Ask your life insurance adviser

Perhaps the hustler spirit in most Ugandans has allowed us to be recognized as a rather highly entrepreneurial country as many people are quick to spot a gap in the economy and find a business solution to it. Microfinance has definitely played a pivotal role in enabling the various side hustles, shops or businesses thus improving the lives and welfare of many Ugandans.
My problem with the microfinance model is the occasional misconception that every poor person is a potential entrepreneur. The model is biased towards achieving the objectives of the banks, MFIs and other funding bodies of growing customer base and extending credit facilities to those at the bottom of the pyramid in the name of helping them do business. The popularity in funding microfinance is also disturbing especially with diminishing aid. Sometimes the best way to stop a nagging poor relative from begging you for money is to lend them such that when they default they start hiding from you and don’t come back.
But above all people join Saccos, Community associations and other borrowing groups not necessarily because of their entrepreneurial skills, it’s mostly for social insurance, this refers to the sharing of burdens such as contributions for medical bills, funerals, weddings etc. and the spreading of risk e.g. though joint investments . Instead of lending Shs1 million to each of five hundred banana farmers in a village, there might be more value in using Shs500 million to set up a banana processing factory in this same village and offer agricultural insurance or funeral and medical insurance to all the farmers and their families that are employed or sell their bananas to this factory. This prioritises the welfare of the poor person as opposed to seeing a Microfinance institution selling off an already poor person’s plot of land due to loan default.
For more information please contact, lifeadvisor@uap.co.ug, The writer is the Corporate Sales Manager for UAPLife Insurance.