Streamline Credit Schemes
A RURAL loan scheme launched with much pomp in Luweero three years ago has stalled.
A RURAL loan scheme launched with much pomp in Luweero three years ago has stalled. A sh10m initiative, the revolving credit project was launched by President Museveni to fight household poverty, but now most of the initial beneficiaries have defaulted, and there are no further funds to lend.
Rural credit schemes are well intentioned. They offer finance credit to the rural majority who, more often than not, cannot access high-interest bank loans that are almost an exclusive preserve of savvy urbanites. But because of liberal administration, the propensity for default on rural credit is very high.
The primary work, though, has to be done at the root. Borrowers must have sound plans for the monies — many people tend to regard these schemes as political gifts for which there is little or no accountability. Little wonder then that many men have been known to marry more wives shortly after acquiring loans! The agencies disbursing the funds — local governments, NGOs —must themselves be well versed in managing credit finance. There has to be basic accounting and book-keeping, a solid follow-up regime, and no favouritism. Regular monitoring will ensure, for instance, that finance given to develop a piggery unit is not diverted, say, to petty trading by an individual with no experience in shop-keeping. Women’s credit schemes, in both urban and rural areas, have been fairly successful because many of these basic requirements have been put in place. The women are given business and accounting skills; they are monitored. With rural poverty a stain on our national conscience, we should resist the temptation to throw the baby out with the bathwater. We should not stop the projects altogether, but work out a strategy to improve the structure. Ends
Rural credit schemes are well intentioned. They offer finance credit to the rural majority who, more often than not, cannot access high-interest bank loans that are almost an exclusive preserve of savvy urbanites. But because of liberal administration, the propensity for default on rural credit is very high.
The primary work, though, has to be done at the root. Borrowers must have sound plans for the monies — many people tend to regard these schemes as political gifts for which there is little or no accountability. Little wonder then that many men have been known to marry more wives shortly after acquiring loans! The agencies disbursing the funds — local governments, NGOs —must themselves be well versed in managing credit finance. There has to be basic accounting and book-keeping, a solid follow-up regime, and no favouritism. Regular monitoring will ensure, for instance, that finance given to develop a piggery unit is not diverted, say, to petty trading by an individual with no experience in shop-keeping. Women’s credit schemes, in both urban and rural areas, have been fairly successful because many of these basic requirements have been put in place. The women are given business and accounting skills; they are monitored. With rural poverty a stain on our national conscience, we should resist the temptation to throw the baby out with the bathwater. We should not stop the projects altogether, but work out a strategy to improve the structure. Ends