Lead Partner: Micro- Finance Association, Kabarole, Uganda, East Africa
Description
Kabarole Research & Resource Center is a non-profit making organization, operating in the Rwenzori region, Kabarole district in the western part of Uganda. Their work on Micro Finance Associations (MFAs) is the topic of this study. A Micro Finance Association is an organization whose membership is normally made up of groups of people from a defined geographical area, involved in their own savings and credit activities. These come together with the prime purpose of pooling their savings that will enable them to obtain better credit facilities to provide the necessary capital to run their farms and households more productively. Since its start in 1992, the program has enabled the initially insignificant rural-based, predominantly female savings and credit groups to join together into now formidable structures called Micro Finance Associations (MFAs).
The Groups are encouraged to buy as many shares and deposit as
much of their savings as they can with the MFA. The money raised is
used to provide credit to the Groups, and some for administration and
support. The Groups use the credit to provide loans to their members.
As the Association develops it uses some of its capital to build a small
local bank and start to provide full banking and later insurance services to its members.
An important feature of the work is that the capacity building program
is asset focused and runs through Community Trainers (CTs)
and Community Process Facilitators (CPFs). They are not KRC employees but are facilitated, on a cost-sharing basis, between KRC and the particular community/MFA according to stipulated policies agreed upon with all the MFAs. This is seen not only as an empowering
endeavour, but also as a sustainable approach to community training.
It aims at phasing out centralized workshops which, according to
the program experience, have proved not only costly but also largely
ineffective for community training. The knowledge imparted by the
Community Trainers is further fostered and internalized through the
structure of MFAs at joint meeting and exchange visits. This approach therefore enables communities to harness not only their financial but also other resources to better their livelihoods. This approach also emphasises action learning through reflection. Participation
for empowerment is critical, as are the creation of sustainable
systems.
What advice would you give to people starting a project like yours?
- Rural communities should be encouraged to mobilize their own financial services through creation of their own Micro finance Associations.
- Appropriate training all other relevant forms of capacity building should be given to rural farmers to enable them to run their micro finance business properly. The integration of other training like gender training into micro finance will create social harmony among families. This will create an enabling environment for economic production to increase household income. The integration of the health component promotes the growth of MFAs through increased savings and buying of shares as there
will be less spending on medical expenses. Already, training in sustainable agriculture has led to increased food security among
most families of the MFAs. - Decentralized trainings, exchange visits and use of community trainers make both the training and learning more sustainable to the communities, and leads to consistent growth of the MFAs and strengthens the process of community empowerment.