While microfinance institutions are a vital source of credit for many businesses, experts are stressing the need for financial literacy to truly empower entrepreneurs and break the cycle of poverty.
Jane Nalunga, Executive Director of SEATINI Uganda, says business training should be tailored to the individual,” she says. “When it comes to accessing micro-loans, key things include cash flow, interest rate, and knowledge on investment. Borrowers should be mindful of interest rates by choosing microfinance companies with lower rates to avoid keeping people in the cycle of debt.
Building on Nalunga’s point about the importance of managing debt, Robert Kakande, the Executive Director of FINCA Uganda, a Microfinance Deposit Institution, says entrepreneurs can manage their finances effectively by making informed decisions to avoid debt traps.
“FINCA Uganda provides both financial services and training programs that equip entrepreneurs with crucial skills like budgeting, saving, and investing. The impact of this approach is evident in the success of clients like the Nakawa market women’s group,” says Kakande.
Sarah Nangozi, a member of the group, shares how the training has transformed her life: “I joined the group with a capital of Shs 300,000, and from the bookkeeping training I received, I was able to track my business growth.” Nangozi now boasts a business with a capital of UGX 5 million, owns a house, and can afford to educate her children.
Kakande adds that FINCA Uganda’s commitment to financial literacy has earned them recognition from Rotary Uganda, who recently awarded them a certificate for their impactful program.
In October 2024, FINCA Uganda was appreciated for its impactful financial literacy program for the Nakawa Market women group. The FINCA team promised to continue working together with different people to improve living standards and build a brighter future. FINCA receiving this certificate is a testament to commitments. This is a direct result of dedication to impacting communities even beyond Nakawa.
This focus on education comes at a time when financial inclusion is on the rise in Uganda. According to the 2023 Finscope survey, 81% of Ugandan adults now use financial products and services, highlighting the need for widespread financial literacy to ensure responsible and effective use of these tools.
