that are publicly advertised. Selected project concepts will be financed on a cost-sharing basis, covering the project cost on the basis of the financial strength of the applicants, but only up to a maximum of 80% of costs. The maximum grant will amount to 250,000 EUR, the minimum grant to 50,000 EUR. Dfcu Bank Uganda ( Save for Loans ), Centenary Bank ( M-SACCO and E- Savigs Box ) and Bank of Africa Uganda Ltd. with their Integration of Mobile Banking project), have signed a contract agreement with URCF. We are glad to welcome the new partners and wish them every success in the implementation of their projects! Delegation of The German Development Ministry visited Namayumba Epicenter of The Hunger Project A delegation of the German Development Ministry visited The Hunger Project s Namayumba Epicenter end of August to learn about the implementation of the project of installing satellite kiosks in far-to-reach villages around THP s Epicentres and that act as collection centres and the micro leasing project that aims to help poor that do not have sufficient collateral to obtain a loan from a financial institution to invest in productive assets and hence raise family income. The Uganda Rural Challenge Fund (URCF) triggers investments of over EUR 5.5 million to improve access to finance in rural areas The following table resumes the approved grants and the financial institutions own investments for projects that improve access to finance for the rural population: URCF Newsletter Volume 8, November 2015 1
Name of FI Amount approved EUR FI Contribution Total 1 Equity Bank Uganda 250,000 250,000 500,000 2 FINCA Uganda (Project A) 176,000 208,931 384,931 3 Post Bank 250,000 373,718 623,718 4 Stanbic 50,000 68,668 118,668 5 Kashongi SACCO 186,400 13,194 199,594 6 Lyamujungu SACCO 140,000 39,387 179,387 7 Opportunity Bank (OBUL) 250,000 414,387 664,387 8 Finance Trust Bank 138,000 138,000 276,000 9 The Hunger Project 149,500 175,028 324,528 10 UGAFODE 136,371 149,568 285,939 11 Mukono Kayunga Teacher s SACCO 130,206 118,613 248,819 12 Centenary Bank 172,000 108,065 280,065 13 Bank of Africa (Uganda) 249,000 250,759 499,759 14 Post Bank (2 nd project) 250,000 350,000 600,000 15 UCCFS/Sanlam 44,100 44,100 88,200 16 DFCU 51,860 51,860 103,720 17 Finca Uganda (Project B) 233,093 71,306 304,399 Total 2,856,530 2,825,584 5,682,114 Project implementation continues The partner financial institutions implement the different projects approved to improve access to sustainable and demand-driven financial services for the rural population and rural Micro, Small and Medium Enterprises (MSMEs) in Uganda. For example; Equity Bank Uganda Ltd. links with 45 partner SACCOs Already 10 SACCOs integrated with Equity Bank s IT system and are hence able to offer professional financial service to their clients (e.g. drawing cash from Equity s ATMs) and 45 SACCOs with approximately 22,500 members (i.e. 90% of the target of the pilot stage) have signed the partnership agreements in the frame of the Integrated Financial Inclusion Project (IFIP). URCF Newsletter Volume 8, November 2015 2
The picture shows the meeting of Equity Group Foundation s team with UCSCU. The construction of Lyamujungu Co-operative Financial Services Ltd s storage facility for agricultural produce of their members shows impressive progress. Centenary Bank s M-SACCO & E-Savings Box Project With a focus to deepen accessibility of financial services to rural populations and achieve self-sustainability the bank has registered the positive results are shown in the table below within shorter period as result of using the new digital financial solutions. Particulars Project Target Q1 Project Achieved Q1 Variance (Targ Vs Act) SACCOs VSLAs SACCOs VSLAs SACCOs VSLA No. of 12 25 20 59 8 34 Accounts Value (UGX) 1.5m 1.1 m 375m 300m (1,125) (900) Through empowering groups to improve banking through collective savings the bank team with support from Ensibuuko Digital financial Solution has done some tests on E-Savings Box and M-SACCO with the mentioned VSLA/SACCOs, the software has created a direct substitute for wooden box that most VSLAs were using and a unique IT platform created to link SACCOSs to the bank. Finance Trust Bank s Branchless Banking Project With an aim to enable financial inclusion and deepening to 5,100 workers of tea estates in Kabarole district, the branch opened/branch operations started on 16 th March 2015, 740 new accounts were opened during this quarter. Overall, there are 2,355 new savings accounts opened - representing 46% of the 5,100 target for the project. These range from women, youth to general savings accounts. Additionally with a target to provide financial education to 5,100 tea growers in order to positively impact their financial behaviour especially savings, 3,381 people have been trained representing 66% of the target beneficiaries. Note: The people trained in Financial Education do not directly translate to the number of accounts opened because non account holders are encouraged to attend the trainings. URCF Newsletter Volume 8, November 2015 3
Map of locations of rural finance innovation The following map shows the places were the partner financial institutions implement their projects: A newsletter published by the Uganda Rural Challenge Fund a project financed by KfW on behalf of the German Federal Government. This project is an initiative of the German Federal Ministry of Economic Cooperation and Development (BMZ) and implemented by KfW Development Bank on behalf of the Federal Government of Germany. Project Executing Agent: Agricultural Business Initia UMOJA House, 2 nd floor, Plot 20 Nakasero Road, Kampala, Tel: 0312 351600 E-mail: l.ssentongo@fs.de The advisory services are provided by Frankfurt School of Finance and Management. URCF Newsletter Volume 8, November 2015 4
Principles of the Uganda Rural Challenge Fund In order to improve the situation of the rural population, the partner financial institutions should be highly committed and have to demonstrate that they have the necessary values, commitment, resources and systems to successfully implement the projects. Projects that are awarded with a grant must demonstrate the following: Innovation: New or creative ways of increasing the depth and breadth of financial outreach in rural areas. Innovation can be something new but it could also mean enhancements of existing products and/or services to better meet the needs of the rural clients. Sustainability: The reasoning for initiating a project should be that the proposed project is likely to lead to positive longer term impacts, i.e. the positive impact triggered by the project on the rural population has to be sustainable. The project must be financially viable and sustainable and the applicant should have the financial strength and profitability to continue growing and developing in the future. Development Impact: The applicant should show the number of new clients gaining access to financial services, number of existing clients getting better access to financial services and how the clients quality of life is likely to change due to the intervention undertaken by the financial institution. Additionality: This is the projects net, rather than its gross impact after making allowances for what would have happened in the absence of the intervention of the Challenge Fund. It is the extent to which a project is triggered by the intervention of the Challenge Fund, i.e whether it would have been implemented at all, or is undertaken on a larger scale, or earlier, or to a higher standard, or within a new region. Implementation Capacity: The applicant should have sufficient financial and human resource capacity and the needed infrastructure to implement the project. Concept Notes: After a first expression of interest, formal Concept Notes submitted to the Fund Management Team by the financial institutions will be evaluated and after a successful selection the Applicant will be asked to present a detailed Application using the format provided by the Fund Management Team. The decision to fund a project rests with the Grant Committee. The Concept Note Guidelines can be downloaded here: http://www.urcf.co.ug/en/how-to-apply.html URCF Newsletter Volume 8, November 2015 5