The Ministry of Finance in conjunction with the MasterCard Foundation this week launched a five year Micro and Small Enterprise (MSE) US$20 million (Approximately UGX70 billion) recovery fund targeting 50,000 enterprises mostly youth and women enterprises to withstand the effects of covid-19 pandemic.
The recovery fund is anticipated to shorten the recovery process of youth and women-owned businesses that employ and sustain the livelihood of millions of Ugandans. The fund is to directly secure 100,000 at-risk jobs and at the same time enable 150,000 additional opportunities for dignified and fulfilling work for the young people. The programme targets to reach at least 40% women and 30% youth.
Speaking at the launch on Thursday, the Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi said the fund will boost the government’s effort and help them to cover more ground and support Ugandans in becoming self-reliant amidst the challenges of the pandemic.
He also revealed that the government is committed to promoting financial inclusion where every Ugandan can access and use a broad range of quality and affordable financial services citing government initiatives put in place to ensure every Ugandan gets financial security.
“Government is implementing the Presidential Initiative on Wealth and Job Creation (the Emyooga program) through which government is channeling financial support in form of a grant to enterprise based savings groups for onward lending to members at 180/affordable rates. This program is at the moment targeting 18 enterprises/categories,” said Ggoobi.
He added: “During a study by the Economic Policy Research Centre (EPRC) and the International Growth Centre (IGC) it was revealed that only 10% of Micro, Small and Medium Enterprises (MSMEs) in Uganda remained open during the lockdown. EPRC’s rapid assessment study of August 2021, on the effect of the COVID 19 lock down on livelihoods and MSMES, further established that Uganda’s MSMES are “hanging in there” to see the next day with the majority of them far from being resilient.
Therefore, Ggoobi said government has also introduced the Parish Development Model (PDM) which is a wholly funded by the Government as a strategy or approach for organizing and delivering Public and Private Sector interventions for wealth creation and employment generation at the Parish, as the lowest economic planning unit.
He said: “Similar to the micro and small enterprises recovery fund by FSDU and MasterCard, last year on 23rd November, 2021, Government launched the Small Business Recovery Fund, administered by BOU and implemented in partnership with Commercial Banks, Microfinance Deposit Taking Institutions and Credit Institutions, to provide financial loans to businesses to help them recover from the effects of Covid-19. Government is contributing UGX 100bn, which is to be matched by the participating financial institutions by UGX 100bn making it a pool of UGX 200bn. This initiative will enable the last mile borrower to access affordable credit at an interest rate not exceeding 10% per annum,” he added.
Also speaking at the launch, Rashmi Pillai the Executive Director of Financial Sector Deepening Uganda (FSD) said that FSD Uganda prides itself in working closely with like-minded partners such as the Government of Uganda and the MasterCard Foundation to find solutions that benefit all Ugandans.
“The MSE Recovery Fund was a result of the FSD Uganda 5-waves COVID-19 studies. The studies show that while most people returned to jobs by late 2020, the quality of jobs declined, and net pay was still below pre-pandemic levels for nearly 73% of surveyed adults. Individuals and households that worked for and with MSES were worst hit. That’s why the facility we are launching today is intentional in targeting micro and small enterprises whose credit needs fall between Ushs100,000 to UShs10 million. We are confident that this facility will be an excellent complement to the Government of Uganda’s Small Business Recovery Fund,” she added.