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Financial sector players urged to end household poverty
FINCA International president Andree Simon and the managing director for FINCA Uganda, Mr James Onyutta at a press conference held at the FINCA Uganda Head Offices on May 15, 2024. Photo | RONAH AHABWE
What you need to know:
- Financial industry analysts and economists agree that it is time for financial sector players across all levels to be judged on indicators such as the number and quality of lives or households they have improved with their activities and products
With poverty being a key challenge in the National Development Plan, it is crucial for financial industry players to work with the grassroots population to facilitate the transition of nearly 70 per cent of the population, who are stuck in subsistence farming, into the money economy.
Financial industry analysts and economists agree that it is time for financial sector players across all levels to be judged on indicators such as the number and quality of lives or households they have improved with their activities and products.
To play a positive role in fighting poverty, financial industry players should ensure that the population, the majority of whom have been relegated to the periphery of the financial pyramid, not only have access to financial inclusion but are also able to satisfy their basic needs.
According to the Uganda Bureau of Statistics (UBOS), the national poverty rate in 2019/20 was at about 30 per cent, which is closer to but still lower than the international poverty rate of about 42 per cent.
This indicates little progress in poverty reduction in Uganda during much of the decade leading up to 2019/20, according to the World Bank's analysis of the UBOS poverty report.
Furthermore, the High-Frequency Phone Survey conducted in October/November 2022 showed that households, particularly the poorest ones and those living in rural areas, continued to feel the impact of increased prices, either through being unable to access food products or to buy the desired amounts of basic needs.
Tackling poverty
Foundation for International Community Assistance (FINCA) Uganda, a micro-finance company with a focus on low-income entrepreneurs and households, has vowed to continue aligning itself with the micro-segment of the economy, resisting the urge to transition to a commercial bank, preferring to stay loyal to its majority base – the lower end of the pyramid.
After years of tackling poverty through financial inclusion, FINCA will continue to work with small entrepreneurs and cooperatives by aiding them to become self-reliant. This according to a statement by FINCA “will be complemented by financial education, technical assistance and employment diversification.”
Uganda being a centre of microfinance innovation, and the success here can be replicated across the group.
“Uganda provides FINCA with the opportunity to develop new products and services that can then be deployed around the world,” said FINCA International president, Ms Andree Simon at a press conference held at the FINCA Uganda Head Office on Wednesday.
She continued: “We want Uganda to be the centrepiece of defining the future of microfinance and challenging the old way of operating."
By increasing access to credit for refugees, women, and people in agricultural areas and combining that activity with other support, FINCA is strengthening its ability to impact under-resourced communities.
Utility
FINCA Uganda started its operations in 1992 as a credit institution, building a positive reputation for its Village Banking model which allowed its clients to access loans through group membership. FINCA later transformed into an MDI becoming the first to be licensed and regulated by the Bank of Uganda and has 30 branches across the country.
