AGRIC FINANCING PROJECT

Specific objective of the project is to increase access to rural financial services to the fruits and vegetables, rice and groundnuts/cassava small holder farmers in selected districts of eastern Uganda

Implementation Strategy;

The main strategy is building financially sustainable Microfinance Institutions by supporting Member-Owned Microfinance Institutions (MFIs). Mobilization of savings is the genesis of a successful SACCO, the best way of not only accumulating investment capital and also demonstrating the seriousness and capacity to pay by any entrepreneur. VECO EA uses the highly successful VSLA model as a central building block to develop sustainable member owned SACCOs. A “savings-first mentality” is instilled in farmers before credit can be given. Cash surplus for the small-scale farmers is seasonal, which requires personal motivation for the farmers to save. Farmers are encouraged to save or pay-up share capital right after the harvest that enables them borrow money, meet other banking requirements and also keep some aside for a rainy day.

The approach aims at addressing the twin constraints facing the farmers, the household cash flows and the investment needs. This is addressed by the VSLAs that are formed at Rural Producer Organizations (RPO) level. The formed VSLAs have two savings products;

    1. Long and Medium Investment term product and;

    2. Short term savings products for emergency and household financial demands.

The VSLAs provide and manage the savings and credit services for both short term needs for members but also collect and remit the savings component specifically meant for Investment and long to medium term product to the SACCO.The members of the VSLAs take loans individually to finance various activities they deem necessary.

Successes:

SEPSPEL supported the SGSLAs in the establishment of strong financial and management system through provision of technical advice and trainings in the areas that include but not limited to; governance, selection of management committee that helps to enforce the constitution. Effectively, the groups elected and ensured the operation of the following committee members; A Chairperson (who leads group meeting), A secretary (who keeps records of the group’s financial activities), A treasurer (who keeps the locked cashbox between meetings), 3 key holders (who keep the keys to the locked cashbox between meetings) and a money counter (who counts the money during the meeting). Additionally, SEPSPEL conducted capacity building trainings for the SACCO managers and chairperson in the areas of resource mobilization, SACCO governance and product development.

To keep safely the group savings, the VSLAs groups were supported to procure 150 tool kits which have effectively enabled the group members to safe guard group funds. The tool kits are always locked and different members who are mandated to keep keys have different keys and are only opened during the meeting days as per the procedure. As a result, transparency and accountability has been promoted

Among the VSLAs group members. Whereas the project (Agric finance) contributed Ush45,000 (50%), the balance was being paid by the group themselves. To ensure sustainability and adherence to best practice, the data collection tool was developed and availed to SACCOs for easy tracking and follow up of the SGSLAs

A total of 4,256 members (1,447 males and 2,809 females)were reached through mobilization meetings across the operation areas. The meetings were fruitful and resulted into the formation of 608 VSLAs

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