MGLSD Clarifies On Strict Grow Loan Accessibility Complaints

 The Ministry of Gender, Labour and Social Development (MGLSD) has clarified that the Generating Growth Opportunities and Productivity for Women Enterprises (GROW) Project, in its current design, the participating Financial institutions are bearing the entire risk just in case they lend money to a woman entrepreneur and failure to repay that loan or part of it ,these financial institutions have to absorb the credit losses.

This has been revealed by the MGLSD minister Hon Betty Amongi while addressing media at Uganda Media Centre in Kampala. 

Earlier this week while in Mityana District, the Minister of Lannds, Housing and Urban development hon Judith Nabakooba informed president Museveni that government programs like Glow, PDM Operation Wealth Creation have benefited a number of women in the area but reported the public outcry about the strict requirements to access the Glow program.

"The financial institutions are therefore taking the responsibility of assessing creditworthiness and lending to only those women entrepreneurs who are assessed to be able to repay based on the financial institutions’ credit assessment protocols and regulations. The GROW loan, therefore and in accordance with the Bank of Uganda Regulations, requires appropriate collateral". Sha said.

In addition, the Government has negotiated with the Banks to accept a wide range of security including untitled land and movable business assets (Chattels). Some financial institutions are also accepting group and personal guarantees as a form of security for small loan values. Key to note is that the financial institutions are required to pay back all the money advanced by Government so that the GROW loan is sustained as a Revolving Fund that will be available to women entrepreneurs even beyond the life of the Project.The minister added.

Minister Amongi noted that the loan is implemented in partnership with the Private Sector Foundation Uganda (PSFU) through the Participating Financial Institutions (PFIs).

"The GROW Project aims to increase access to entrepreneurial services that enable female entrepreneurs to grow their enterprises, including refugee women and women in host districts. The Project was designed to respond to multiple constraints hindering women in business (entrepreneurs) from growing their businesses that include but are not limited to: inadequate business management skills; lack of access to affordable capital; limited access to common user manufacturing infrastructure and negative social norms that affect their participation in business". Noted Hon Amongi.

The GROW Project therefore provides an integrated package of services to meet the needs of women entrepreneurs that include:  mobilising women entrepreneurs to network, receive mentorship and information on services of the project under district/city-based women entrepreneurship platforms;  training women entrepreneurs and their employees on basic entrepreneurship development;  provision of trade or sector-specific training and access to business development services offered by specialised departments of the Government of Uganda;  apprenticeship training for women entrepreneurs and their employees; business competition grants;  access to affordable credit (GROW loan); and improving access to common user production infrastructure. She added.

The financial institutions are required to pay back all the money advanced by Government so that the GROW loan is sustained as a Revolving Fund that will be available to women entrepreneurs even beyond the life of the Project. Regarding the reports indicating that some Commercial Banks depleted the GROW loan funds advanced to them, I wish to provide clarification as follows: Drawing lessons from similar interventions delivered through financial institutions, under the GROW Project, Government put in place an arrangement where GROW funds are disbursed in tranches with corresponding targets over a given period. As part of the same arrangement, Government contracted an independent firm (KPMG), to undertake a due diligence and verify the loan funds given out by the Participating Financial Institutions before the release of additional funds to the specific banks that have depleted the total amount initially released. In this case, Centenary Bank and Finance Trust Bank exhausted funds (i.e. UGX Six (6) Billion each) that were released in the first tranche. The independent firm (KPMG) has finalised the due diligence/verification exercise and Government is now set to release the next tranche of funds to the two (2) aforementioned Banks before the end of October 2024. The results from the assessments so far indicate that the funds released so far are being lent out to eligible women entrepreneurs. We are however going to require the Participating Financial Institutions to collect demographic information of targeted beneficiaries with a view to assess if the funding is directed towards the purpose of the GROW project specifically growth of women owned enterprises and job creation. It should be noted that the other Commercial Banks involved, namely; Post Bank, DFCU Bank and Equity Bank have not yet exhausted the first tranche of funds released. The women entrepreneurs across the country are encouraged to visit these Commercial Banks.she said. 

The GROW Loan is targeting women entrepreneurs who are making a transition from other existing Govt programs that provide micro-loans, for example, PDM, EMYOOGA, and the Uganda Women Entrepreneurship Program (UWEP), and now seek to grow and expand their businesses.

Government will roll-out entrepreneurship training to eligible women entrepreneurs and their employees by 30th November 2024. Revealed the minister.