Through the Public Financial Management, Private, and Financial Sector Consultant Program in Uganda, IDG supported the efforts of USAID in introducing new financially viable vehicles to facilitate economic growth in partnership with the Government of Uganda (GOU).
Despite high demand for finance from micro-, small-, and medium-sized enterprises (MSMEs), access to MSME finance has remained low due to conservative lending practices of regulated commercial banks. These banks typically did not lend to the MSMEs on a scale that could increase broad based economic growth, create jobs, and improve livelihoods and health outcomes. The lending that reached these entities often came with high interest rates, short loan tenors and prohibitive collateral requirements. USAID’s interventions in Uganda were targeted toward modifying and developing the existing lending practices to boost economic growth.
The objectives of IDG’s assessment were to:
- Review the Mission’s past and current activity portfolio in an effort to determine any key opportunities to scale up current or replicate past efforts with existing and/or new partners.
- Review and catalog mission activities and mechanisms and determine if there was sufficient scope to increase private sector and financial system engagement, and/or facilitate private sector financing for current mission activities.
- Determine, along with key mission staff and management and given available budget resources, whether partnerships with other donors or private organizations may be a more effective way to optimize the impact of USAID knowledge and resources rather than pursue an independent strategy and/or activity.
IDG considered a number of issues, including USAID’s activity portfolio, creating a network of community-level knowledge workers, building a common platform to support entrepreneurship and access to finance, launching an agro-bond, linking Feed-the-Future and Power Africa, commercial bank lending, value chain businesses as financing providers, leasing, new financial products, mobile financial services, and financial-sector supervision. IDG provide recommendations to the Mission on ways to strengthen current systems and explore future efforts.