Microfinance & Economic Activity in Uganda

The Hunger Project’s Microfinance Program addresses a critical missing link for the end of hunger in Africa: the economic empowerment of the most important but least supported food producers on the continent – Africa’s women.

From the beginning, the innovation of microfinance has allowed poor people – usually excluded from the traditional banking system – to obtain credit to develop microenterprises and build savings. Microfinance has become a real means of reducing poverty by improving both people’s standard of living and economic self-sufficiency, as well as offering a pathway to education, health care and equity between men and women.

Across the areas where we work in Africa, well over two million individuals will take microloans from scores of microfinance institutions this year. They will use those loans to start small trade businesses and improve farming techniques for increased crops. The profits they make will in turn serve to feed and send the next generation to school and to receive health care.

Microfinance, it is clear, has done a world of good in Africa. However, if the full promise of microfinance is to be brought to bear on hunger and poverty in Africa, it must take into account a critical issue: the full inclusion of women farmers and entrepreneurs which is why The Hunger Project’s Microfinance Program (MFP) is women-led, locally owned and fully integrated. It is a training, credit and savings program through which micro-credit is distributed to groups of women and men and a culture of savings is promoted.

The program eventually gains the financial means for economic self-reliance and official government certification to operate as a Rural Bank. Small loans are used primarily for farming and small trade and succeed in increasing household incomes. The majority of the Microfinance Committee seats are for women and 75% of the Board of Directors of the Rural Bank are women, giving women a powerful voice in the community — often for the first time.

Nine of Uganda’s 11 epicenters have recognized Rural Banks. All of the epicenters have partners involved in agriculture, in handicrafts, in livestock, in petty trade, in services and in sewing and dressmaking. Two of the epicenters also have partners involved in soap making and in the performing arts. The Microfinance Programs are often instrumental in providing the initial capital to allow partners to move away from sustenance farming.