By Uganda Vanguard
KABUUSU – BRAC, the largest microfinance provider in Uganda has received a Tier 2 Credit Institution (CI) license from Bank of Uganda, the central bank of the country transforming the institution into a commercial bank.
Representing President Yoweri K. Museveni, First Deputy Prime Minister Moses Ali formally opened the newly licenced institution – BRAC Uganda Bank Ltd (BUBL) through a ceremonial tape cutting of the bank’s Kabuusu branch on the morning of 25 April 2019.
President Museveni called financial inclusion for all Ugandans.
“Although financial inclusion is improving, half of Ugandans do not have access to banking services. Ministry of Finance is design a strategy to have all Ugandans access banking services by 2020,” he said.
President Museveni urged BRAC to design products to the youth who are most vulnerable in society.
He was accompanied by State Minister for Privatization Evelyn Anite who hailed BRAC for opening branches in 84 districts.
“BRAC gives cheap financing to the disadvantaged deep in rural areas,” she said.
Ms Anite promised a favorable environment for a robust financial sector.
She cautioned the bank against charging high interest rates.
According to a press statement, the microfinance journey started in Uganda in 2006. BRAC currently serves over 200,000 clients, with its 163 branches in 84 districts across the country.
As part of its commitment to provide a range of financial services responsibly to the people, especially women in rural and low-income communities, BRAC has been pursuing a change in its regulatory status that would allow it to broaden the scope of its financial services to its clients.
With the CI license, BRAC Uganda Bank Ltd will now be able to offer savings accounts, money transfer, insurance and other financial services in addition to its existing credit products to the people of Uganda.
“Becoming a bank is not the end in itself, but a means to an end,” said Shameran Abed, the Senior Director of BRAC’s Microfinance and Ultra-Poor Graduation programme, “we are now in a position to not only provide far greater value to the hundreds of thousands of clients that we already serve but to achieve greater financial inclusion in Uganda by serving many hundreds of thousands more who are outside of the formal financial system.” The transition from a Tier 4 institution, a category for unregulated credit-only NGOs and money lenders, to a Tier 2 Credit Institution (CI) allows BRAC to drive more impactful financial inclusion at an even greater scale and with strengthened sustainability while staying true to its pro-poor mission. “Most importantly, our clients can now have the confidence and trust of saving at a formal institution, a critical component that ensures resilience for low-income households in times of social or economic shocks”, said Jimmy Adiga, the CEO of BUBL.
As a part of the transformation process, BRAC has partnered with three mission-aligned investors – DEG (Deutsche Investitions- und Entwicklungsgesellschaft mbH), the German development finance institution, Equator Capital Partners, the experienced fund manager investing in financial inclusion, and Triple Jump, the Dutch impact investment manager advising the ASN Microkredietpool fund. The equity partners each bring unique value and expertise to BUBL and are excited to join BRAC in providing affordable and responsible financial services to the people of Uganda.
BRAC has hosted day-long events with its staff, partners, clients, regulators and other stakeholders to celebrate this hallmark achievement. Following the ceremonial opening in the morning by the President at the head office branch of the bank, a launch event with the broader community of stakeholders took place at the Victoria Hall of The Kampala Serena Hotel later in the evening. Mr Haruna Kasolo Kyeyune, the Minister of State for Microfinance and DR Louis Kasekende, the Deputy Governor of the Bank of Uganda were present at the event as the Chief Guest and the Guest of Honour, respectively