The African Development Fund (ADF) has agreed to loan an equivalent of USD 16 million to finance a Rural Income Employment Enhancement Project (RIEEP) run by the government-controlled Microfinance Support Centre (MSC) in Uganda. The USD 16 million loan accounts for 85 percent of the total cost of the entire project (about USD 19 million). The remainder is provided through government funding.
This project supports MSC’s Strategic Plan for 2009-2014, which aims to provide both financial and institutional development services to rural clients. The financial services goal is to disburse 2934 loans through financial intermediaries. Meanwhile, the project also emphasizes institutional development services, which include using performance evaluations to enhance the capacity of about 1000 microfinance institutions and help develop field worker business skills. Details on the exact mechanisms through which these services are to be provided remain unspecified.
About the African Development Fund:
The African Development Fund was established in 1972 and is operated by the African Development Bank. Its main goal is to reduce poverty by providing loans and grants to its African member countries. Project loans are to be repaid over 50 years, with a 10 year grace period. Though the ADF does not charge interest on its loans, it does include a service charge of 0.75% per year and a commitment fee of 0.5% per year on funds that have not been disbursed (starting 120 days after the loan is signed).
Bibliography:
[1] allAfrica.com. “U.S.$16 Million for Rural Income Project.” http://allafrica.com/stories/200911191000.html
[2] Microfinance Focus. “ADF approves $16m loan for Ugandan rural microfinance program.” http://www.microfinancefocus.com/news/2009/11/20/adf-approves-16m-loan-for-ugandan-rural-microfinance-program/
[3] African Development Fund. https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=African+Development+Fund
Original Source Article: allAfrica.com. “U.S.$16 Million for Rural Income Project.”
Tunis — The objective of the project is to help reduce rural poverty in Uganda by facilitating access to and utilization of affordable financial and business development services for an estimated 1.4 million rural poor in the country’s districts.
The project is an important input to Uganda’s Microfinance Support Centre (MSC)’s 2009-2014 Strategic Plan and comprises two key components – the Financial Services and Institutional Development Services. Under the financial services component, an estimated 1.4 million rural clients of whom 50% are women will be reached, while maintaining gender parity and disbursing some 2934 loans through financial intermediaries. The component on institutional and business development services will strengthen the capacity of 1000 intermediaries and provide business development skills to some 3,000 staff together with a performance evaluation mechanism.
The project is estimated at UA12.01 million (USD 19.10 million), of which the ADF share is UA 10.21 million or 85.0% of the overall cost. The Ugandan government’s share is UA 1.8 million or US$ 2.9 million or 15% of the entire cost. The ADF’s concessionary grant resources are repayable over 50 years at zero interest rate, including a 10-year grace period, a service charge of 0.75% per annum and a commitment fee of 0.5% per annum on the undisbursed portion, beginning 120 days after the loan is signed.
The Bank’s intervention in Microfinance in Uganda started in 1994 with a Poverty Alleviation Project (PAP 1994-1998). Currently, the Bank is playing a leading role among other partner institutions involved in micro financing in Uganda including the World Bank, the Islamic Development Bank (IsDB), DANIDA, IFAD, GTZ, SIDA and the EU. The Rural Income and Employment Enhancement Project is consistent with Bank Group’s 2006 Microfinance Policy and Strategy. Above all, it is in line with the Bank Group’s 2008-2010 overall operational strategy. Both strategies emphasize human development, pro-poor development programmes and overall poverty reduction.
*1 UA = 1. 59 US$ as at 17 November 2009
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