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The Ministry of Gender, Labour and Social Development has explained why the World Bank-funded Generating Growth Opportunities and Productivity for Women Enterprises Project, designed to support women entrepreneurs, lends money with interest rather than as grants.
Permanent Secretary Aggrey Kibenge clarified that the interest rates are deliberately set low to promote sustainability while ensuring credit accessibility.
Low Interest Rates to Support Women Entrepreneurs
Speaking about the project’s financing model, Kibenge said the programme was designed to make credit easier for women in business by offering friendlier lending terms.
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“That is why the interest rate was put at 10%, about half of the commercial lending rate,” he explained.
The low rate helps reduce the financial burden on women entrepreneurs while allowing the fund to revolve and support more borrowers over time.
Kibenge added that the decision to partner with commercial banks, rather than have the government directly manage the funds, was made jointly with the World Bank.
“At the end of the day, this money has to be recovered,” he said, noting that the project is a revolving fund running until December 2027.
After this period, all repaid money will remain with the Ugandan government, which will establish a mechanism to manage and sustain the fund for future lending.
Addressing concerns over charging interest on what is technically a World Bank grant, Kibenge said:
“If we don’t lend it on interest, sustainability becomes a problem. If the money is not repaid, we have no more funds to lend, and the project would close.”
Partner Banks Guarantee Loans for Sustainability
The project collaborates with six selected commercial banks to disburse loans to women entrepreneurs under the programme.
These banks include Centenary Bank, PostBank Uganda, Finance Trust Bank, Dfcu Bank, Equity Bank Uganda, and Opportunity Bank Uganda.
Kibenge emphasised that the banks guarantee these loans. “They are the ones that will take responsibility should the women not return the money; the banks will be the ones to return it,” he said.
This partnership ensures that the lending process is professionally managed, while protecting the revolving nature of the fund.
The GROW Project aims to boost women-owned micro and small enterprises across Uganda by improving access to finance, business skills, and gender-inclusive infrastructure.
Since its launch, the programme has disbursed billions of Ugandan shillings to thousands of women entrepreneurs, fostering economic empowerment and sustainable growth.