Microfinance in Uganda: Lessons from FINCA

This paper provides an overview of specific MFIs in Uganda based on their approaches and performance. The study selects FINCA Uganda based on its outreach and portfolio, which is maximum in Uganda as compared to other MFIs.

The paper analyzes FINCA's operations based on its institutional parameters and client-level analysis:

• Institutional analysis indicators:
  • Performance;
  • Organizational structure;
  • Strategies and planning procedures;
  • Control mechanisms: ownership structure, audits, MIS;
  • Staff;
  • Financial technology: lending, savings, other financial and non-financial products;
  • Risk management;
  • Cost management;
  • Liquidity management.

• Client-level analysis indicators:
  • Clientele served: socio-economic background of clients, income source and assets created by FINCA clients;
  • Use of financial services: evaluation of lending approach, repayment capacity, use of other financial institutions, evaluation of services offered;
  • Assessment of FINCA by its clients and non-clients easy access to savings by clients; death, sickness, inability to repay lead to dropouts;
  • Evaluation of results: assessment of loan, loan cycles and its impact on client business.

The report also emphasizes the regulatory and supervisory lessons drawn from the experiences of MFIs in Uganda. The paper concludes by make recommendations for regulation and supervision of microfinance through the Bank of Uganda.