1,000 Microloans for Rural Women in East Africa

The rural areas where WMI works still operate primarily on a cash economy. Banks typically operate only in the larger towns and cities, which makes accessing them difficult for our typical rural loan program participant. In areas with an unreliable power grid, debit and credit cards are not useful, and purchases in the markets and at local businesses are all made in cash. Although mobile money is making some headway (although with high transaction costs), rural villagers still primarily use cash at local markets and for local business transactions. WMI’s businesswomen must keep their cash receipts either in their houses or make a time-consuming and expensive journey to the bank to make a deposit.

From the bank’s perspective, building rural branches is too expensive. The cost of construction plus maintaining and supervising a trained local staff is very high on a cost/benefit basis. Thus, they stick to the bigger towns and cities. In the past few years, the governments in East Africa have recognized this problem and, in order to encourage banks to extend financial services in rural areas, they implemented an Agency Banking system. Certified organizations that pass a government due diligence review and that have suitable physical premises may be licensed by standard banks to establish rural outposts where they can take deposits and issue withdrawals to existing bank customers as well as open accounts for new customers. Agents can handle transactions for customers of any licensed bank in the country and the Agent receives a small fee on every transaction conducted. In return, banks gain customers without the costs of having to build and staff a physical bank in each location.

WMI is very pleased to have been selected to become an Agency Bank. With our background in rural lending, WMI already has experienced local staff available to be able provide basic banking services to village families. And because we already needed additional space, we quickly got to work raising the funding to build a larger office space at our headquarters in Buyobo, Uganda that could include Agency Banking.

We are happy to report that our new building is well under construction and will be ready for business by late summer. The four windows you see on the short side of the building above open to the road and will be the teller windows. A veranda will keep the hot sun and rain off our customers. The rest of the first-floor space will house WMI offices. Until we need it, the upstairs will be rented to a trade school to train local youth in employable skills such as mechanics, sewing and hairdressing (the rent providing another revenue stream to the loan hub).

With Agency Banking WMI moves one step further in its vision to develop an inclusive and just financial system by breaking down the barriers that severely discriminate against and routinely exclude village women from access to financial services.

Our ultimate goal will be to expand this service to all of our hub locations as it is a win-win situation for everyone – the banks gain customers, our borrowers have a convenient place to deposit and withdraw funds, and the local hubs gain a steady source of income from banking transactions. This additional long-term income stream will complement operating support provided by loan fund income, making the WMI loan hubs truly self-sustaining for the long run.

All of us at WMI wish you a safe and happy summer!