The backbone of Uganda’s financial inclusion story, the microfinance sector, took centre stage today at the Annual General Meeting of the Association of Microfinance Institutions of Uganda (AMFIU).
The gathering, which brought together key players in the microfinance landscape, including Savings and Credit Co-operative Organisations (SACCOs), provided a crucial platform to assess the sector’s health, share vital insights, and chart a course for its sustainable future.
The highlight of the event was the strong reaffirmation of commitment from Stanbic Bank to support microfinance institutions at all levels.
Tunde Thorpe, the Executive Head of Business and Commercial Banking (BCB) at Stanbic Bank, emphasised the profound impact of microfinance in uplifting communities.
“This is a sector that plays a critical role in expanding access to financial services and lifting communities,” Thorpe said, adding, “Indeed, Uganda’s story of financial inclusion cannot be fully told without mentioning the great work that you, the SACCOs and your members, are doing.”
He noted that SACCOs, in particular, serve as indispensable lifelines for financial access in Uganda’s rural and underserved communities.
He observed that, unlike traditional banks that often have limited reach in remote areas, SACCOs are community-based, making financial services accessible to millions who would otherwise be excluded.
They offer vital services such as savings, affordable credit, and financial literacy training, empowering individuals to start businesses, improve livelihoods, and contribute to local economies.
This accessibility has significantly mitigated financial exclusion in Uganda, providing a critical bridge for marginalised groups.
Capacity Building for Sustainable Growth
Stanbic Bank’s partnership with AMFIU goes beyond mere financial support. Thorpe highlighted the bank’s strong emphasis on capacity building, recognising it as fundamental to the long-term sustainability and effectiveness of SACCOs.
“That’s why we put strong emphasis on capacity building, equipping SACCO staff and leaders with critical skills across governance, financial management, loan administration, and compliance,” he asserted.
Thorpe explained that robust governance structures, sound financial management practices, efficient loan administration, and strict adherence to regulatory compliance are essential for SACCOs to thrive.
By investing in these areas, he observed, Stanbic Bank aims to empower SACCOs to operate more professionally, manage risks effectively, and ensure the safety of their members’ deposits, fostering trust and stability within the microfinance ecosystem.
Commitment to Sustainable Lending
A key message from Thorpe was the importance of sustainable lending practices for microfinance institutions.
“We are committed, and we want you to be committed to staying in this for the long term. Therefore, we must ensure that we lend sustainably,” Thorpe cautioned.
This, he noted, underscores the need for responsible lending and borrowing, ensuring that loans are used productively and repaid, thereby maintaining the health of the loan portfolio and the financial viability of SACCOs.
He pointed out that sustainable lending prevents over-indebtedness among borrowers and protects the integrity of the microfinance sector.
Digital Transformation and Financial Inclusion
In an increasingly digital world, the microfinance sector cannot afford to be left behind.
Thorpe revealed that Stanbic Bank is actively championing digitisation within SACCOs through its flagship platform, FlexiPay.
“We are also championing digitisation through our flagship platform, FlexiPay, enabling greater efficiency in your processes,” he stated.
FlexiPay is an all-in-one digital solution that allows users to make financial transactions conveniently, safely, quickly, and affordably.
Launched in 2022, it has rapidly become a leading digital finance platform in Uganda, boasting over 1.5 million active wallets. For SACCOs, FlexiPay offers numerous benefits:
Enhanced Efficiency
Automating processes like deposits, loan repayments, and other transactions reduces manual work and human error.
Greater Accessibility
Enabling members to conduct transactions from anywhere, anytime, without needing to visit a physical branch, is particularly beneficial for rural members.
Improved Security
Offering robust security measures with advanced technology and encryption to protect both funds and data.
Reduced Operational Costs
This comes with minimising the costs associated with cash handling and physical infrastructure.
The integration of such digital platforms, according to Thorpe, is crucial for microfinance institutions to scale their operations, reach more beneficiaries, and remain competitive in a rapidly evolving financial landscape.
It also aligns with Uganda’s broader national financial inclusion strategies, which emphasise leveraging digital infrastructure for greater efficiency.