As one way of bolstering the micro businesses to thrive into medium enterprises, Urwego Opportunity Bank (UOB) has disbursed Rwf6.6b worth of loans, majorly targeting rural and agro based businesses.
The Chief Executive Officer, Jeffrey Lee, said that the loans were given to over 37,000 micro businesses to help them grow into viable enterprises that can compete in the market.
“By providing linkage loans we are enhancing access to credit to the informal sector to be able to join the formal sector,” he said adding, that the bank is intending to extend its outreach to the unbanked rural Rwandans.
Jeffrey believes that with the bank’s current 110,000 clientele of which 90 per cent are rural based and 80 per cent women, the rural folk will increase access to finance as the bank majorly targets social impact.
“The rural poor want convenient and flexible services and depending on their nature of income and capacity, MFIs suit better to serve them,” Rita Ngarambe, the Executive Secretary of Association of Microfinance Institutions of Rwanda (AMIR) said.
She added that Microfinance Institutions have the potential to penetrate the rural areas unlike banks.
She, however, noted that the current financial rush callings on the public to access loans by presenting only business ideas would cripple the sector as many businesses are likely to collapse and fail to pay back the loans.
“It is a very dangerous idea to encourage college graduates to start their businesses with loans,” she said, adding that people need to start businesses with their own money to be able to first meet overhead costs.
Banks have recently stepped up campaigns calling on the public to present business plans and access loans to start up businesses with government backing up with guarantee funds to support businesses and individuals who may not have collaterals.