ACOT implements micro credit project which aims at improving the living condition of underprivileged people in Uganda, and Nwoya district in particular
ACOT Micro credit which started in January 2011 now has 3130 members in Nwoya district and the majority of the members are mothers, grandmothers as well as caregiver. The project has given birth to ACOT SACCO which has moved to cover the neighboring districts of Amuru and Gulu.
Families living with orphans and other vulnerable children often lack resources to cater for their needs. This undermines the fulfillment of their rights. African Child Outreach Trust, since 2011 is undertaking project that enhances coping mechanisms of the affected households and community members in and around Nwoya district, a new district curved from the greater Gulu district. Over 80% of the members under micro credit project are women and some are widows who lost their husbands during the two decade insurgency.
The micro credit scheme is one of the socioeconomic security interventions implemented to ensure economic empowerment of poor and aging mothers and caregivers particularly the grandmothers.
The high rates of interest charged by conventional banks and the demand for collateral have made it difficult for these people to access loans and other financial services. They fall prey to unscrupulous informal money lenders who charge them incredibly high interest rates and other unbearable terms and conditions.
ACOT has therefore come in to economically empower mothers and grandmothers by mobilizing them into Village Savings and Loaning Groups (VSLGs) and providing them with training in entrepreneurship after which, the group members are validated by credit supervisor and those who qualify are given the loan at low and affordable interest rate. The members get their loans in phases and they keep on graduating from one level to another.
The objectives of this micro credit scheme are:
- To alleviate poverty among household mothers and caregivers.
- To economically empower mothers and caregivers, particularly the mothers and grandmothers.
In order to achieve our objectives we:
- Prioritize women caregivers (grandmothers) in accessing micro credit support in order to directly engage them into productive activities and open up opportunities for additional income to the family.
- Encourage mothers and grandmothers to save. We do this by organizing their small savings to make provision for their capital to invest in more productive ventures leading to self sufficiency.
- Improve the condition of the extreme poor of the society by bringing them under the loan scheme.
ACOT micro credit project which started in 2011 in Nwoya district in northern Uganda has two main components;
- Savings scheme.
- Loan scheme.
Savings and loaning scheme
This scheme mainly targets the rural poor whose earning is less than one dollar. Each member makes a daily saving of as little as 0.108 USD. We have so far formed a pilot Village Savings and Loaning Groups (VS$LGs) called Atek ki Lwak “Being strong by belonging to a group” where mother and grandmothers save part of their daily incomes. Current savings portfolio stands at $4,570.
We have also trained members in:
- Best financial management practices.
- Capital accumulation and investment.
- Small enterprise management and operation.
- Saving and loaning.
- Record management
Since the start of the project in 2011, a total of 305,651 US dollars have so far been loaned out to credible members in groups as soft business loans at affordably low interest rates of 15% for six months. Since the members are poor, therefore lack collateral that the banks require, group security is therefore very important here..
Given the small size of the loan portfolio and the increasing demand for the loan product, 95% of the proceeds got from interest are being re-invested in the loan scheme so as to cover great number of people.