Microcredit Progress Report — Uganda
First results and insights from impactMarket’s pilot in Uganda between April and May 2023.
Three months ago, impactMarket launched its second microcredit pilot, this time in Uganda. Our microcredit pilot in Uganda aims to address the financial inclusion gap and support grassroots economic development by providing small-scale entrepreneurs from underprivileged communities and low-income households with access to financial services.
Having transparency as one of our core values, we at impactMarket are excited with our preliminary results and insights from the pilot in Uganda and happy to share the highlights with you in the present article. You can also read the full report by downloading it here.
impactMarket’s Microcredit Contextualization
Microcredit is the most recent product launched by impactMarket to complete its hub of web3-driven inclusive solutions for human empowerment. Together with the Unconditional Basic Income (UBI), the Libera Crypto Wallet, and the Learn & Earn Program, impactMarket’s Microcredit provides much-needed support to unbanked and underbanked borrowers from developing countries. By unlocking accessible credit for these users, we are expanding to untapped markets with high demand and growth potential while promoting a positive impact on economic, social, and psychological aspects from an individual and collective perspective.
While impactMarket’s crypto UBI, one of the world’s largest programs of its kind, is helping over 40,000 beneficiaries in almost 30 countries, the microcredit is currently going through the pilot phase in Brazil and Uganda — soon to be expanded to Venezuela and Nigeria.
So far, borrowers have been selected among members from existing UBI communities in the targeted regions, but shortly, we aim to expand microcredit to a broader audience.
A snapshot of our borrowers in Uganda
Borrower demographics based on 91 interviews conducted from 22/04/2023 to 07/06/2023:
- 81 individual borrowers received microcredit after submitting applications and attending interviews.
- The average age of applicants: 28, ranging from 21 to 51. 84% are under the age of 30.
- Gender distribution: 53.08% women (43 individuals) and 46.91% men (38 individuals).
- Average number of dependents: 2.59, with a maximum of 9.
- 41.87% of individuals have a bank account, while 56.84% do not.
- In terms of monthly expenses, 50% spend 0–200,000 UGX, and only 8.7% (4 individuals) spend over 1 million UGX. This aligns with a recent report by the Ugandan Bureau of Statistics, which states that 50% of Ugandans in paid jobs earn 200,000 UGX or less per month.
Get to know more about the businesses supported
Differently from our UBI program which supports communities often in partnership with local and international NGOs, our microcredit targets mainly entrepreneurs looking for a loan to invest in their small businesses. As shared in our Theory of Change, we believe that by supporting these initiatives our impact goes beyond accelerating the business itself, contributing to the growth of the local economy, and better living conditions for borrowers, their families, and communities.
Find below the categories of businesses that we supported so far:
Even in the pilot phase, our microcredit has seen great interest from users, and our team has been focused on attending to the increasing demand in Uganda by increasing also the disbursement of the loans while we develop the digital interfaces that will allow our global scalability. In the chart below, you can see the microcredit growth in the country since its launch:
Access more data on the Microcredit Progress Report here.
Key insights from the Microcredit Report pilot in Uganda:
- Repayment incentives: The pilot has identified effective incentives for repayment, including offering repeat loans to those who repay with an increased amount, prioritizing women borrowers, and focusing on business categories with quick revenue generation such as Mobile Money trades.
- A high conversion rate of applicants: The careful selection process by Country Ambassadors has resulted in a high selection rate of quality borrowers for the pilot.
- Proposed interest rate increase: Based on competitor interest rates obtained through interviews, it is recommended to double the current interest rates used in the pilot from 0.1% to 0.2%. This increase aims to boost revenue for program expansion and encourage borrowers to make early repayments instead of compounding them in later months.
Our primary focus of development and growth are:
- Streamlined interview processes: Enhancing credit scoring methods to better assess borrowers’ repayment potential and developing scalable loan amounts and categories for future expansion to other countries.
- Diversification of repayment incentives: Exploring additional incentives beyond social pressure to encourage repayment.
- Meeting growing microcredit demand: Addressing the increasing demand for microcredit in communities by accommodating its rapid growth.
- Evidence-based learning: Implementing mechanisms to assess the program’s social impact based on empirical evidence and learning from the pilot’s outcomes.
Dig deeper into the insights for our Microcredit Progress Report! Beyond accessing more data related to the information shared above, you will also know more about Business Demographics, our Monitoring and Evaluation Framework and its key indicators, project growth and roadmap, and more. Download it now.
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impactMarket (The Human Empowerment Protocol)
impactMarket provides accessible financial solutions to empower underprivileged people all over the world, unlocking opportunities and human potential.
