Sh40b Islamic revolving fund launched to support small businesses
The initiative dubbed the Revolving Economic Empowerment Fund (REEF) seeks to strengthen Islamic financing and expand access to affordable loans for small businesses, especially among vulnerable communities in Uganda.
Abdulla Ahmed Al Jofairi, Chargé d’Affaires at the Embassy of the State of Qatar in Kampala (right), and Elias Kigonya Muwalima, chairman of the Hijaz Cooperative, address delegates. (Credit: Derrick Muduku)
___________________
Small businesses, especially those owned by women, youth and persons with disabilities are set to benefit from a $10m (about sh40b) Islamic revolving fund that has been launched in Uganda.
The initiative dubbed the Revolving Economic Empowerment Fund (REEF) seeks to strengthen Islamic financing and expand access to affordable loans for small businesses, especially among vulnerable communities in Uganda.
Launched by Hijaz Community SACCO (Savings and Credit Cooperative Organisation), the initiative seeks to mobilise resources from development partners, businesses and individuals to support micro-enterprises and promote economic empowerment.
The move was revealed at an event held at the Uganda Business Facilitation Centre on November 5.
Elias Kigonya Muwalima, the Board Chairman of the Hijaz SACCO, noted that the REEF fund is a catalytic financing initiative designed to support Islamic SACCOs and strengthen their sustainability.
“Our goal is to ensure that we put in place a fund that is ethical, affordable, sustainable and can help to transform lives of vulnerable communities, especially women, youth, persons with disabilities by supporting their micro enterprises,” he said.
He noted that the fund will combine financing with business support. “Beneficiaries will receive more than financial assistance, with the programme incorporating training, mentorship, market linkages and follow-up support to improve the sustainability of their enterprises,” he said.
Muwalima appealed to government and development partners to support asset financing, which will enable vulnerable Ugandans to acquire productive equipment and engage in income-generating activities.
Abdulla Ahmed Al Jofairi, the Charge d’ Affaires at the Embassy of the State of Qatar in Kampala commended the initiative for addressing the financial inclusion gap by providing ethical and Islamic financing options to underserved individuals, who struggle to access conventional banking services.
“The initiative stands out for its detailed and careful selection of deserving clients to ensure that the support reaches those who genuinely need it. We are certain that it will be transparent and support them thrive economically,” he remarked.
He appealed to the Muslem community to embrace the initiative and ensure that they improve their livelihoods and quality of life.
Favourable loans
Prof. Badru Kateregga, the Vice Chancellor of Kampala University, who also plays a supervisory role on the Hijaz SACCO board, noted that the fund provides an opportunity for entrepreneurs to access loans at affordable interest rates, a viable alternative to moneylenders, who he said charge exorbitant rates.
Kateregga said the initiative aims at building sufficient financial capital to purchase bonds and extend financing to governments and partners across the East African region.
He urged the youth to pool resources, work together and build strong partnerships rather than pursue economic development individually.
Accountability is key
Hadijah Namyalo, the Senior Presidential Advisor on Political Affairs, encouraged the Muslim community to observe transparency and accountability, which she said are essential for financial success.
“We need to establish effective monitoring mechanisms. Beneficiaries need to understand and use monitoring tools that ensure financial circles operate transparently and fulfil their intended purposes,” she said.
She emphasised the need for value addition and measurable results, asserting that the investment should generate tangible outcomes, including business growth and profits, rather than simply disbursing money without assessing its impact.
She urged stakeholders to invest in skills development alongside financial support because the beneficiaries require additional business skills, entrepreneurship training and mentorship to ensure they can effectively manage and grow the funds they receive.