World Bank urged to ease collateral requirements for GROW loans
Racheal Tania Naijuka, the chief executive officer of Redshield Limited, a manufacturer of Tania reusable sanitary pads, said many women entrepreneurs with viable business ideas and the capacity to repay loans were being locked out of the financing facility because they lacked assets to provide as security.
Naijuka asked the World Bank to consider providing guarantees to participating financial institutions to enable women without conventional collateral to access the loans.
KAMPALA - A woman entrepreneur has urged the World Bank to consider easing collateral requirements under the Growth Opportunities and Productivity for Women Enterprises (GROW) project to enable more women-owned businesses to access affordable financing and expand their operations.
Racheal Tania Naijuka, the chief executive officer of Redshield Limited, a manufacturer of Tania reusable sanitary pads, said many women entrepreneurs with viable business ideas and the capacity to repay loans were being locked out of the financing facility because they lacked assets to provide as security.
Naijuka made the appeal during the presentation of findings from an intermediate outcomes assessment of the GROW project at Serena Hotel in Kampala on Friday. The event was organised by the Private Sector Foundation Uganda (PSFU) in partnership with Business Synergies.
She asked the World Bank to consider providing guarantees to participating financial institutions to enable women without conventional collateral to access the loans.
“One of the challenges that would prevent any other woman out there from having access to this money is the requirement for assets. Most women are very innovative, but they do not have assets to give as security or collateral,” Naijuka said. She added that some women face additional difficulties accessing loans because properties they could potentially use as security are jointly owned with their husbands, making it difficult to obtain the necessary consent to pledge them.
“So we are calling upon the World Bank to maybe guarantee or be a guarantor to these financial institutions so that women who do not have assets can access this financing,” she said. Naijuka argued that financial institutions should place greater emphasis on assessing borrowers' business potential and ability to repay rather than relying heavily on the value of assets they own.
She said the GROW financing facility had significantly transformed her business by enabling her to purchase more raw materials and recruit additional women to work at her sanitary pad manufacturing factory.
“Initially, we had five women, but we grew to 25 women. Even when we have big orders, we can afford to have over 50 women in the factory,” she said. Naijuka attributed the growth to the affordable interest rate of 10% per annum offered under the facility, saying such financing would be difficult for women entrepreneurs to secure through conventional commercial bank lending.
“As a beneficiary of this project, my experience has been amazing because, first of all, we would never have received such money at this rate. The rate is amazing, 10% per annum. There is no bank that would ever give you this money. So we appreciate that the World Bank came on board and supported us as women in business,” she said.
However, she called for the reconsideration of restrictions that prevent previous borrowers who have successfully repaid their loans from accessing the facility again.
“Initially, they told us that when you borrow once, you cannot borrow again. I am requesting that they reconsider that. Those who have already borrowed and paid back should be given a chance to borrow again because that is one way of growing their businesses bigger,” she said.
She cited manufacturers and enterprises dealing in milk, bakery products and juice, among others, as businesses that could suffer losses when power supply is interrupted.
Affordable financing
Another beneficiary, Monica Wadiko, who owns Smiles School, a nursery school in Kyaliwajjala, Wakiso district, said the GROW loan enabled her to acquire land and begin constructing her own school premises after previously operating from rented premises.
Wadiko said she secured sh100m from Pearl Bank in September 2024 for a two-year repayment period, attracted by the facility's 10% annual interest rate.
She said the financing helped her acquire land and lay the foundation for a permanent school structure, an investment she expects will eventually reduce the cost of renting premises
“I was renting my premises for the nursery school, but when I got the loan, I managed to acquire land for building my own structure for the nursery school. Much as it is not complete, at least the money helped me to acquire the land and put a foundation for the school,” Wadiko said.
She said she successfully completed repayment of the loan this year, adding that the interest charged was sh8m over the two years. However, after receiving a sh5m repayment bonus, her effective interest cost reduced to sh3m.
Wadiko said the affordable financing had also improved her household income, enabled her to meet her children's school expenses and expand employment at the school. She said the number of teachers had increased to 10, improving the teacher-pupil ratio.
“At least now the total number of teachers has increased to 10, and the teacher-pupil ratio has improved in the school,” she said.
Wadiko appealed for the continuation of the facility, saying affordable loans could help more women acquire productive assets, expand their enterprises and create employment.
Collateral remains a challenge
Serena Cavicchi, the World Bank's task team leader for the GROW project in Uganda and a senior social development specialist, acknowledged that collateral requirements remained a major obstacle to women entrepreneurs seeking financing.
“Collateral is still a big issue which is still not allowing the flowers to bloom,” Cavicchi said
She, however, commended PSFU for its role in implementing the project and supporting women-owned enterprises.
“Some of the results you have seen: 77% of beneficiaries say the loan helped boost household income,” she noted.
Meanwhile, Sarah Kagingo, the vice-chairperson of the PSFU board, said the GROW project was conceived to expand women's businesses while addressing barriers that have historically limited their access to finance.
Kagingo said the programme, jointly implemented by Government, the World Bank and PSFU, had registered encouraging results within a relatively short period.
She noted that the first disbursement under the financing facility was made in September 2024, adding that the programme had since expanded its reach to borrowers in every district of Uganda.
Kagingo also said the project was helping women formalise their businesses, increase household incomes and create employment. She cited findings showing that 77.2% of women surveyed reported that the loans had helped increase their household income expenditure.
She urged women entrepreneurs to embrace digital tools to improve business records and strengthen their creditworthiness, noting that digital transaction records could help financial institutions assess their businesses when considering loan applications.
Kagingo further called for the adoption of artificial intelligence to improve business operations, decision-making and competitiveness.
She said the GROW facility should be understood as business capital intended to scale women's enterprises rather than a mass-market programme.
The project, officially known as Growth Opportunities and Productivity for Women Enterprises (GROW), is designed to improve access to affordable financing and business development support for women entrepreneurs in Uganda.