SOCIAL AND ECONOMIC EMPOWERMENTand ECONOMIC Empowerment

ABOUT MICROFINANCE: 

Financial exclusion is especially severe among the rural poor, young, women, and other excluded groups, with only 16 percent of adults saving in formal deposit-taking institutions such as banks, microfinance institutions, and savings and credit organizations. Over the last decade, Community Savings Groups have become an important tool in achieving BIDCAF's goals of expanding access to finance in marginalized communities. Finally, Community Savings Groups are an effective economic and social development tool, enabling for investments in household assets, long-term livelihoods, health, education, food security, and nutrition.

Most formal financial institutions are unable to reach Uganda's poorest citizens, who urgently require appropriate and affordable financial services. The microfinance programs of BIDCAF collaborate with informal or community-based savings groups.

The approach encourages clients to save and borrow for investments in income-generating microenterprises. It reaches extremely poor households and communities, assisting in the establishment of a sustainable financial foundation for local community development.


Savings-led microfinance is a major focus of BIDCAF microfinance programs, which assist community members in forming groups, pooling their savings, and making loans to one another. This strategy has resulted in economic opportunities for people living in the most impoverished areas.


BIDCAF uses a highly sustainable fee-for-service, market-based, agent strategy to provide training and capacity enhancement to new savings groups. Groups can operate independently after completing their initial 12-month cycle. The next cycle begins immediately after the share out meeting, bringing the previous cycle to a close. Some of these organizations are currently in their sixth cycle.

ABOUT SAVINGS-LED MICROFINANCE

BIDCAFs’ Community Savings Groups (CSG) methodology is a comprehensive, savings-led microfinance approach that provides a secure environment for low-income households to save and borrow in order to increase their income. The goal is to teach members basic financial management skills in order to help them better manage their existing resources. 

Traditional community-based rotating savings and credit associations are at the heart of BIDCAF's savings-led microfinance system. However, our strategy considerably improves on the methods by assisting poor communities in developing highly sustainable, accessible, transparent, adaptable, and self-managed Community Savings Groups.

BIDCAF facilitates savings services, allowing the poor to accumulate useful lump sums without incurring excessive debt or interest charges. Furthermore, the CSG process protects members' limited resources by redirecting funds from poorly protected informal ways to investments in group members' businesses. This provides a positive return on their savings (dividend).

Savings accumulate, and the capacity to access flexible credit through an internal lending system leads to increased financial resilience among participating households and investments in productive assets, such as agricultural output and small business activities.

Our Approach

·         CSG are owned and run by its members since its inception. This protects the groups' long-term financial stability and sustainability. CSG membership fosters social cohesiveness by fostering trust among members, resulting in increased financial inclusion of marginalized groups such as rural farmers, women, HIV-positive persons, and vulnerable youth who are frequently excluded from mainstream financial institutions.

·         To address the need for long-term community-level financial services, BIDCAF has incorporated a market-based strategy that allows local entrepreneurs, known as Village Agents (VA), to expand savings group services on a fee-for-service basis wherever there is demand. The VAs are paid directly by the savings groups, resulting in an easily replicable and self-sustaining savings-led program. VAs earn a living by assisting in the formation and support of groups, and groups receive assistance from a quality-assured service provider independent of BIDCAF or donor funding.