1. Microfinance in Uganda: 2012 and beyond
Microfinance Workshop of
Makerere University Business School; 28/29 Feb. 2012
Microfinance in Uganda: 2012 and beyond
By Oliver Schmidt
Academic Advisor Microfinance, MMU
Seconded by

2. Presentation Outline
Ugandan microfinance has to weather macro-economic uncertainty
Strategic risks faced by Ugandan microfinance: Increasing?
Mobile Phone –> Mobile Microfinance?!
How can Ugandan MFIs grow, and how should they grow?
Concluding remarks

3. Economic Growth and inflation
1 Ugandan microfinance has to weather macro-economic uncertainty
Economic Growth and inflation
Billion UGX
GDP (current prices)
GDP (prices of 2002)
Source:
UBOS

4. Economic growth (prices of 2002) and population growth
1 Ugandan microfinance has to weather macro-economic uncertainty
Economic growth (prices of 2002) and population growth
annual growth in %
Source:
UBOS

5. The Challenge of Financial Inclusion
1 Ugandan microfinance has to weather macro-economic uncertainty
The Challenge of Financial Inclusion

6. Uganda’s FIs charge highest risk premium than in East Africa
2 Strategic risks faced by Ugandan microfinance: Increasing?
Uganda’s FIs charge highest risk premium than in East Africa %
Source:
Worldbank

7. Uganda’s legal rights are rated lower than neighboring countries
2 Strategic risks faced by Ugandan microfinance: Increasing?
Uganda’s legal rights are rated lower than neighboring countries
Source:
Worldbank

8. Uganda’s is rated more difficult to do business than Kenya and Rwanda
2 Strategic risks faced by Ugandan microfinance: Increasing?
Uganda’s is rated more difficult to do business than Kenya and Rwanda
Source:
Worldbank

9. So what are the strategic risks arising specifically for MFIs?
2 Strategic risks faced by Ugandan microfinance: Increasing?
So what are the strategic risks arising specifically for MFIs?
Enforcement of loan contract
Loss of savings (particularly SACCOs!)
Loss of funding / innovation opportunity
Enforcement of loan contracts
Regulators diluting / diverting MFIs from their vision and mission

10. The mobile phone is the most dynamic technology of the last 20 years
3 Mobile Phone -> Mobile Microfinance?!
The mobile phone is the most dynamic technology of the last 20 years %
Source:
Worldbank

11. Expand moderately but steadily,…
4 How can Ugandan MFIs grow, and how should they grow?
Expand moderately but steadily,…
‘000 persons
Sources:
AMFIU, MF Census,
Groen et. al., MixMarket

12. … and reach out to new market segments
4 How can Ugandan MFIs grow, and how should they grow?
… and reach out to new market segments
savings portfolio
per customer
Outstanding loan portfolio
per customer

13. … and reach out to new market segments
4 How can Ugandan MFIs grow, and how should they grow?
… and reach out to new market segments
savings portfolio
per customer
Outstanding loan portfolio
per customer

14. … and reach out to new market segments
4 How can Ugandan MFIs grow, and how should they grow?
… and reach out to new market segments
Loan Portfolio of MDIs, by sectors,

15. A to-do list for policy-makers:
5 Concluding remarks
A to-do list for policy-makers:
Further improve the environment for investment and economic growth, in particular
(i) stability of the currency;
(ii) reliable, smooth and quick procedures for entering and enforcing business contracts.
Tear down the regulatory hurdles to mobile banking. Now.
Create a common financial sector for East Africa. Now.
Re-model the lending facilities to MFIs; sector-oriented incentives and medium-term (5-7years) tenure.
Foster savings culture.

16. A to-do list for researchers:
5 Concluding remarks
A to-do list for researchers:
Why is there no ‘Cellini-report’ for East Africa? Why is there no regular monitoring of the East Africa integration process?
(When) Should East Africa enter a monetary union?
What are the organizational factor and trajectories of success?
What shapes – and changes – the financial behavior of (small-scale) agriculturalists?
How does organizational failure influence financial behavior?
What are the factors that drive and shape policy making?
How do government agencies – and their officers – implement policy?

17. Thank you very much for listening
I am looking forward to lively discussions
Dr. Oliver Schmidt
Academic Advisor Microfinance