UMRA calls on financial institutions to offer unsecured loans amid Covid-19

Kampala, Uganda | THE INDEPENDENT | The Microfinance Regulatory Authority-UMRA has called on financial institutions to provide quick, unsecured loans to people affected by the Covid-19 lockdown.

The outbreak of the pandemic and the ensuing lockdown of movements and operations resulted in a decline in both the demand for and supply of goods and services. In turn, this has negatively affected the income of businesses and individuals and their ability to repay their loans.

Rachel Vanesa N. Muhwezi, director of microfinance institutions at the Uganda Microfinance Regulatory Authority, said several businesses have been hit hard by the lockdown caused by the pandemic and have yet to recover.

Muhwezi was speaking at the launch of UNIFI, a new South African microfinance company.

She says that small lenders play an important role in providing many benefits and accessing business opportunities and services, especially instant unsecured loans.

Unifi currently operates in South Africa, Zambia and Tanzania. So far, 950 institutions provide loans to Ugandans. The institution has introduced instant and online unsecured loans to the Ugandan market to support those affected by COVID-19.

Unsecured loans focus on salaried employees in the public and private sector and the main goals are to get rid of the rigorous process of applying for the loan.

The establishment unveiled its online loan access platform where customers complete the loan application process online for emergencies such as sudden illness and when a device or vehicle breaks down and must be repaired at a cost.

Michael Boden, Country Manager Unifi, says they intend to have a quick and easy online and physical application in just 20 minutes and flexible repayment with an affordable 16% interest rate for borrowers for the first time and as low as 8 percent for customers with good credit history per year.

He says they hope to change the future of credit in Uganda by reducing the lengthy process and queues associated with obtaining loans.

The loan facility is intended to help Ugandans struggling during COVID-19 to access credit, but also workers to obtain advances and complete their business.

Several Ugandans have been affected by containment measures linked to COVID-19 and have relied on support from microfinance institutions and banks, among others, to save their businesses.

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About Christopher Easley

Christopher Easley

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